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[Federal Register Volume 66, Number 81 (Thursday, April 26, 2001)]
[Notices]
[Pages 20997-21000]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10397]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

[HCFA-3056-NC]

Medicare Program; Evaluation Criteria and Standards for Peer 
Review Organization 6th Round Contract

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Notice with Comment Period.

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SUMMARY: This notice describes how HCFA intends to evaluate the Peer

[[Page 20998]]

Review Organizations (PROs) under their 6th round contracts, for 
efficiency and effectiveness in accordance with the Social Security 
Act. In accordance with the provisions of the Government Performance 
and Results Act of 1993, Tasks 1 and 4 of the 6th round contracts with 
the Peer Review Organizations are performance based.

DATES: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on June 
25, 2001.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: HCFA-3056-NC, P.O. Box 8013, 
Baltimore, MD 21244.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses: Room 443-G, Hubert 
Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201-
0001, or Room C5-16-03, 7500 Security Boulevard, Baltimore, MD 21244-
1850.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code HCFA-3056-NC. Comments received timely will be available 
for public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 443-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
DC 20201-0001, on Monday through Friday of each week from 8:30 a.m. to 
5 p.m. (Telephone (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Susan Smith, (410) 786-6748.

SUPPLEMENTARY INFORMATION:

I. Background

    The Peer Review Improvement Act of 1982 (Title I, Subtitle C of 
Public Law 97-248) amended Part B of Title XI of the Social Security 
Act (the Act) to establish the Peer Review Organization (PRO) program. 
The PRO program was established to redirect, simplify and enhance the 
cost-effectiveness and efficiency of the medical peer review process. 
Sections 1152, 1153(b) and 1153(c) of the Act define the types of 
organizations eligible to become PROs and establish certain limitations 
and priorities regarding PRO contracting. In 42 CFR 462.102 and 
462.104, (Medicare and Medicaid Programs; Programs of All-Inclusive 
Care for the Elderly, 64 FR 66234 (November 24, 1999) (To be recodified 
at CFR Part 475) subpart C, of our regulations, we describe the types 
of organizations eligible to become PROs and the capabilities they must 
demonstrate.
    The Secretary enters into contracts with PROs to perform three 
broad functions:
     Improve quality of care for beneficiaries by ensuring that 
beneficiary care meets professionally recognized standards of health 
care.
     Protect the integrity of the Medicare Trust Fund by 
ensuring that Medicare only pays for services and items that are 
reasonable and medically necessary and that are provided in the most 
economical setting.
     Protect beneficiaries by expeditiously addressing 
individual cases such as beneficiary quality of care complaints, 
contested hospital issued notices of noncoverage (HINNs), alleged 
Emergency Medical Treatment and Labor Act (EMTALA) violations (patient 
dumping), and other statutory responsibilities.
    Section 1154 of the Act requires that PROs review those services 
furnished by physicians; other health care practitioners; and 
institutional and non-institutional providers of health care services, 
including health maintenance organizations and competitive medical 
plans; as specified in their contracts with the Secretary.
    Section 1153(h)(2) of the Act requires the Secretary to publish in 
the Federal Register the general criteria and standards that will be 
used to evaluate the efficient and effective performance of contract 
obligations by PROs and to provide the opportunity for public comment. 
The following criteria apply to PROs operating under the 6th Round 
contracts. The PRO 6th Round contracts were awarded for 3 years with 
starting dates staggered into three approximately equal groups starting 
August 1, 1999, November 1, 1999 and February 1, 2000.

II. Measuring PRO Performance

    Under the 6th Round contract, PROs are responsible for completing 
Tasks in the following 5 areas:

Task 1--National Quality Improvement Projects.
Task 2--Local Quality Improvement Projects.
Task 3--Quality Improvement Projects in Conjunction with 
Medicare+Choice Plans.
Task 4--Payment Error Prevention.
Task 5--Other Mandatory Activities.

    The PRO must meet the performance standards for each of these 5 
Tasks to be eligible for a noncompetitive renewal for the 7th Round 
contract cycle, except that a PRO with no M+C organization in its state 
will not be evaluated on Task 3. However, meeting the minimum 
performance standards does not guarantee a noncompetitive renewal of 
its contract. (If, for example, an organization within a particular 
State meeting the definition of a PRO expresses an interest in 
competing for a contract currently held by a PRO from outside that 
State, pursuant to Sec. 1153(i) we will compete the contract despite 
acceptable performance by the current PRO.) We will make a final 
decision on renewal/nonrenewal by the end of the 30th month of the 6th 
Round contract. We will issue a ``Notice of Intent to Non-renew the PRO 
Contract'' letter to all PROs that do not meet the minimum performance 
standards no later than the end of the 33rd month of the contract. The 
PRO will be considered to have met minimum performance standards if the 
PRO has demonstrated acceptable performance in each Task area as 
specified in section III, (Standards for Minimum Performance) of this 
notice.
    If the initial quantitative and/or qualitative assessments suggest 
that the PRO has not met or exceeded the criteria for one or more of 
the five Tasks, its performance of that Task(s) will be referred to a 
HCFA-wide panel for a second, more in-depth assessment of its contract 
performance. The panel will be made up of representatives from each of 
the 4 PRO Regional Offices and the Central Office. The panel will have 
the right to create its own procedures, but must apply them 
consistently to all PROs it reviews. At a minimum, the panel will use 
the criteria listed below for all Tasks:
     The degree of collaboration the PRO exhibited with other 
PROs, both by sharing the lessons and tools it developed and by 
adopting practices and tools developed by other PROs.
     Whether the PRO was a new contractor for the 6th round 
contract.
     Whether specific identifiable circumstances uniquely 
interfered with the PRO's improvement efforts.
     Any other issues which the panel may deem relevant.
    Additionally, for Tasks 1 and 4, the panel will consider the degree 
of difference between the measured improvement of the PRO and that of 
the top 75 percent of the PROs in the same contract renewal cycle.

III. Standards for Minimum Performance General Criteria

    In general, Task 1 and portions of Tasks 3 and 4 will be evaluated 
quantitatively. Success will be measured by assessing changes in 
statewide baselines over a period of time. Task 2 and the remaining 
portions of Tasks 3 and 4 will be qualitatively

[[Page 20999]]

evaluated. Success will be measured both on the improvement achieved 
and on the contribution made to the health care quality improvement 
process. Task 5 will be evaluated based on evidence reported by the PRO 
that demonstrates that it has met the requirements contained in Parts 
4, 5, 7, 9 and 12 of the PRO Manual for the mandatory activities. A 
principal evaluation element for all Tasks will be the timeliness and 
completeness of all required reports.

Task-Specific Standards

1. Task 1 National Quality Improvement Projects
    We provided the PRO a state-specific baseline combined topic 
average (CTA) near the start of the 6th round contract. We calculated 
the CTA by including all the quality indicators for the six national 
topics. We will provide the PRO a second state-specific CTA based on 
re-measurement data, in time for an end-of-contract evaluation.
    The baseline and remeasurement CTAs are calculated in 2 steps. 
First, for national topics with multiple Quality Indicators (QIs), each 
QI has been given a specific weight for calculating performance on that 
topic. Using these weights, an average, termed a Topic Weighted 
Average, is created for each topic. Then a Combined Topic Average (CTA) 
is calculated. The CTA is then calculated by using the average of the 6 
National Topic Weighted Averages. The success of the PRO's efforts 
under this task will be evaluated on the basis of the observed 
improvement in the second CTA compared to the baseline CTA.
    The PRO's relative improvement on the CTA will be compared to the 
relative improvement demonstrated by the other PROs that share the same 
contract renewal cycle. For the purposes of this evaluation, relative 
improvement is defined as the amount of observed improvement compared 
to a possible 100% improvement.
    If the PRO has demonstrated some measured improvement on the CTA 
and its relative improvement exceeds at least 25 percent of the other 
PROs in the same contract renewal cycle, it shall be judged to have 
performed successfully on Task 1.
    If the PRO fails to demonstrate any measured improvement on the CTA 
or its relative improvement is less than at least 75 percent of the 
other PROs in the same contract renewal cycle, our evaluation panel 
will review its work under Task 1.
2. Task 2 Local Quality Improvement Projects
    We will evaluate the success of the PRO's work under Task 2 in two 
ways. In most instances, we will assess whether the PRO has achieved 
measurable improvement on the quality indicators, particularly when the 
projects have employed project tools and indicators that have 
previously been well-developed. In the event that a project fails to 
achieve measurable improvement, we will use as a second standard of 
success the amount of knowledge that has been gained through the 
experience of the project. We directly acknowledge that projects using 
new tools and indicators may not always achieve measurable improvement. 
We will consider these projects successful only if the PRO bases the 
project(s) on plausible hypotheses, uses scientifically valid project 
and evaluation methods, and clearly documents all essential elements of 
the project. The PRO must document these lessons learned in a 
professional manner comparable to the standards used by peer-reviewed 
journals.
3. Task 3 Quality Improvement Projects in Conjunction With 
Medicare+Choice Plans
    The PRO shall report on all projects in which it collaborates with 
one or more M+C plans under Task 3 using the SDPS reporting system. The 
PRO's success under Task 3 will be evaluated in one of two ways. For 
HCFA-directed projects that all plans implement using a standardized 
set of indicators, such as diabetes, we will evaluate the PRO in a 
manner comparable to the evaluation criteria in Task 1.
    For all other projects in which the PRO collaborates with the 
plan(s) or provides technical assistance to the plan(s), we will 
evaluate the success of the PRO in a manner comparable to the 
evaluation criteria in Task 2.
    We may also solicit feedback from the plans on their satisfaction 
with the PRO's technical assistance, and may also consider this 
information as part of its evaluation of the PRO's success under Task 
3.
4. Task 4 Payment Error Prevention
    We provided the PRO a statewide baseline payment error rate and 
will provide a second statewide payment error rate in time for an end-
of-contract performance evaluation. For the purposes of this contract, 
we will define the inpatient PPS payment error rate as the number of 
dollars found to be paid in error out of the total of all dollars paid 
for inpatient PPS services. The number of dollars paid in error is 
defined as the absolute (unsigned) difference between what was actually 
paid and what should have been paid as a result of review.
    The PRO's relative improvement on the state-wide payment error rate 
will be compared to the relative improvement demonstrated by the other 
PROs that share the same contract renewal cycle. For the purposes of 
this evaluation, relative improvement is defined as the amount of 
observed improvement, compared to the amount of possible improvement, 
that is, zero payment errors.
    The success of the PRO's efforts under Task 4 will be evaluated, in 
part, based on the observed improvement in the second statewide payment 
error rate compared to the baseline payment error rate.
    The PRO's efforts under Task 4 will be determined to be successful 
if it--
    1. Performs the required first year projects within the agreed time 
frames;
    2. Establishes contact and coordination with local, State and 
Federal agencies, contractors, hospitals, medical staffs and their 
professional and trade associations, and pertinent law enforcement 
agencies (Evaluation of this requirement will be based upon reports 
from the agencies identified by the Project Officer.); and
    3. Demonstrates some measured improvement on the statewide payment 
error rate, and its relative improvement exceeds at least 25 percent of 
the other PROs in the same contract renewal cycle.
    If the PRO does not meet requirements 1 and 2 or if it fails to 
demonstrate any measured improvement on the statewide payment error 
rate or its relative improvement is less than at least 75 percent of 
the other PROs in the same contract renewal cycle, our evaluation panel 
will review its work under Task 4.
5. Task 5 Other Mandatory Activities
    The Project Officer will continuously review the work of the PRO 
under Task 5, based primarily on periodic reports that the PRO shall 
submit through the SDPS reporting system. The PRO's work will be judged 
to have been successful for each of the categories of review and other 
mandated activities only if it conducts the work in accordance with the 
requirements set forth in Parts 4, 5, 7, 9 and 12 of the PRO Manual.
    In accordance with the provisions of Executive Order 12866, this 
notice with comment period was not reviewed by the Office of Management 
and Budget.

    Authority: Section 1153 of the Social Security Act (42 U.S.C. 
1320c-2)

[[Page 21000]]

(Catalog of Federal Domestic Assistance Program No. 93.778, Medical 
Assistance Program; No. 93.773, Medicare-Hospital Insurance Program; 
and No. 93.774, Medicare--Supplementary Medical Insurance Program)

    Dated: February 27, 2001.
Michael McMullan,
Acting Deputy Administrator, Health Care Financing Administration.
[FR Doc. 01-10397 Filed 4-25-01; 8:45 am]
BILLING CODE 4120-01-P
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