[Federal Register Volume 87, Number 83 (Friday, April 29, 2022)]
[Rules and Regulations]
[Pages 25413-25429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-09102]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 410, 414, 488, and 493

[CMS-3368-F]
RIN 0938-AT83


Medicare Program; Accrediting Organizations--Changes of Ownership

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Final rule.

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SUMMARY: This final rule adds new requirements and a specified process 
to address change of ownership (CHOW) for Accrediting Organizations 
(AOs) in regard to the transfer of the existing Centers for Medicare & 
Medicaid Services (CMS) approval for the AO's accreditation programs to 
the new AO owner. These regulations are intended to provide CMS with 
the ability to receive notice when an AO is undergoing or negotiating a 
CHOW, as well as to review the prospective new AO owner's capability to 
perform its tasks after a CHOW has occurred, in order to ensure the 
ongoing effectiveness of the transferred accreditation program(s) and 
to minimize risk to patient safety.

DATES: This final rule is effective June 28, 2022.

FOR FURTHER INFORMATION CONTACT: Caroline Gallaher, (410) 786-8705.

SUPPLEMENTARY INFORMATION: 

I. Background

    Medicare-certified providers and suppliers participate in the 
Medicare program by entering into a provider agreement with the 
Medicare program. Medicare-certified providers and suppliers include 
hospitals; ambulatory surgical centers (ASCs); skilled nursing 
facilities (SNFs; home health agencies (HHAs); hospice programs, rural 
health clinics (RHCs); critical access hospitals (CAHs); comprehensive 
outpatient rehabilitation facilities (CORFs); laboratories; clinics, 
rehabilitation agencies and public health agencies; and End Stage Renal 
Disease (ESRD) dialysis facilities.. To participate in the Medicare 
program, Medicare-certified providers and suppliers of health care 
services must among other things, be substantially in compliance with 
specified statutory requirements of the Social Security Act (the Act), 
as well as additional regulatory requirements related to, among other 
things, the health and safety of patients specified by the Secretary of 
the Department of Health and Human Services (the Secretary). These 
health and safety requirements are generally called conditions of 
participation (CoPs) for most providers, requirements for SNFs, 
conditions for coverage (CfCs) for ASCs and other suppliers, and 
conditions for certification for RHCs and FQHCs. A Medicare-certified 
provider or supplier that does not substantially comply with the 
applicable health and safety requirements risks having its Medicare 
provider agreement terminated.
    Section 1865(a) of the Act allows most types of Medicare-certified 
providers and suppliers to demonstrate compliance with the applicable 
health and safety requirements through accreditation by a Centers for 
Medicare & Medicaid Services (CMS)-approved accreditation program of a 
national accreditation body, known as an Accrediting Organization (AO). 
This is referred to as ``deemed'' accreditation, because, if an AO is 
recognized by the Secretary as having standards for accreditation that 
meet or exceed Medicare requirements, any provider or supplier 
accredited by that AO's CMS-approved accreditation program is deemed by 
CMS to be complying with the applicable Medicare conditions or 
requirements.
    We are responsible for providing continued oversight of national 
AOs' Medicare accreditation programs to ensure that providers or 
suppliers accredited by the AO meet the required quality and patient 
safety standards. We must ensure that the AOs have formalized 
procedures to determine whether the healthcare facilities deemed under 
their accreditation programs meet the AO's accreditation standards 
(which must meet or exceed the applicable Medicare program 
requirements). We are also responsible for ensuring that the AO's 
accreditation standards and practices for surveying providers and 
suppliers meet or exceed our standards and practices for granting 
approval.
    Additionally, while accreditation by an AO is generally voluntary 
on the part of Medicare-certified providers or suppliers, accreditation 
is mandated by statute for four supplier-types in order to receive 
payment from Medicare for the services furnished to Medicare 
beneficiaries. These four supplier types are Advanced Diagnostic 
Imaging (ADI) suppliers, Home Infusion Therapy (HIT) suppliers, 
Diabetic Self-Management Training (DSMT) entities, and Durable Medical 
Equipment, Prosthetics, Orthotics and Supplies (DMEPOS) suppliers. We 
describe these supplier types as ``non-certified'' because they are 
enrolled in the Medicare program

[[Page 25414]]

but do not formally enter into a participation agreement with Medicare.
    These requirements will affect all of the AOs that accredit 
providers and suppliers, including those that are enrolled in the 
Medicare program, and those that enter into a participation agreement 
with Medicare. We believe that a change of ownership (CHOW) could occur 
with an AO that accredits any category of provider or supplier.
    Any national AO seeking approval of an accreditation program in 
accordance with section 1865(a) of the Act must apply for and be 
approved by us for a period not to exceed 6 years (See 42 CFR 
488.5(e)(2)(i)). The AO must also reapply for renewed CMS approval of 
its accreditation program(s) before the date the existing approval 
period expires. This requirement ensures that accreditation provided by 
these AOs continue to indicate that the providers or suppliers 
accredited are meeting or exceeding Medicare standards. Regulations 
implementing these provisions are found at 42 CFR 488.1 through 488.9.
    We have an established process for the CHOW of Medicare-certified 
providers and suppliers set forth at Sec.  489.18 and in Chapters 2 and 
3 of the State Operations Manual (SOM), Publication 100-07. Although 
the existing provider and supplier CHOW process does not apply to the 
sale and transfer of AOs, it has served as an appropriate model for 
what we are requiring for changes of ownership of AOs.
    The Medicare regulations at Sec.  489.18, as well as the CMS SOM 
(CMS Pub. 100-07), outline processes concerning how a CHOW of a 
Medicare certified provider or supplier affects Medicare participation, 
such as how a provider agreement is automatically assigned to a new 
owner unless the new owner rejects assignment of the provider 
agreement. A CHOW takes place when the responsible legal entity has 
changed, and typically occurs when a Medicare provider has been 
purchased (or leased) by another organization.
    Section 489.18 and interpretive guidance in the SOM (Chapters 2 and 
3) define what constitutes a CHOW, the required notice to be provided 
by the current provider to CMS and contains a provision regarding the 
automatic assignment of the provider agreement to the new owner. This 
regulation also sets out the conditions that apply to assignment of the 
provider agreement to the new owner. Section 489.18(a)(1) provides that 
in the case of a partnership, the removal, addition, or substitution of 
a partner, (unless the partners expressly agree otherwise) as permitted 
by applicable state law, constitutes a CHOW. Section 489.18(a)(2) 
provides that in the case of an unincorporated sole proprietorship, the 
transfer of title and property to another party constitutes a CHOW. 
Section 489.18(a)(3) provides that, in the case of a corporation, the 
merger of the provider corporation into another corporation, or the 
consolidation of two or more corporations, resulting in the creation of 
a new corporation constitutes a CHOW. Transfer of corporate stock or 
the merger of another corporation into the provider corporation does 
not constitute a CHOW. In the new regulations at Sec.  488.5(f), which 
would govern the CHOW process for AOs, we are incorporating via cross-
reference the definitions at Sec.  489.18(a)(1) through (3) of what 
constitutes a CHOW, and applying them to AOs.
    Section 489.18(d) provides that where there is a CHOW, the provider 
agreement under the new owner is subject to all applicable statutes and 
regulations, and to the terms and conditions under which it was 
originally issued. This includes successor liability for Medicare 
overpayments and penalties.
    Generally, under the existing CHOW processes, with certain limited 
exceptions, if a facility's new owner accepts the assignment of the 
provider agreement and CMS Certification Number (CCN), the new owner 
retains all the benefits and liabilities of that agreement. In such a 
case the provider's Medicare participation continues without 
interruption. If the purchaser (or lessee) elects not to accept 
automatic assignment or transfer of the provider agreement, then that 
rejection is considered to be a voluntary termination of the existing 
provider agreement. Therefore, the purchaser or lessee is considered a 
new applicant and must request initial certification as a new provider 
and obtain a new provider agreement.
    It is important to clarify that CMS does not approve the actual 
business transaction between entities that result in the change of the 
responsible legal entity. Instead, our role when a provider's or 
supplier's ownership changes is to ensure that a new owner, who accepts 
the automatic assignment of the existing provider agreement (a CHOW), 
is eligible for Medicare participation. If so, we continue to treat the 
provider as the same entity, with only the owner having changed. If the 
new owner rejects automatic assignment of the provider agreement, then 
it must seek initial Medicare enrollment and certification for the 
facility, which may take several months. Pursuant to Sec.  489.18, a 
new owner who rejects automatic assignment of the provider agreement, 
cannot receive payment for any services it may provide for Medicare 
beneficiaries between the date it acquires the facility and the date we 
determine that it meets all Medicare requirements (including any of the 
CoPs, CfCs, or other requirements).
    The principles that apply when a Medicare-certified provider or 
supplier undergoes a CHOW provide a general framework as to how CMS 
will treat situations involving a CHOW for an AO, though there are some 
important differences. For example, in a CHOW of a Medicare-certified 
provider or supplier, CMS approval is not needed to transfer the 
Medicare agreement of the provider or supplier that undergoes a CHOW, 
if the new owner decides to accept assignment of the Medicare 
agreement. The Medicare agreement is automatically transferred to the 
new owner unless the new owner affirmatively rejects assignment, and 
the new owner will accept the assigned agreement subject to all 
applicable requirements, including health and safety standards and 
liability for overpayments. However, in the case of a CHOW for an AO, 
under this regulation, CMS' affirmative approval will be needed to 
transfer the existing CMS approval for the AO's accreditation program 
to a new owner. This policy reflects CMS' desire to ensure that an AO's 
CHOW does not adversely impact its survey and accreditation procedures, 
a change which could impact the health and safety of patients receiving 
services from providers and suppliers.
    Currently, the regulations governing AOs do not include any 
provisions related to the CHOW process, including a process for 
notifying CMS of pending CHOWs for AOs, or other procedures which would 
allow us to review information about the proposed transfer of ownership 
of accreditation program(s). The current regulations also do not 
provide us with the authority to approve or deny the transfer of the 
existing CMS approval for the accreditation program(s) to be 
transferred. Under our current regulations, we are not typically made 
aware of a sale or transfer of an AO until that AO applies for renewal 
of CMS approval of the accreditation program(s) or unless we are 
voluntarily notified of the CHOW by the AO (although we retain the 
right to conduct comparability or validation surveys in accordance with 
Sec.  488.8).
    After review of the existing CMS regulations related to CHOWs, we 
did not believe that we had the explicit

[[Page 25415]]

regulatory authority to prospectively review and approve or deny the 
transfer of the existing Medicare-approval of accreditation programs. 
The purpose of such a review would be to ensure that, after transfer, 
the AO would continue to ensure that the entities it accredits met or 
exceeded CMS requirements.
    On May 2, 2019, we published in the Federal Register a proposed 
rule entitled ``Accrediting Organizations--Changes to Change of 
Ownership'' (84 FR 18748) (2019 proposed rule). In the proposed rule, 
we stated that the current situation, whereby a change in ownership of 
CMS-approved accreditation programs may occur without notice to CMS 
does not provide an opportunity for us to review and approve or deny 
the transfer of the existing CMS-approval of the accreditation programs 
to be transferred. We further stated that this scenario had to be 
addressed so that we could assure Medicare beneficiaries that the 
standards and conditions for surveying facilities would continue to be 
met by the accreditation programs that were transferred to new 
ownership. We also stated that it was possible that the AO, after a 
CHOW transaction, might not be viable or equipped to accredit 
facilities under the transferred CMS-approved accreditation program(s), 
due to the new owner's inability to enforce the health and safety 
requirements of CMS. Without the authority to require AOs to provide us 
with notice when they are contemplating or negotiating a CHOW, and the 
authority to review the ability of the prospective new owner's 
capability to perform the required accreditation tasks after a CHOW, we 
are unable to confirm the ongoing effectiveness of the transferred CMS-
approved accreditation program(s).
    This final rule adds new requirements and a specified process to 
address CHOWs for AOs in regard to the transfer of the existing CMS 
approval for the AO's accreditation programs to the new AO owner. These 
regulations are intended to provide CMS with the ability to receive 
notice when an AO is undergoing or negotiating a CHOW, as well as to 
review the prospective new AO owner's capability to perform its tasks 
after a CHOW has occurred, in order to ensure the ongoing effectiveness 
of the transferred accreditation program(s) and to minimize risk to 
patient safety.
    To date, there have been two (2) AO CHOW requests submitted to CMS. 
One was submitted approximately 20 years ago, and the other was 
submitted on November 19, 2020. While we cannot predict the frequency 
with which AO CHOW transactions will occur in the future, we believe 
that they could occur more frequently than they have in the past.

Requirements for Issuance of Regulations

    Section 902 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) amended section 1871(a) of the Act and 
requires the Secretary, in consultation with the Director of the Office 
of Management and Budget, to establish and publish timelines for the 
publication of Medicare final regulations based on the previous 
publication of a Medicare proposed or interim final regulation. Section 
902 of the MMA also states that the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final regulation except under exceptional 
circumstances.
    This final rule finalizes provisions set forth in the May 2, 2019 
proposed rule. In addition, this final rule has been published within 
the 3-year time limit imposed by section 902 of the MMA. Therefore, 
this final rule is in accordance with the Congress' intent to ensure 
timely publication of final regulations.

II. Provisions of the Proposed Regulations

    In the 2019 proposed rule, we proposed new procedures for the CHOW 
process for accrediting organizations. This proposed procedure would 
enable CMS to determine whether the new AO would be able to meet the 
appropriate Medicare requirements to be eligible for transfer of the 
existing CMS-approval for the accreditation programs to be transferred 
in the CHOW.
    At Sec.  488.5, we proposed to add a new paragraph (f) that would 
set out the requirements and processes for CMS review and approval or 
denial of a transfer of the existing CMS-approval for accreditation 
program(s) in a CHOW event.
    We proposed at Sec.  488.5(f)(1)(i) that any CMS-approved AOs 
negotiating or engaging in a CHOW transaction would have to provide 
notice of this CHOW transaction to CMS. At proposed Sec.  
488.5(f)(1)(ii) and (iii), we would require that this notice be 
provided to CMS in writing no less than 90 days prior to the effective 
date of the transfer of ownership. This notice requirement would allow 
CMS to perform an evaluation of whether the AO, under the new 
ownership, would (1) be viable or equipped to accredit facilities under 
its existing CMS approval; (2) be able to enforce the health and safety 
requirements of CMS for that program; (3) operate effectively; and (4) 
continue to meet or exceed the Medicare standards.
    We would further require the prospective new owner or transferee to 
submit certain information to CMS in support of their request that the 
existing CMS-approval for the accreditation programs to be transferred 
in the CHOW. We proposed at Sec.  488.5(f)(2)(iii) to require the 
prospective new owner or transferee to submit the following 
information: (1) The name and address of the legal entity that would be 
the owner of the new AO after the transfer was completed; (2) the three 
most recent audited financial statements of the organization that 
demonstrate that the organization's staffing, funding, and other 
resources would be adequate to perform the required surveys and related 
activities; (3) a transition plan that would summarize the details of 
how the accreditation functions will be transitioned to the new owner. 
Section 488.5(f)(2)(iii)(C) would require that the prospective new AO's 
transition plan include the following information: (1) Changes to 
management and governance structures including current and proposed 
organizational charts; (2) a list of the CMS-approved accreditation 
programs that will be transferred to the purchaser/buyer/transferee; 
(3) employee changes, if applicable; (4) anticipated timelines for 
action; (5) plans for notification to employees; and (6) any other 
relevant information that CMS finds necessary.
    At Sec.  488.5(f)(3)(i), we proposed to require the purchaser or 
transferee to provide a written acknowledgement, which states that if 
CMS approves the transfer of the existing CMS-approval of the 
accreditation programs that are part of the CHOW transaction, the new 
owner will become managerially, legally, and financially responsible 
for the operations of all CMS-approved accreditation programs being 
transferred. Upon the finalization of the CHOW transaction, the 
purchaser or transferee would be completely responsible for the 
management of the business operations of the AO, including, but not 
limited to the day to day business operations, the survey and 
accreditation processes, the oversight of accredited providers and 
suppliers, the handling of complaints regarding accredited suppliers, 
and compliance with all CMS requirements.
    Furthermore, we proposed at Sec.  488.5(f)(3)(ii), to require the 
purchaser or transferee to provide written acknowledgment stating that 
they agree to operate the transferred CMS-approved accreditation 
program(s)

[[Page 25416]]

under all the terms and conditions found at Sec. Sec.  488.5 through 
488.9.
    We proposed at Sec.  488.5(f)(3)(iii), that the purchaser or 
transferee would be required to provide a written acknowledgement that 
it would not operate the accreditation program(s) it acquired as CMS-
approved accreditation program(s) until it received a notice of 
approval.
    We proposed at Sec.  488.5(f)(4)(i), that the parties to the CHOW 
would be required to notify the providers and suppliers affected by the 
CHOW within 15 calendar days after being notified of CMS's approval or 
disapproval for transfer of the existing CMS-approval for the 
accreditation program(s) to be transferred in the CHOW. Additionally, 
we proposed at Sec.  488.5(f)(4)(ii), that if the AO or accreditation 
program(s) being acquired were under a performance review or under 
probationary status at the time the CHOW notice was submitted, the 
purchaser or transferee would have to acknowledge such status in 
writing. We believe that the purchaser or transferee must understand 
that when the CMS-approved accreditation program(s) are transferred 
under the CHOW, all current terms and conditions, and responsibilities 
are included in the transfer.
    We proposed at Sec.  488.5(f)(5), that we would publish a notice in 
the Federal Register, which would acknowledge the transfer of the CMS-
approved accreditation program(s) through a CHOW event. This notice 
would also state that the purchaser would retain this CMS-approval for 
the transferred accreditation programs under the new ownership. This 
notice would be only intended to inform the public of the ownership 
change; therefore, the notice would not solicit public comments. 
Section 488.5(f)(5) would further provide that we would not publish 
this notice after we have issued approval for the transfer, without 
first receiving written confirmation that the CHOW has taken place.
    We proposed at Sec.  488.5(f)(6), that in the event we did not 
approve the transfer of the existing CMS approval for the accreditation 
programs to be transferred, we would notify all parties to the CHOW 
transaction in writing. The parties to the CHOW would include the 
relevant staff of the transferor and the transferee. Therefore, this 
notice would be sent to the relevant parties at the existing AO and the 
prospective transferee but not to the providers and suppliers 
accredited by the AO.
    We proposed at Sec.  488.5(f)(7)(i), that, in the event we were not 
made aware of a CHOW transaction, or did not approve the transfer of 
the existing CMS approval for the accreditation program(s) that were to 
be transferred, so long as the CHOW transaction was not completed, the 
transferor AO (existing AO) would be able to continue operating their 
accreditation programs under the existing CMS approval for said 
accreditation programs. The exception to this policy would be in the 
event that our review of the pending CHOW transaction revealed 
performance and/or compliance issues with the transferor AO that were 
previously unknown to CMS.
    We also proposed at Sec.  488.5(f)(7)(ii), that CMS would be able 
to withdraw the CMS approval of an AO's accreditation programs in 
accordance with Sec.  488.8(c)(3)(ii) and (iii), if a CHOW transaction 
was completed without notice to CMS and/or without obtaining CMS' 
approval for the transfer the existing CMS approval of the 
accreditation program(s) to the new owner.
    We proposed at Sec.  488.5(f)(8), that in the event parties 
completed the CHOW transaction, and the purchaser or transferee 
attempted to operate the transferred accreditation programs under the 
CMS-approval granted to the previous owner of the accreditation 
program(s), notwithstanding CMS disapproval of the request to transfer, 
CMS would withdraw the approval of the accreditation programs in 
accordance with the procedures set out at Sec.  488.8(c)(3)(ii) and 
(iii).
    We proposed at Sec.  488.5(f)(9), that, in accordance with Sec.  
488.8(g), if CMS withdrew the existing approval of transferred 
accreditation program(s) because a CHOW transaction was completed 
without notice to or the approval of CMS, an affected Medicare-
certified provider's or supplier's deemed status would continue in 
effect for 180 calendar days after the removal of the existing CMS 
accreditation approval, if the provider or supplier took the steps 
stated in Sec.  488.8(g). First, the Medicare-certified provider or 
supplier would be required to submit an application to another CMS-
approved accreditation program within 60 calendar days from the date of 
publication of the removal notice in the Federal Register. Second, the 
Medicare-certified provider or supplier would be required to provide 
written notice to the State Survey Agency (SA) stating that it has 
submitted an application for accreditation under another CMS-approved 
accreditation program within the 60-calendar day timeframe specified in 
Sec.  488.8(g). Failure to comply with the timeframe requirements 
specified in Sec.  488.8(g) would place the affected Medicare-certified 
provider or supplier under the SA's authority for continued 
participation in Medicare and on-going monitoring.
    The provisions of Sec.  488.8(g) would not apply to non-certified 
suppliers, because the statute does not authorize SAs to engage in 
oversight of these supplier types. Therefore, we proposed at Sec.  
488.5(f)(10) that if CMS withdrew the existing approval of transferred 
non-certified accreditation program(s) because a CHOW transaction was 
completed without notice to or the approval of CMS, an affected non-
certified supplier's deemed status would continue in effect for 1 year 
after the removal of the existing CMS accreditation approval if the 
non-certified supplier submitted an application to another CMS-approved 
accreditation program within 60 calendar days from the date of 
publication of the removal notice in the Federal Register and provided 
written notice of such application to the CMS within such timeframe. 
Failure to comply with the timeframe requirements would result in a CMS 
determination that the provider or supplier was no longer accredited.
    For non-certified suppliers such as ADI and DSMT suppliers, CMS-
approved accreditation is required as a condition for receipt of CMS 
reimbursement for the services furnished to Medicare beneficiaries. If 
these suppliers were suddenly left without CMS-approved accreditation 
they would have to seek new accreditation from a CMS-approved AO. We 
estimated that it would take no less than 6 to 9 months for these 
suppliers to complete the reaccreditation process and obtain new CMS-
approved accreditation. We were concerned that during the time that 
these suppliers were undergoing the reaccreditation process, they would 
not be able to receive reimbursement from Medicare for any services 
furnished to Medicare beneficiaries. For many of these suppliers, 
Medicare beneficiaries make up a large portion of their client 
population and provides a large source of revenue for them. Therefore, 
these suppliers would be likely to suffer significant hardship if left 
without CMS-approved accreditation for a 6 to 9 month period. Also, if 
these suppliers were not able to provide services to Medicare 
beneficiaries for an extended period of time, it could create access to 
care issue for Medicare beneficiaries for the services provided by 
these suppliers. For this reason, we proposed accreditation for a 1 
year period after Federal Register notification that CMS's approval of 
the non-certified supplier's

[[Page 25417]]

accreditation organization was being withdrawn. Because we proposed to 
add the same requirements for ADI, HIT, DSMT suppliers, and clinical 
laboratories, we would add cross references to the provisions in Sec.  
488.5(f) for these suppliers so that they would be subject to the same 
proposed requirements for a CHOW. Specifically, for DSMT suppliers at 
Sec.  410.142, we proposed to add a new paragraph (k); for ADI 
suppliers at Sec.  414.68, we proposed to add a new paragraph (j); for 
HIT suppliers at Sec.  488.1030, we proposed to add a new paragraph 
(g); and for laboratories at Sec.  493.553, we proposed to add a new 
paragraph (e).

III. Analysis of and Responses to Public Comments

    We received 8 public comments from an individual, accrediting 
organizations and a hospital association. We have reviewed all of the 
public comments received and considered the concerns raised by all 
stakeholders. As a result, we have made several revisions to the 
proposed regulation at Sec.  488.5(f) in response to public comments. 
Specifically, we have modified Sec. Sec.  488.5(f)(1)(iii) and (iv) and 
Sec.  488.5(f)(2)(iii)(D). See section IV ``Provisions of the Final 
Regulations'' for detail description of these changes. A summary of the 
comments received and our responses to those comments appear in the 
paragraphs below.

A. Notification Requirements

1. Notice to CMS Requirements--Sec.  488.5(f)(1)
    Comment: One commenter expressed support for the 90-day written 
notification of intention to change ownership of an AO. The commenter 
stated that this requirement reflects a reasonable timeframe for the 
organization to notify CMS of whether negotiation or engagement in the 
intent to change ownership is taking place.
    Response: We thank this commenter for their support on the written 
notification requirements.
    Comment: One commenter recommended that CMS require AOs to notify 
CMS of any ownership change within 15 days following the effective date 
of ownership transfer. This commenter stated that, by that point, CMS 
would have the authority to review characteristics of the new business 
entity and make decisions regarding whether the new entity has the 
necessary resources and structure to retain deeming authority.
    Response: We thank this commenter for their comment, however, we 
respectfully disagree with the commenter's position that CMS would not 
have the authority to review characteristics of the new business entity 
and make decisions regarding whether the new entity has the necessary 
resources and structure to retain deeming authority until after the AO 
is sold or transferred to the new owner. We believe that in the case of 
a CHOW for an AO, the new owner might have an expectation that CMS's 
approval of an accreditation program would be a transferable business 
asset or an intrinsic part of the accreditation program that would 
automatically transfer, along with the accreditation programs, to the 
new owner as part of the CHOW process. However, this rule clarifies 
that CMS approval of accreditation programs is not freely transferable, 
without regulatory oversight, qualifications or conditions.
    CMS approval is not a transferrable business asset, but a 
governmental regulatory agency approval. Our approval of an 
accreditation program is granted to the existing owner of the AO based 
on that AOs ongoing circumstances, as described in the AO's initial and 
renewal applications for deeming authority. Before we could agree to 
transfer the existing approval of CMS accreditation program(s) to a new 
AO owner, we would require information which provides us with the 
assurance that the AO, under new ownership, would: (1) Be viable or 
equipped to accredit facilities under its existing CMS approval; (2) be 
able to enforce the health and safety requirements of CMS for that 
program; (3) operate effectively; and (4) continue to meet or exceed 
the Medicare standards. If CMS finds that these conditions are met, 
then we would approve the transfer of the existing CMS approval for the 
accreditation programs to be transferred to the new owner. We believe 
that section 1865(a)(2) of the Act permits us to look at an AO's 
resources and procedures at any time. Consequently, CMS has the 
authority to perform a prospective review of the new owner's ability to 
run the AO prior to the time of sale or transfer. The purpose of this 
review is to ensure that the AO will have financial longevity, will 
provide safe and effective accreditation that meets the CMS 
requirements, and ensure that the providers and suppliers accredited by 
the AO, under new ownership, will continue to provide safe and 
effective healthcare to patients.
    Further, we note that waiting until after the CHOW has occurred to 
perform our review of the new owner's circumstances and qualifications 
will likely be burdensome as well as a disservice to the AO itself. If 
we were to find that an AO under new ownership was not accrediting 
facilities in accordance with the CMS requirements, we will terminate 
our approval for the transferred accreditation programs. Also, we will 
investigate the providers and suppliers that were accredited between 
the time that the new owner took over and the time that the CMS 
approval for the accreditation programs was terminated. We will perform 
this investigation because these providers and suppliers would have 
been accredited under accreditation programs during the time the 
programs were not being properly administered by the AO under the new 
owner. These additional surveys will be burdensome for the providers or 
suppliers being surveyed a second time, as well as for CMS and our 
contractors.
    Comment: One commenter suggested that the rule should require the 
AO to notify CMS when an AO is contemplating undergoing or negotiating 
a CHOW.
    Response: We agree with this commenter. Sections 488.5(f)(1)(ii) 
and 488.5(f)(1)(iii) require that written notice of the CHOW must be 
provided by the AO to CMS no less than 90 days prior to the anticipated 
effective date of the CHOW transaction.
2. Notification Requirements--Sec.  488.5(f)(4)
    Comment: One commenter stated that if CMS approved the transfer of 
ownership of an AO, the required 15 day notice that providers would 
receive would be an inadequate amount of time for hospitals to review 
and enter into new contracts with the new AO owner. This commenter 
requested that CMS provide at least 3 months' notice to hospitals prior 
to the change in ownership going into effect, to allow hospitals time 
to engage with the new owner. This commenter also suggested that CMS 
should consider both print and electronic communications to satisfy 
these efforts (that is, U.S. mail, email, voicemail follow up by AOs).
    Response: We understand this commenter's concern but respectfully 
disagree. The purpose of the notice required by Sec.  488.5(f)(4) is to 
notify the providers and suppliers that have been accredited by that AO 
that CMS has approved the transfer of the existing CMS-approval for the 
accreditation programs to be transferred in the CHOW to the new owner. 
An approved transfer will not terminate any facility's existing 
accreditation, which will expire at the end of the term set by the 
transferor AO.
    We are hopeful that requirements imposed under these proposed new 
regulations will not affect the contracts

[[Page 25418]]

between the providers and suppliers and the AO. We are also hopeful 
that the accredited providers and suppliers will not be required to 
immediately enter into new contracts with the new AO since the new 
owner will assume ownership of the AO subject to the AO's existing 
contractual obligations. However, it will be up to the parties involved 
to examine their own agreements prior to the CHOW. Unless the CHOW 
agreement between the existing AO and transferee AO states otherwise, 
we believe the CHOW will not affect the term of accreditation that was 
granted to the providers and suppliers by the existing AO ownership, 
provided that CMS does not withdraw approval for the accrediting 
programs to be transferred. CMS' approval for the transfer of the 
approval for the accreditation program(s) being transferred in a CHOW 
will be contingent upon the new AO owners agreement to continue the 
periods of accreditation for any providers or suppliers accredited 
under those accreditation programs, prior to the time the CHOW 
transaction took place. In other words, the new AO owner will be 
required to assume ownership of the AO subject to the terms of existing 
accreditations granted by the existing AO.
    The caveat to this rule would be if CMS were to not approve the 
transfer of the approval for the accreditation program to be 
transferred in the CHOW. In such a case, if the CHOW still occurred, 
the new AO would not have approval for the transferred accreditation 
programs and the providers and suppliers accredited by the previous 
owner of the AO would be required to seek accreditation from another 
AO. Also, there is a possibility that a transferor's poor performance 
could trigger withdrawal of the AO's deeming authority in accordance 
with Sec.  488.8(g). In this case, as in all cases of involuntary 
termination of an AO's accreditation program, an affected provider's or 
supplier's deemed status would continue in effect for 180 calendar days 
after the removal of the approval if the provider or supplier submitted 
an application to another CMS--approved accreditation program within 60 
calendar days from the date of publication of the removal notice in the 
Federal Register.
3. Notification to Parties in the Event That CMS Does Not Approve the 
Transfer of the Existing CMS Approval--Sec.  488.5(f)(6)
    Comment: One commenter stated that it was important to include this 
step in the provision; however, they stated that the language of Sec.  
488.5(f)(6) was vague. This commenter suggested that Sec.  488.5(f)(6) 
be revised to include language stating that CMS would notify all 
providers and suppliers to the CHOW transaction in writing. The 
commenter stated that the notice to the providers and suppliers should 
include information about an AO program's current status.
    Response: We appreciate the need for providers and suppliers to 
have transparency about their AO's ownership, but believe that the 
policies in this rule are sufficient to reach that end. Section 
488.5(f)(4) provides that all parties to the CHOW transaction must 
notify the providers and suppliers affected by such change within 15 
calendar days of being notified of CMS's approval to transfer of the 
existing CMS-approval for the accreditation programs to be transferred 
in the CHOW transaction. We believe that this notice to providers and 
suppliers required by Sec.  488.5(f)(4) is adequate because it must be 
provided within 15 days after CMS has approved the transfer of the CMS 
approval for the accreditation programs to be transferred in the CHOW.
    Also, Sec.  488.5(f)(5) requires that, after CMS receives written 
confirmation from the new owner that the CHOW has taken place, CMS 
publishes a notice of approval in the Federal Register of the transfer 
of the existing CMS approval for the accreditation program(s) to a new 
owner. However, the notice required by Sec.  488.5(f)(5) will be 
published only after CMS receives written confirmation from the new 
owner that the CHOW has taken place because providers and suppliers 
should not be notified by CMS of the CHOW until after it is approved by 
CMS. If CMS does not approve the transfer of the CMS approval for the 
accreditation programs or if the parties to the CHOW decide not to 
proceed with the sale or transfer transaction, such premature notice 
could cause providers and suppliers to panic or worry unnecessarily.
    We believe between these two forms of notice, there is no reason 
that the affected providers and suppliers would not be notified of the 
CHOW. In addition AOs contemplating a CHOW may choose to notify 
providers and suppliers at any time on their own.
    We further disagree with this commenter's suggestion that the 
notice required by Sec.  488.5(f)(6) should include information about 
the current status of the AOs' programs. The purpose of this notice is 
to inform the parties to the CHOW that CMS has disapproved the transfer 
of the approval for the accreditation programs to be transferred in the 
CHOW. This is outside the purpose of the notice required by Sec.  
488.5(f)(6). Also, we believe that it would not be CMS's place to 
provide information about the AO's current status to its accredited 
providers and suppliers; CMS generally does not maintain current 
information on accreditation organizations' client lists.

B. Documentation Requirements

    Comment: One commenter stated that a transition plan plays no role 
in the contemplated business negotiation and may not be readily 
available 90 days prior to the effective date of ownership transfer.
    Response: We thank the commenter for their input but respectfully 
disagree. We believe that the new owner should have a transition plan 
fully developed at least 90 days prior to the time that the CHOW takes 
place so that it can be put into place immediately upon the sale or 
transfer of the AO. We believe that it will be shortsighted of the new 
owner to not develop a transition plan well in advance of the 
anticipated effective date of the CHOW. We also believe that it will 
have potentially negative consequences, not only for the AO but for the 
providers and/or suppliers it accredits, for the new owner to wait 
until after the CHOW takes place to develop the transition plan. If 
this were the case, the AO under new ownership would lack organization 
and direction until the transition plan was developed and implemented.
    Comment: One commenter stated that the development of a transition 
plan will engage employees in both the business operations and 
accreditation operations departments within the AO(s).
    Response: We agree with this commenter regarding this aspect of the 
request for approval process and thank them for their comment.

C. Written Acknowledgements

1. Written Acknowledgement From the Purchaser/Buyer/Transferee--Sec.  
488.5(f)(3)(ii)
    Comment: One commenter stated that the requirement of Sec.  
488.5(f)(3)(ii) that requires the purchaser/buyer/transferee to agree 
to operate the transferred CMS approved accreditation program(s) under 
all of the CMS imposed terms and conditions (to include program reviews 
and probationary status terms) is an important step. This commenter 
supports the expectation of the purchaser or transferee to provide full 
disclosure of the understanding of specific conditions related to 
operating a CMS-approved AO.

[[Page 25419]]

    Response: We thank this commenter for their support of the written 
acknowledgement provision.
2. Written Acknowledgement From the Purchaser/Buyer/Transferee--Sec.  
488.5(f)(3)(iii)
    Comment: This commenter stated that the requirement of Sec.  
488.5(f)(3)(iii) that requires the purchaser/buyer/transferee to agree 
not to operate the accreditation program(s) it acquired in the CHOW as 
CMS approved accreditation programs until the effective date set forth 
within the notice of approval from CMS expands on the importance of 
full disclosure. The commenter supported the continued protection of 
the process included in the transfer of ownership of an AO.
    Response: We thank this commenter for their support of the proposed 
written acknowledgement provision.

D. Proposed Regulatory Requirements

1. General Comments About the Proposed Regulatory Requirements
    Comments: Several commenters expressed full support for our 
proposal to establish the regulations at Sec.  488.5(f). One commenter 
stated that being certain a process is in place so that CMS approves 
new ownership of AOs is essential to mitigating risks to patients and 
that proposal will establish even greater accountability for the AO and 
will highlight CMS' role in the oversight of AOs. This commenter 
further stated that our proposals exemplify the ongoing efforts CMS has 
in order to safeguard patients by guaranteeing AOs are upholding the 
standards required to maintain an approved accreditation program.
    One commenter stated CMS should establish a standard process for 
review and approval of a CHOW of an accrediting organization and that 
this rule would provide important clarity for accrediting organizations 
seeking to undergo an ownership change. Another commenter stated that, 
generally, the proposed changes provide for increased oversight and 
strengthen the program without placing extraordinary burden on AOs and 
prospective merger or acquisition partners.
    Response: We thank these commenters for their support of our 
proposals.
    Comment: One commenter did not support our proposal to establish 
regulations related to CHOW of AOs. This commenter stated that the 
proposed notification requirements regarding contemplated ownership 
changes amount to unwarranted regulatory interference.
    Response: We thank the commenter for sharing their concern but 
respectfully disagree that this regulation amounts to unwarranted 
interference. It is important to note that transfer of the CMS approval 
of the accreditation programs held by the original owner of an 
accreditation program is not a right that could automatically accrue to 
the new owner of an AO. It is also not something that could be sold or 
transferred to another owner like a piece of property or business 
asset. Such CMS approval is granted to the original owner of the AO 
accreditation programs based on the circumstances of the AO that exist 
at the time of approval.
    Therefore, transfer of the CMS approval for the accreditation 
programs being transferred in a CHOW must be approved by CMS. In order 
to give this approval, CMS must receive assurance that the AO under the 
new ownership will be financially viable, and have long term stability 
of operations. CMS must also ensure that the accreditation provided by 
the AO, under new ownership, meets the CMS standards to ensure that the 
healthcare providers and suppliers accredited by that AO are providing 
safe and effective healthcare. This means that CMS would need to be 
provided with specific information about the proposed new ownership in 
order to obtain such assurance prior to the CHOW taking place.
    The regulations at Sec.  488.5(f) allow CMS to obtain information 
prior to the CHOW that will allow us to determine whether the AO, under 
the new ownership, will maintain continuity of operations, will be able 
to accredit facilities using the CMS accreditation standards, and 
whether the facilities accredited by the new AO will provide safe and 
effective patient care. CMS is finalizing these regulations in order to 
create fair and transparent standards for the transfer of the CMS 
approval for the accreditation programs to be transferred in a CHOW and 
avoid any potential lapses in deeming authority that may come from a 
post-transfer review. Without this regulatory authority, the new AO 
would not be allowed to operate using the existing CMS approval for the 
accreditation programs that were transferred in the CHOW. The new AO 
owner/transferee will be required to submit an application to CMS 
seeking approval of the transferred accreditation programs. During the 
time frame that the application was pending CMS approval, the new AO 
owner/transferee would not be able to provide accreditation services to 
any providers or suppliers. The requirements of Sec.  488.5(f) will 
enable us to decide whether to approve the transfer of the existing CMS 
approval for the accreditation programs to be transferred, thus 
avoiding a lapse in the CMS approval for these accreditation programs.
    Comment: A commenter stated that CMS is inappropriately inserting 
itself into the AO's financial transactions, which would interfere with 
the AOs' ability to conduct business.
    Response: We thank the commenter for their concern but respectfully 
disagree. The purpose of this regulation is not to approve or deny the 
sale or transfer transaction that takes place. The purpose of these 
regulations is (1) to receive documents from the prospective new owner 
of the AO, prior to the time that the CHOW takes place, in order for 
CMS to determine whether the AO's accreditation programs under new 
ownership would meet or exceed the CMS requirements; (2) to make a 
prospective determination as to whether the AO, under the new 
ownership, can assure us that the providers and suppliers accredited by 
the AO, are providing safe and effective care; and (3) to determine 
whether to transfer the existing CMS approval for an AO's accreditation 
program to the prospective new owner of the AO. We believe these 
functions are integral to CMS' ability to effectively regulate AOs and 
ensure quality in Medicare-certified suppliers and providers. Beyond 
ensuring accreditation program integrity and adherence to CMS' 
requirements under the new ownership, we will have no part in AO 
financial business.
    Comment: One commenter stated that this proposed notification 
process could create unnecessary work for CMS. They explained that not 
all negotiations end in a successful transaction and that in the event 
that a potential ownership change never came to fruition, CMS would 
have spent resources reviewing documentation for a transaction that was 
never finalized.
    Response: We appreciate this commenter's concern on CMS' behalf. We 
are primarily concerned with making sure there are assurances that an 
AO's accreditation programs under new ownership would meet or exceed 
our requirements and determine whether the providers and suppliers 
accredited by that AO provide safe and effective care. If a sale or 
transfer for the AO were to fall through, we expect the existing or 
prospective new owner of the AO to notify CMS as soon as possible. This 
will allow us to cease our review of the documents as early as possible 
and thus limit any unnecessary work.

[[Page 25420]]

2. Deadline Requirement--Sec.  488.5(f)(1)
    Comment: One commenter suggested that CMS specify in the final 
regulation whether the timeframes are measured in business or calendar 
days.
    Response: We agree with this commenter and believe that the 
distinction between calendar and business days has a significant impact 
on the amount of time allowed.
    In reviewing Sec.  488.5(f)(1)(iii) in the 2019 proposed rule, we 
noted that only the 90 day deadline was listed but did not specify 
whether this deadline was for calendar or business days. However, the 
remainder of the deadlines contained in Sec.  488.5(f) did specify 
whether these deadline are for calendar or business days. Therefore, we 
have revised the requirement at Sec.  488.5(f)(1)(iii) by adding 
``calendar days'' to the 90 day deadline.
    Comment: One commenter pointed out that the proposed regulations do 
not include a timeline related to the CMS review and approval or denial 
of the proposed transfer. This commenter requested that CMS amend the 
proposal to add that CMS will notify the parties of approval or denial 
no more than 30 days after receipt of a complete application for 
approval of transfer of the existing Medicare approval.
    This commenter stated that a timeline should be in place because, 
should the AO contemplate a CHOW arrangement, there would be 
implications on planning, forecasting, and budgeting. The AO would face 
significant costs throughout the duration of transition planning 
including ongoing accounting, public relations, legal, and other 
professional fees. In addition, in a CHOW, an AO may have other 
operational issues to consider, including staffing requirements and 
support before and after the ownership change.
    Response: We agree with this commenter that having a deadline for 
CMS' review of their request for approval of the CHOW would be helpful 
for the planning, forecasting, and budgeting process related to a CHOW 
and also for transitioning the AO to the new ownership. Therefore we 
have added a provision at Sec.  488.5(f)(1)(iv) which requires that CMS 
will complete their review of the AO's request for approval for the 
transfer of the existing CMS approval for the accreditation programs to 
be transferred in the CHOW within 90 days from receipt of said request.
3. Federal Register Notice Requirement--Sec.  488.5(f)(5)
    We received no comments in regards to this section of the proposed 
regulation, and are therefore adopting it without change.
4. Withdrawal of CMS Approval Due to Failure To Notify CMS of Intent To 
Transfer Accreditation Programs--Sec.  488.5(f)(7).
    Comment: One commenter stated that the provisions of Sec.  
488.5(f)(7) serve an important role. This commenter further expressed 
their support for the provision at Sec.  488.5(f)(7)(i) regarding CMS' 
authority to withdraw approval if further review of the pending 
transaction reveals issues with performance and/or compliance. This 
commenter stated that if an AO does not notify CMS of the CHOW, but has 
started the process, the AO may continue to operate under their current 
approval but that this violation should prompt a CMS review of their 
current approval status.
    Response: We thank this commenter for their support regarding the 
requirements in Sec.  488.5(f)(7). We further note that there are 
several types of reviews that CMS can use when an AO attempts to or 
does complete a CHOW without notice to and approval from CMS.
    First, proposed Sec.  488.5(f)(7)(i) will allow CMS to perform a 
review of a pending CHOW transaction of which CMS has not been made 
aware. As in the case of other CHOW reviews, per Sec.  488.5(f)(7)(ii), 
if our review revealed issues with the AO that were previously unknown 
to CMS, CMS would take action accordingly.
    Second, proposed Sec.  488.5(f)(8) provides that in the event that 
the parties complete the CHOW, notwithstanding CMS disapproval, and the 
purchaser/buyer/transferee attempts to operate the transferred 
accreditation program(s) under the CMS-approval granted to the previous 
owner, CMS will withdraw the existing approval of the transferred 
accreditation program(s) in accordance with the procedures set out at 
Sec.  488.8(c)(3)(ii) and (iii). Existing Sec.  488.8(c) provides the 
standards for CMS-approved accreditation program review, including the 
timeline for the AO's probationary period and withdrawal of CMS 
approval at Sec.  488.8(c)(3)(ii) and (iii).
    Therefore, in addition to the ability to cite the AO's failure to 
meet Medicare's conditions and requirements under Sec.  488.5(f)(7)(i), 
CMS can also initiate a program review under proposed Sec.  
488.5(f)(8). We do not believe that any additional review processes are 
necessary.
5. Withdrawal of CMS Approval for Accreditation Programs Which Are 
Transferred Notwithstanding CMS' Disapproval of the Transfer--Sec.  
488.5(f)(8)
    Comment: One commenter supported the provision for the withdrawal 
of CMS' approval for the accreditation program if the transfer is 
disapproved, as proposed at Sec.  488.5(f)(8).
    Response: We thank this commenter for their support of the proposed 
withdrawal provision.
    Comment: One commenter suggested that the notice of withdrawal of 
an AO's Medicare approval should be provided directly to affected 
providers by CMS and the AO. This commenter stated that this would make 
this notice process consistent with the notice requirement when a CHOW 
is approved.
    Response: We understand this commenter's concern. We would like to 
point out that if CMS does not approve a CHOW, we will not withdraw or 
terminate an AO's Medicare participation, but instead will withdraw the 
CMS approval for that AO's accreditation programs to be transferred in 
the CHOW. If the transferee were to proceed with the CHOW, the AO, 
under new ownership, will be permitted to file a new application 
seeking CMS approval for these accreditation programs.
    We do not believe that it is necessary to modify the regulations at 
Sec.  488.5(f) to require CMS to provide notice of the disapproval of 
the CHOW directly to the affected providers and suppliers for several 
reasons. First, if the transferee elected not to proceed with the CHOW, 
then the CMS approval would remain unchanged as per Sec.  
488.5(f)(7)(i) Second, there are other AO oversight regulations which 
require that such notice be given to providers and suppliers when CMS 
withdraws approval for an AO's accreditation program. Existing Sec.  
488.8(g)(1) provides that we will publish a notice in the Federal 
Register if we were to withdraw the CMS approval of an AO. Also, 
existing Sec.  488.8(e) provides that an AO whose CMS approval has been 
withdrawn must notify, in writing, each of its accredited providers or 
suppliers of the withdrawal and the implications for the providers' or 
suppliers' deemed status no later than 30 calendar days after the 
notice is published in the Federal Register. We believe that the notice 
provided pursuant to Sec. Sec.  488.8(e)(1) and 488.8(g) are adequate 
to ensure providers and suppliers receive timely notification of the 
withdrawal of an AO's CMS approval.

[[Page 25421]]

We are therefore finalizing Sec.  488.5(f)(8) without change.
6. Requirements for Continuation of a Deemed Status Accreditation of 
Medicare-Certified Providers and Suppliers After CMS Withdraws the 
Existing Approval of the Transferred Accreditation Program(s)--Sec.  
488.5(f)(9)
    Comment: One commenter stated that if CMS proceeds in codifying 
this process, it should extend the proposed timeframes for providers, 
to allow sufficient time for providers to negotiate new contracts and 
have orderly transitions from one AO to another AO, or to a SA.
    Response: We appreciate this commenter's concern. The timeframes 
set forth in Sec.  488.5(f)(9) are the same as those that are set forth 
in Sec.  488.8(g) entitled ``Continuation of deemed status'' which 
provides that ``[a]fter CMS removes approval of an accrediting 
organization's accreditation program, an affected provider's or 
supplier's deemed status continues in effect for 180 calendar days 
after the removal of the approval if the provider or supplier submits 
an application to another CMS-approved accreditation program within 60 
calendar days from the date of publication of the removal notice in the 
Federal Register.'' We believe that having different timeframes in 
Sec.  488.5(f)(9) for the same activities that are set forth in Sec.  
488.8(g) for Medicare-certified providers and suppliers would be 
inconsistent and confusing to providers and suppliers.
    Comment: One commenter noted that the proposed rule provided that 
if an AO did not appropriately seek approval from CMS prior to a change 
in ownership, providers accredited by the now-former AO would only have 
180 days of deemed status remaining. As an example, a hospital may have 
only recently gone through their AO's survey process and could have 
just recently been reaccredited for 3 years. Through no fault of their 
own, they would have only 6 months prior to their loss of Medicare 
certification status. By contrast, the proposed rule would provide 1 
year of accreditation status to non-certified suppliers. This commenter 
recommended that CMS grant Medicare-certified providers and suppliers 
at least the same amount of time as non-certified suppliers (that is, 1 
year) and allow for an extension process if additional time is needed. 
This commenter further stated that the Ligature Risk Extension Request 
process in CMS' draft guidance, DRAFT-QSO-19-12-Hospitals--
Clarification of Ligature Risk Interpretive Guidelines, released April 
19, 2019, may provide a helpful model for seeking an extension.
    Response: We appreciate this commenter's concern. The timeframe set 
forth in Sec.  488.5(f)(9) for Medicare-certified providers and 
suppliers are the same as those that are set forth in Sec.  488.8(g) 
titled ``Continuation of deemed status.'' In fact, Sec.  488.8(g) are 
referenced in Sec.  488.5(f)(9)(iii). As noted previously, we believe 
using different timeframes would be inconsistent and confusing.
    We proposed at Sec.  488.5(f)(10) that if CMS withdrew AO approval 
of transferred non-certified accreditation program(s) because a CHOW 
was completed without notice to CMS or receipt of CMS approval, an 
affected non-certified supplier's deemed status would continue in 
effect for 1 year after the removal of the existing CMS accreditation 
approval if the non-certified supplier submitted an application to 
another CMS approved accreditation program within 60 calendar days from 
the date of publication of the removal notice in the Federal Register 
and provided written notice of such application to the CMS within such 
timeframe. Failure to comply with the timeframe requirements would 
result in a CMS determination that the supplier was no longer 
accredited.
    We proposed a 1 year period of time for the continuation of 
accreditation for non-certified suppliers for several reasons. First, 
the provisions of Sec.  488.8(g) do not apply to non-certified 
suppliers. Second, in our view, giving non-certified suppliers 
additional time compared to Medicare-certified provider and suppliers 
(1 year as opposed to 180 days of continued accreditation status, 
respectively), is appropriate due to the different circumstances of 
Medicare and Medicare certified providers and suppliers as compared to 
those of the non-certified suppliers. More specifically, non-certified 
suppliers are not subject to inspection by the SA, because there is no 
legal authority for the SA to do so. Therefore, they are not able to 
use the SA for approval to participate in Medicare in the event that 
they cannot obtain accreditation from an AO. We believe it is necessary 
to grant the non-certified suppliers a longer period of extended 
accreditation in which to achieve reaccreditation from another AO, 
since they do not have the safety net of being certified by the state.
    For non-certified suppliers such as ADI, DSMT, and HIT suppliers, 
the accreditation process typically takes longer because it's usually 
performed by a ``desk audit'' process. With a desk audit, the non-
certified supplier would be given a period of time in which to collect 
and submit the information required for the desk audit. For example, 
ADI suppliers must submit images for specific ADI procedures. They must 
either gather images from procedures that have already been performed 
or perform new procedures to obtain these images.
    After the ADI supplier has obtained all of the images required for 
accreditation, they would submit their accreditation package to the AO. 
We estimate that the ADI AO's review the ADI supplier's accreditation 
package takes up to one to several weeks, depending on the AO's 
workload. Whereas, for Medicare-certified providers and suppliers, 
accreditation is based on an on-site survey, which can be scheduled and 
performed within a short period of time. Therefore, the accreditation 
can be completed more quickly.
    In addition, accreditation is a condition for receipt of Medicare 
payment for non-certified suppliers, while this is not the case for 
Medicare certified providers and suppliers. If their Medicare 
accreditation lapses, the non-certified suppliers would no longer be 
eligible to receive payment for services furnished to Medicare 
beneficiaries. This could lead to financial hardship for these non-
certified suppliers that could cause them to refuse to serve Medicare 
beneficiaries or cause them to go out of business. Both of these 
scenarios would result in an access to care issues for Medicare 
beneficiaries. For these reasons, we believe it is important that we 
allow the non-certified suppliers a longer period of time in order to 
obtain re-accreditation from another AO.
    Comment: One commenter suggested that both the 60-day timeframe to 
submit an application to a new AO and the 120-day timeframe to be 
surveyed be extended. Another commenter expressed the belief that an 
affected provider's or supplier's deemed status should continue for 
longer than 180 days to allow sufficient time for them to make 
decisions, establish budgets, prepare for and address findings on the 
path to an accreditation determination by a new AO.
    Response: This commenter seems to suggests that Sec. Sec.  
488.5(f)(9) and 488.8(g) provide for 2 separate and distinct periods of 
time or deadlines, consisting of an initial 60 day period in which the 
provider or supplier must submit their application to another AO and 
second and subsequent 120 day period in which the provider or supplier 
must be surveyed.

[[Page 25422]]

    We note that providers and suppliers actually have 180, rather than 
120, days in which to receive accreditation. Section 488.5(f)(9) 
provides that ``an affected Medicare-certified provider or supplier's 
deemed status will continue in effect for 180 calendar days if the 
Medicare-Certified provider or supplier takes the following steps set 
forth is Sec.  488.8(g).'' Those steps include the provider or supplier 
is required to file an application with another AO and provide notice 
to the SA of the filing of this application within 60 days of the date 
of receipt of notice of the withdrawal of the AOs CMS approval. This 
deadline does not separate the 180 day period of continued 
accreditation into two separate and distinct periods. Rather, 
healthcare provider or supplier can file their application with another 
AO as soon possible after being notified of withdrawal of their AO's 
CMS approval. Conceivably, this application could be filed the day 
after the provider or supplier received such notification. We believe 
that if a provider or supplier has filed an AO application in the past, 
they should be familiar with the information and documentation required 
and therefore, should not wait until near the 60 day deadline to notify 
the SA of the filing of their application with another AO.
    We further believe that the 180-day timeframe is an adequate amount 
of time for a Medicare-certified provider or supplier to obtain 
reaccreditation from a new AO. In fact, the timeframes in Sec.  
488.8(g) are referenced in Sec.  488.5(f)(9)(iii).

E. Change of Ownership of AOs

    Comment: One commenter suggested that, CMS should also require 
written disclosure of any potential or actual conflicts of interests 
related to the new owner, as part of the documentation required to 
request approval of a transfer to a new owner. This commenter expressed 
the opinion that requiring this information would do the following: (1) 
Give CMS the authority to review conflicts and, if necessary, require 
corrective action as a condition of approval; (2) be an opportunity to 
consider conflicts based on paid consultative services (the subject of 
the Request for Information published in December 20, 2018, 
``Accrediting Organizations Conflict of Interest and Consulting 
Services'', CMS-3367-NC (83 FR 65331)); and (3) help CMS ensure that 
the primary focus of accreditation by the new owner is to recognize 
quality and that accreditation decisions will continue to be made in an 
objective manner independent of the new owner's other financial or 
programmatic interests.
    Response: We agree with this commenter. Therefore, we have added a 
requirement at Sec.  488.5(f)(2)(iii)(D) that requires the prospective 
new owner of the AO to provide policies and procedures to avoid 
conflicts of interest, including the appearance of conflicts of 
interest, involving individuals who conduct surveys or participate in 
accreditation decisions, as required by Sec.  488.5(f)(10) with the 
information to be submitted with the AO's request for approval.
    Comment: Several commenters expressed concern regarding the 
confidentiality of proprietary merger/acquisition information and the 
open-ended review timeline. Other commenters expressed concerned that 
the proposed regulation did not include provisions protecting against 
disclosure of sensitive information related to the potential CHOW.
    Another commenter explained that parties to a merger or acquisition 
have significant interest in maintaining the confidentiality of related 
deliberations because uncontrolled disclosure could cause significant 
harm to the interests of the parties involved and other stakeholders, 
including CMS. This commenter expressed concern that if the CHOW 
information is disclosed prematurely, it could create concern amongst 
customers, potentially impacting the transaction, and creating 
operational issues for both the accreditation organization and CMS who 
may not yet be ready to field customer inquiries about the pending 
change.
    Another commenter expressed concern that the proposed rule contains 
no explicit guarantee of the confidentiality of proprietary information 
and intellectual property shared with CMS. This commenter stated that 
as part of the valuation process in any ownership change, AOs will 
share proprietary information and intellectual property that must 
remain protected. Another commenter recommended that CMS consider 
confidentiality concerns of the involved parties in any rulemaking that 
requires advance notice to CMS. Several other commenters requested that 
CMS modify the proposal with consideration for these concerns.
    Response: We understand the concern expressed by these commenters. 
We will make every effort to keep the information submitted by the 
buyer/transferee in support of their request for transfer of the 
existing CMS approval for the accreditation programs strictly 
confidential. There is a possibility that CMS could receive a Freedom 
of Information Act (FOIA) request for this information, however the 
FOIA contains several statutory exemptions that allow agencies to 
withhold records in responding to a FOIA request. Exemption 4 protects 
``trade secrets and commercial or financial information'' that is 
``privileged or confidential.'' See 5 U.S.C. 552(b)(4). CMS will 
withhold or release information in accordance with applicable federal 
law and its regulations at 45 CFR subpart D.
    Comment: One commenter stated that CMS should consider ``change of 
control'' principles in addition to ``CHOW'' as part of the proposed 
rule.
    Response: We thank the commenter for their input. We note that the 
term ``change of control'' could refer to a change in the day-to-day AO 
management activities, or a change to the managing control of the AO. 
This term could also refer to a change in the ownership or partnership 
interests in the AO. A change of management or managing control could 
involve a change in the day-to day management staff, board of director 
members or managing partners of the AO. A change in the ownership 
interest in the AO could involve a change in the number of persons who 
own an interest in the AO and/or a change in their percentage of 
ownership of interest in the AO. A change in a partnership interest in 
an AO could involve the addition of or removal of partners or a change 
in the percentage of their partnership interest.
    We do not believe that change of control should be included in the 
regulations at Sec.  488.5(f) because, if a change of control issue 
were to occur, we would not expect the daily operations of the AO to 
change. We say this because, an AO undergoes a change of control they 
are required to notify CMS of this change. Also if, as a result of the 
change of control, the AO were to decide to make changes to its 
accreditation standards and/or survey processes, the AO will be 
required to submit these revised accreditation standards and/or survey 
processes to CMS for a comparability review and CMS approval pursuant 
to Sec.  488.8((b)(2). In addition, the AO will be required by Sec.  
488.5(a)(19) to provide, with their initial or renewal application, a 
statement that, in response to a written notice from CMS to the 
organization of a change in the applicable conditions or requirements 
or in the survey process, the organization will provide CMS with 
proposed corresponding changes in the organization's requirements for 
its CMS approved accreditation program to ensure continued 
comparability with the CMS conditions or requirements or

[[Page 25423]]

survey process. These proposed changes must be submitted within 30 days 
after CMS's written notice and the AO may not implement them without 
CMS approval. We believe that these requirements will be sufficient to 
provide notice to CMS of any changes, in the event that an AO undergoes 
a change of control.
    Comment: One commenter suggested that the regulation should set out 
the criteria CMS uses to assess an AO's ability to perform its tasks 
after a CHOW has occurred.
    Response: We appreciate this commenter's concern but respectfully 
disagree. The regulation at Sec.  488.5(f)(2) states the specific 
information the AO must submit to CMS for review. As we have noted 
throughout this preamble, we review transaction information in order to 
assess the new AO's financial resources and its ability to perform its 
tasks after a CHOW has occurred, in order to insure the ongoing 
effectiveness of the approved accreditation program(s) and to minimize 
risks to patient safety. We believe that stating the information and 
documents that will be reviewed and the purpose for this review 
provides the AOs with enough information about CMS' intent for the 
review and approval or disapproval of the transfer of the existing CMS-
approval for the accreditation programs to be transferred in the CHOW. 
The review of the application to be submitted by the prospective new 
owner of the AO is similar to the requirements at Sec.  488.5 in which 
we request information to be submitted with an AO's initial or renewal 
application for CMS approval of the AOs accreditation programs. We do 
not state specific review criteria to be used for this application 
review.

IV. Provisions of the Final Regulations

    In this final rule, we are adopting the provisions in the May 2, 
2019 proposed rule, with the following changes:
    <bullet> Revised Sec.  488.5(f)(1)(iii) to specify that the 90 day 
deadline refers to calendar days.
    <bullet> Revised Sec.  488.5(f)(1)(iv) to specify that we will 
complete our review of the AO's request for approval for the transfer 
of the existing approval for the accreditation programs to be 
transferred CHOW within 90 days from receipt of the request.
    <bullet> Revised Sec.  488.5(f)(2)(iii)(D) to require that the 
prospective new owner of an AO provide us with policies and procedures 
to avoid conflicts of interest, including the appearance of conflicts 
of interest, involving individuals who conduct surveys or participate 
in accreditation decisions, as required by Sec.  488.5(f)(10).

V. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 30-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval. In 
order to fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act 
of 1995 requires that we solicit comment on the following issues:
    <bullet> The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
    <bullet> The accuracy of our estimate of the information collection 
burden.
    <bullet> The quality, utility, and clarity of the information to be 
collected.
    <bullet> Recommendations to minimize the information collection 
burden on the affected public, including the use of automated 
collection techniques.
    We solicited public comment on each of the section 3506(c)(2)(A)-
required issues for the following information collection requirements 
(ICRs).

A. Wage Data

    In the 2019 proposed rule, to derive average costs, we used data 
from the U.S. Bureau of Labor Statistics' (BLS) May 2020 ``National 
Occupational Employment and Wage Estimates'' for all salary estimates 
(http://www.bls.gov/oes/current/oes_nat.htm). In this final rule we 
have updated the wage information to reflect the most current wage 
information from the BLS for the May 2020 ``National Occupational 
Employment and Wage Estimates'' (https://www.bls.gov/oes/current/oes_nat.htm).
    In this regard, the following table presents the updated mean 
hourly wage, the employer's benefits and other indirect costs 
(calculated at 100 percent of salary), and the adjusted hourly wage.
---------------------------------------------------------------------------

    \1\ https://www.bls.gov/oes/current/oes291141.htm.
    \2\ https://www.bls.gov/oes/current/oes119111.htm.
    \3\ https://www.bls.gov/oes/current/oes132011.htm.

                           Table--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                                    Hourly wage
                                                                                                   adjusted for
                      BLS occupation title                          Occupation      Mean hourly     benefits &
                                                                       code            wage       other indirect
                                                                                                       costs
----------------------------------------------------------------------------------------------------------------
Registered Nurse \1\............................................         29-1141          $38.47          $76.94
Medical or Health Services Manager \2\..........................         11-9111           57.12          114.24
Accountant or Auditor \3\.......................................         13-2011           39.26           78.52
----------------------------------------------------------------------------------------------------------------

    As indicated, we are adjusting our employee hourly wage estimates 
by a factor of 100 percent. This is necessarily a rough adjustment, 
both because the employer's benefits and other indirect costs vary 
significantly from employer to employer, and because methods of 
estimating these costs vary widely from study to study. Nonetheless, 
there is no practical alternative and we believe that doubling the 
hourly wage to estimate total cost is a reasonably accurate estimation 
method.

B. Documentation Requirements

    At Sec.  488.5(f)(1), we require that the AO that is the subject of 
the transaction provide notice to CMS that it intends to request 
approval for a CHOW. This initial notice will be minimal, such as a 
coversheet, email, or any type of formal notice and will be included in 
the additional documentation requirements of Sec.  488.5(f)(2).
    At Sec.  488.5(f)(2)(i) and (ii), we specify that the prospective 
purchaser or transferee provide three most recent audited financial 
statements of the organization that demonstrate that the organization's 
staffing, funding, and other resources are adequate to perform the 
required surveys and related activities. Additionally, we require the 
name and address of the legal entity that would be the owner of the new 
AO. We believe that this information is

[[Page 25424]]

documentation that will be easily accessible and require minimal time 
to gather and submit. Therefore, we have considered that the cost 
burden for the AO to submit the financial statements and other 
information deemed necessary by CMS will be approximately $76.94. We 
believe it is likely that the AOs use a registered nurse (RN) to gather 
information and we estimate the time to gather the financial statements 
will not exceed 1 hour. The AO will incur a cost burden in the amount 
of $76.94 for the preparation of the response to CMS (1 hour x $76.94).
    At Sec.  488.5(f)(2)(iii), we require the prospective purchaser or 
transferee to submit a transition plan that summarizes the details of 
how the accreditation functions will be transitioned to the new owner. 
While most existing AOs engaged in business transactions such as a CHOW 
would have already developed a transition plan as proposed under 
section II of the 2019 proposed rule, this process will be more time 
consuming. The development of a transition plan will take approximately 
45 hours of time to gather, obtain, or prepare all documentation for 
submission. We estimate that the AO will have a total of three staff 
work on transition plan. One of these staff persons will likely be 
clinicians such as a RN. We further believe that the other will be in a 
management position and serve in a management position. We believe that 
this person's position will be equivalent to the U.S. Bureau of Labor 
Statistics job category of Medical and Health Services Manager. We 
believe that the other staff person working on this task will be 
accountant or auditor.
    We estimate that the RN, medical or health services manager, and 
accountant or auditor would each spend 45 hours performing this task. 
We estimate that the total time burden for this task will be 135 hours.
    We further estimate that the cost burden for the work performed by 
the RN will be $3,462.30 (45 hours x $76.94). We believe that the cost 
burden for the work performed by the Medical and Health Services 
Manager will be $5,140.80 (45 hours x $114.24 per hour). Also, we 
estimate that the cost burden for the work performed by the auditor or 
account will be $3,533.40 (45 hours x $78.52 per hour).
    Finally, we estimate that the total cost burden for this task will 
be $12,136.50 ($3,462.30 + $5,140.80 + $3,533.40).
    Section 488.5(f)(2)(iii)(C)(6) requires the prospective new owner 
of the AO to submit any other relevant information that CMS finds 
necessary. This task would involve the following: (1) Review of CMS' 
request for information regarding the CHOW; (2) collecting and 
preparing this information for sending to CMS; and (3) sending the 
requested information to CMS. In the 2019 proposed rule we had estimate 
the time burden for this task to be 1 hour. However, in response to a 
public comment received. We are increasing the time burden for this 
task to 3 hours.
    We believe that this task will be performed be a clinician such as 
RN, as is generally the case in AO applications seeking deeming 
authority. We estimate that the total cost burden incurred by the AO 
for this task will be $230.82 (3 hours x $76.94).

C. Written Acknowledgements

    At Sec.  488.5(f)(3), we specify that the purchasing AO to provide 
several written acknowledgements. At Sec.  488.5(f)(3)(i), we require 
the purchaser or transferee to provide written acknowledgement that it 
understands the financial and legal responsibilities involved with the 
CHOW process. We believe this written acknowledgement will be developed 
by a health services manager, as they currently serve in roles for 
submission of general accrediting approvals. We believe this will not 
take more than 1 hour to prepare the required written notice.
    We estimate that the total cost burden associated with this task 
will be $114.24. ($114.24 x 1 hour).
    At Sec.  488.5(f)(3)(ii), we require the purchasing AO to provide 
written acknowledgement that it agrees to operate the new AO as defined 
by CMS' standards under Sec. Sec.  488.5 and 488.9, as well as include 
acknowledgements on any program reviews or probationary terms. This 
will be a minimal cost burden as we are not defining a specific format 
for the written acknowledgement. We believe that it will take no more 
than 1 hour to prepare this written notice. We believe that this task 
will be performed by a medical or health services manager. We estimate 
that the cost burden associated with this task will be $114.24 (1 hour 
x $114.24).
    At Sec.  488.5(f)(3)(iii), we require the purchasing AO to provide 
written acknowledgement that would not operate the accreditation 
program until it received a notice of approval of the transfer of the 
CMS approved accreditation program from CMS. Given this requirement is 
minimal and the purchasing AO is already required to include a written 
acknowledgment as outlined at proposed Sec.  488.5(f)(3)(ii), it is 
likely that this written notice will include both acknowledgements; 
therefore, we will include this in the hour of burden and cost 
described under Sec.  488.5(f)(3)(ii).
    At Sec.  488.5(f)(5), we require the purchasing AO to provide 
documentation within 15 days after the sale confirming the CHOW. We 
believe that it is a standard business practice that the sale or 
transfer of a business and its assets be confirmed with some type of 
documentation such as a bill of sale, deed, or financial documents. 
Therefore, we believe that the burden to the AO for providing the 
required proof of the sale of transfer of the AO will be minimal. This 
will require the AO to provide CMS with a copy of already existing 
sales documentation. Also, because the existing owner of the AO and 
prospective new owner will be in the process of negotiating the sale or 
transfer of the AO, we believe that the AO will have this information 
readily available and easily accessible.
    We estimate that it will require 30 minutes for the staff of the 
new AO to provide a copy of the existing sales documentation to CMS via 
an electronic method such as email. We believe that this task will be 
performed by a medical or health services manager. We estimate that the 
total cost burden for this requirement will be $57.12 (0.5 hour x 
$114.24).
    We want to emphasize that these anticipated costs and burdens are 
only subject to those AOs seeking a CHOW. To date, there has been one 
CHOW request of an AO submitted approximately 20 years and another 
submitted in November 2020. While we cannot predict the frequency with 
which AO CHOW transactions will occur in the future, we believe that 
they should occur more frequently than they have in the past.
    The requirements and burden will be submitted to OMB under (OMB 
control number 0938-New).

D. Description of Time and Cost Burdens

[[Page 25425]]



----------------------------------------------------------------------------------------------------------------
                                                     Number of
                                     Time per        potential    Triennial hour
      Description of burden          response       respondents     burden per       Cost per     Triennial cost
                                      (hours)       per every 3      response        response         burden
                                                       years          (hours)
----------------------------------------------------------------------------------------------------------------
Burden Associated with proposed                0               1               0              $0              $0
 Sec.   488.5(f)(1) \4\ (See
 footnote 4 below)..............
Burden Associated with proposed              135               1             135       12,136.50       12,136.50
 Sec.   488.5(f)(2)(iii)........
Burden Associated with proposed                3               1               3          230.82          230.82
 Sec.   488.5(f)(2)(iii)(C)(6)..
Burden Associated with proposed                1               1               1          114.24          114.24
 Sec.   488.5(f)(3)(i)..........
Burden Associated with proposed                1               1               1          114.24          114.24
 Sec.   488.5(f)(3)(ii) &
 488.5(f)(3)(iii)...............
Burden Associated with proposed              0.5               1             0.5           57.12           57.12
 Sec.   488.5(f)(5).............
                                 -------------------------------------------------------------------------------
    Total.......................           140.5               1           140.5       12,652.92       12,652.92
----------------------------------------------------------------------------------------------------------------

E. Response to Public Comments

    We received the following public comments in response to the burden 
estimates:
---------------------------------------------------------------------------

    \4\ The time and cost burden related to Sec.  488.4(f)(1) are 
minimal have been combined with the time and cost burden for Sec.  
488.5(f)(2) because the notification required by Sec.  488.5(f)(1) 
would be submitted together with the documentation required by Sec.  
488.5(f)(2).
---------------------------------------------------------------------------

    Comment: One commenter stated that the development of a transition 
plan will engage employees in both the business operations and 
accreditation operations departments within the AO(s). This commenter 
suggested that the estimated time and cost burden of $8,014 to allow 
for the work performed by business operations.
    Response: We agree with this commenter that there could be a 
business person such as an accountant or auditor involved in the 
preparation of the transition plan. Therefore, we have revised the 
burden estimate for this task to include a time burden of 45 hours for 
an additional person who would be an accountant or auditor. This change 
increased the hourly burden estimate for the preparation of the 
transition plan from 90 to 135 hours.
    Comment: One commenter suggested that the estimated time burden of 
1 hour for a development of a response to a CMS request for additional 
information be increased to 8 hours. The commenter stated that while 
one individual will prepare the response, it will require multiple 
layers of internal review, approval, and communication as well as 
delivery to CMS.
    Response: We appreciate this commenter's input. We agree that there 
will be layers of administrative review for any documentation 
requirements. However, we do not believe that this administrative 
review should be included in the burden estimate, because this is a 
task that is performed in the normal course of business and therefore 
will not be considered burden. Given the unpredictable nature of the 
``CMS request for additional information'' we believe that the current 
burden estimate of 1 hour to perform this task is too low.
    If the AO provides all of the information required by Sec.  
488.5(f)(2)(iii), CMS would need to request little, if any, additional 
information. However, if the AO fails to provide some of the 
information required by Sec.  488.5(f)(2)(iii), we believe that the 
time spent by the AO to provide this information in response to a 
request from CMS for additional information will still be covered under 
our initial burden estimate for Sec.  488.5(f)(2)(iii). Therefore, we 
do not agree with this commenter that the time required for the 
prospective owner to submit ``additional documentation'' should be 
increased to 8 hours. This request for additional information and/or 
documentation would occur only after CMS has received and reviewed the 
required documentation from the prospective new owner and found that 
there was missing or incomplete information or that we needed 
additional clarifying information.
    We have increased the estimated time burden for this task to 3 
hours. However, we note that this requirement would not be a regularly 
occurring burden under these regulations but would only be required 
when and if CMS needs additional information from the AO.
    Comment: One commenter stated that the hours assigned for the 
preparation of the CHOW application was estimated to be two staff (one 
RN and one health services manager) for 2 hours each for a total of 4 
hours. This commenter suggested that the amount of staff working in 
this task should be increased to three (two RNs and one health services 
manager), and the time spent on this task should be increased to 8 
hours per each person for each a total of 24 hours.
    Response: We thank the commenter for their concern. However, we did 
not provide a specific burden estimate for the task of preparing an 
application which will be performed by two RNs for a period of 2 hours 
each. We did provide specific time and cost burden estimates for the 
gathering and submission of required documentation set forth in Sec.  
488.5(f)(1) and Sec.  488.5(f)(2)(iii). We have revised this burden 
estimate in response to public comments received. We believe that this 
burden estimates, as revised, provide an accurate estimate of the 
burden related to the requirements of Sec.  488.5(f)(2).

VI. Regulatory Impact Statement

A. Overall Impact

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the 
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), 
Executive Order 13132 on Federalism (August 4, 1999), and the 
Congressional Review Act (5 U.S.C. 804(2)).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
Regulatory Impact Analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year). 
This rule does not reach the economic threshold and thus is not 
considered a major rule.

[[Page 25426]]

B. Burden for Change of Ownership Among Accrediting Organizations

    The AOs which seek to sell or transfer or purchase another AO and 
undergo a CHOW will incur time and cost burdens associated with the 
preparation of the information they submit to CMS to request approval 
of their new accreditation program under the CHOW. This includes the 
preparation, gathering or obtaining of all the documentation required 
at Sec.  488.5(f).
    While we recognize that most existing AOs are familiar and have 
majority of the documentation CMS is requesting at Sec.  488.5(f), we 
believe that due to the need for the selling or transferring and 
purchasing AOs to submit documentation for both entities, that this 
will take approximately 2 hours of time to gather, obtain or prepare 
all documentation required by Sec.  488.5(f). We believe that this task 
will take approximately 2 hours because the AOs have previously 
submitted an application to CMS requesting approval of their 
accreditation program; therefore, will already be familiar with the 
application process and requirements and should have the required 
documentation readily available.
    The AOs (selling or transferring and purchasing) will incur costs 
associated with the preparation and submission of the requested 
documents, development of the written acknowledgement letters, and 
submission of the documents. The AO will incur costs for the wages of 
all AO staff that work on the preparation of the CHOW application. We 
estimate that the AO will have a total of three staff work on the 
preparation of the application. We believe that two of the AO staff 
that perform this task will be clinicians such as RN or medical or 
health services manager, as they currently serve in roles for 
submission of general accrediting approvals. We further believe that 
the third AO staff person will be an accountant or auditor.
    We estimate that the RN, medical or health services manager, and 
accountant or auditor will each spend 45 hours performing this task. 
The total estimated time burden for this task is 135 hours.
    The mean hourly wage for a RN is $38.47 (https://www.bls.gov/oes/current/oes291141.htm). This wage, adjusted for the employer's benefits 
and other indirect costs, is $76.94. We estimate that the total wages 
incurred by the AO for the 45 hours spent by the RN performing this 
task will be $3,462.30 ($76.94 x 45 hours).
    The mean hourly wage for a medical or health services manager is 
$57.12 (https://www.bls.gov/oes/current/oes119111.htm). This wage 
adjusted for the employer's benefits and other indirect costs is 
$114.24. We estimate that the total wages incurred by the AO for the 45 
hours spent by the Medical or Health Services Manager performing this 
task will be $5,140.80 ($114.24 x 45 hours).
    The mean hourly wage for an accountant or auditor is $37.89. 
(https://www.bls.gov/oes/current/oes132011.htm). This wage adjusted to 
include employer's benefits and other indirect costs is $78.52. We 
estimate that the total wages incurred by the AO for the 45 hours spent 
by the Accountant performing this task will be $3,533.40 ($78.52 x 45).
    We estimate that the total cost burden for this task will be 
$11,598, which is calculated as follows:

<bullet> 45 hours x $76.94 per hour = $3,462.30
<bullet> 45 hours x $114.24 per hour = $5,140.80
<bullet> 45 hours x $78.52 per hour = $3,533.40
    Total = $12,136.50

    Furthermore, at Sec.  488.5(e)(8), we require the AOs to provide 
additional information as requested by CMS to ensure the continuity of 
oversight for facilities currently accredited. Therefore, there is 
potential for AOs to incur a cost burden for the wages of the AO staff 
that are involved with reviewing our additional requests for 
information and the preparation of the documents and program standards. 
The AO staff that review information requested by CMS regarding the 
CHOW will be a clinician such as RN, as is generally the case with the 
AO's preparation and submission of application materials. We estimate 
that it will take 3 hours for the RN to perform this task.
    As, stated previously, the adjusted wage for an RN is $76.94. We 
estimate that the AO will incur a cost burden in the amount of $230.82 
(3 hours x $76.94 per hour) for the preparation of the response to CMS.
    We want to emphasize that these anticipated costs and burdens are 
only subject to those AOs seeking a CHOW. To date, there has only been 
one AO CHOW request submitted approximately 20 years ago and another 
submitted in November 2020. While we cannot predict the frequency with 
which AO CHOW transactions will occur in the future, we believe that 
they should occur more frequently than they have in the past.
    We solicited comments, specifically from stakeholders and AOs and 
request AOs to submit their comments to include a breakdown of 
potential costs they would estimate for this to be completed.
    A summary of the comment received and our response to that comment 
follow:
    Comment: One commenter stated that they disagree with the 
conclusion that the burden would not be substantial for the AO and any 
other parties involved in a proposed CHOW because the cost estimates 
provided based on hours are probably low.
    Response: We have revised our time and cost burden estimates in 
section V ``Collection of Information'' and section VI ``Regulatory 
Impact Statement'' of this rule.

C. Anticipated Effects

    The RFA requires agencies to analyze options for regulatory relief 
of small entities. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and small governmental 
jurisdictions. Most hospitals and most other providers and suppliers 
are small entities, either by nonprofit status or by having revenues of 
less than $8.0 million to $41.5 million in any 1 year. Individuals and 
states are not included in the definition of a small entity. We are not 
preparing an analysis for the RFA because we have determined, and the 
Secretary certifies, that this final rule will not have a significant 
economic impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. We are not preparing 
an analysis for section 1102(b) of the Act because we have determined, 
and the Secretary certifies, that this final rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. In 2022, that 
threshold is approximately $165 million. This rule will have no 
consequential effect on state, local, or tribal governments or on the 
private sector.

[[Page 25427]]

    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on state 
and local governments, preempts state law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on state 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on April 20, 2022.

List of Subjects

42 CFR Part 410

    Diseases, Health facilities, Health professions, Laboratories, 
Medicare, Reporting and recordkeeping requirements, Rural areas, X-
rays.

42 CFR Part 414

    Administrative practice and procedure, Biologics, Diseases, Drugs, 
Health facilities, Health professions Medicare, Reporting and 
recordkeeping requirements.

42 CFR Part 488

    Administrative practice and procedure, Health facilities, Health 
professions, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 493

    Administrative practice and procedure, Grant programs-health, 
Health facilities, Laboratories, Medicaid, Medicare, Penalties, 
Reporting and recordkeeping requirements.

    For the reasons stated in the preamble, the Centers for Medicare & 
Medicaid Services amends 42 CFR chapter IV as set forth below:

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
1. The authority citation for part 410 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.


0
2. Section 410.142 is amended by adding paragraph (k) to read as 
follows:


Sec.  410.142  CMS process for approving national accreditation 
organizations.

* * * * *
    (k) Change of ownership. An accreditation organization whose 
accreditation program(s) is (are) approved and recognized by CMS that 
wishes to undergo a change of ownership is subject to the requirements 
set out at Sec.  488.5(f) of this chapter.

PART 414--PAYMENT FOR PART B MEDICAL AND OTHER HEALTH SERVICES

0
3. The authority citation for part 414 continues to read as follows:

    Authority:  42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).


0
4. Section 414.68 is amended by adding paragraph (j) to read as 
follows:


Sec.  414.68  Imaging accreditation.

* * * * *
    (j) Change of ownership. An accreditation organization whose 
accreditation program(s) is (are) approved and recognized by CMS that 
wishes to undergo a change of ownership are subject to the requirements 
set out at Sec.  488.5(f) of this chapter.

PART 488--SURVEY, CERTIFICATION, AND ENFORCEMENT PROCEDURES

0
5. The authority citation for part 488 continues to read as follows:

    Authority:  42 U.S.C. 1302 and 1395hh.


0
6. Section 488.5 is amended by adding paragraph (f) to read as follows:


Sec.  488.5  Application and re-application procedures for national 
accrediting organizations.

* * * * *
    (f) Change of ownership. What Constitutes Change of Ownership. A 
description of what could constitute a change of ownership with respect 
to a national accrediting organization are those activities described 
in Sec.  489.18(a)(1) through (3) of this chapter.
    (1) Notice to CMS. Any CMS-approved accrediting organization that 
is contemplating or negotiating a change of ownership must notify CMS 
of the change of ownership.
    (i) This notice requirement applies to any national accrediting 
organization with CMS-approved accreditation program(s) that is the 
subject of a potential or actual change of ownership transaction, 
including accrediting organizations for Advanced Diagnostic Imaging 
(ADI) suppliers; Home Infusion Therapy (HIT) suppliers; Diabetic Self-
Management Training (DSMT) entities, and clinical laboratories.
    (ii) This notice must be provided to CMS in writing.
    (iii) This notice must be provided to CMS no less than 90 calendar 
days prior to the anticipated effective date of the change of ownership 
transaction.
    (iv) CMS will complete their review of the AO's request for 
approval for the transfer of the existing CMS approval for the 
accreditation programs to be transferred in the change of ownership 
within 90 days from receipt of said AO's request.
    (2) Information submitted with the request for approval for change 
of ownership transaction. The person(s) or organization(s) acquiring an 
existing CMS-approved accrediting organization or accreditation 
programs (that is, purchaser, buyer or transferee) through a change of 
ownership transaction must do the following:
    (i) Seek approval from CMS for the purchase or transfer of the 
existing CMS approval for the accreditation program(s) to be 
transferred in the change of ownership event; and
    (ii) Meet the requirements of paragraphs (f)(2)(iii) through (f)(4) 
of this section to demonstrate that the entities that will be 
accredited with the transferred accrediting program(s) continue to meet 
or exceed the applicable Medicare conditions or requirements.
    (iii) The following information must be submitted to CMS in the 
purchaser's/buyer's/transferee's request for approval of a transfer of 
the existing CMS approval for the accreditation program(s) to be 
transferred in the change or ownership transaction:
    (A) The legal name and address of the new owner;
    (B) The three most recent audited financial statements of the 
organization that demonstrate the organization's staffing, funding and 
other resources are adequate to perform the required surveys and 
related activities;
    (C) A transition plan that summarizes the details of how the 
accreditation functions will be transitioned to the new owner, 
including:
    (1) Changes to management and governance structures including 
current and proposed organizational charts;
    (2) A list of the CMS-approved accreditation programs that will be 
transferred to the purchaser/buyer/transferee,
    (3) Employee changes, if applicable,
    (4) Anticipated timelines for action;
    (5) Plans for notification to employees; and
    (6) Any other relevant information that CMS finds necessary.
    (D) The prospective new AO's policies and procedures to avoid 
conflicts of interest, including the appearance of conflicts of 
interest, involving individuals who conduct surveys or participate in 
accreditation decisions, as required by paragraph (f)(10) of this 
section.

[[Page 25428]]

    (3) Written acknowledgements. The purchaser/buyer/transferee must 
provide a written acknowledgement to CMS, which states the following:
    (i) If the application for the transfer of the existing CMS-
approval for the accreditation program(s) to be transferred in the 
change of ownership transaction is approved by CMS, said purchaser/
buyer/transferee must assume complete responsibility for the operations 
(that is, managerial, financial, and legal) of the CMS-approved 
accreditation programs transferred, immediately upon the finalization 
of the change of ownership transaction;
    (ii) The purchaser/buyer/transferee agrees to operate the 
transferred CMS-approved accreditation program(s) under all of the CMS 
imposed terms and conditions, to include program reviews and 
probationary status terms, currently approved by CMS; and
    (iii) The purchaser/buyer/transferee must not operate the 
accreditation program(s) it acquired in the change in ownership 
transaction as CMS approved accreditation programs, until the effective 
date set forth within the notice of approval from CMS.
    (iv) The purchaser/buyer/transferee agrees to operate the 
transferred CMS-approved accreditation program(s) under all of the 
terms and conditions found at Sec. Sec.  488.5 through 488.9.
    (4) Notification. The following written notifications are required 
after the change of ownership transaction has been approved by CMS:
    (i) All parties to the change of ownership transaction must notify 
the providers and suppliers affected by such change within 15 calendar 
days after being notified of CMS's approval of the transfer of the 
existing CMS-approval for the accreditation programs to be transferred 
in the change of ownership transaction.
    (ii) If applicable, the purchaser/buyer/transferee must acknowledge 
in writing to CMS that the accrediting organization or accreditation 
program(s) being acquired through a purchase or transfer of ownership 
was under a performance review or under probationary status at the time 
the change of ownership notice was submitted.
    (5) Federal Register notice. CMS will publish a notice of approval 
in the Federal Register of the transfer of the existing CMS approval 
for the accreditation program(s) to be transferred to the new owner, 
only after CMS receives written confirmation from the new owner that 
the change of ownership has taken place.
    (6) Notification to parties in the event that CMS does not approve 
the transfer of the existing CMS approval. In the event that CMS does 
not approve the transfer of the existing CMS approval for the 
accreditation program(s) to be transferred in the change of ownership 
transaction, CMS will notify all parties to the change of ownership 
transaction of such in writing.
    (7) Withdrawal of CMS approval for transferred accreditation 
programs due to failure to notify CMS of intent to transfer 
accreditation programs. In the event that CMS was not made aware of or 
did not approve the transfer of the existing CMS-approval for the 
accreditation program(s) to be transferred under a change of ownership:
    (i) The existing AO would be permitted to continue operating their 
existing CMS-approved accreditation programs, if the change of 
ownership transaction was not completed, unless our review of the 
transaction revealed issues with the AO that were the subject of the 
un-finalized change of ownership transaction that was previously 
unknown to CMS.
    (ii) If a change of ownership transaction was completed without 
notice to CMS or the approval of CMS, CMS would be able to withdraw the 
existing approval of the AO's accreditation programs in accordance with 
Sec.  488.8(c)(3)(ii) and (iii).
    (8) Withdrawal of CMS approval for accreditation programs which are 
transferred notwithstanding CMS' disapproval of the transfer. In the 
event that the parties complete the change of ownership transaction, 
notwithstanding CMS disapproval and the purchaser/buyer/transferee 
attempts to operate the transferred accreditation program(s) under the 
CMS-approval granted to the previous owner, CMS will withdraw the 
existing approval of the transferred accreditation program(s) in 
accordance with the procedures set out at Sec. Sec.  488.8(c)(3)(ii) 
and (iii).
    (9) Requirements for continuation of a deemed status accreditation 
of Medicare-certified providers and suppliers after CMS withdraws the 
existing approval of the transferred accreditation program(s). If CMS 
withdraws the existing approval of the transferred accreditation 
program(s) because the change of ownership transaction was completed 
without notice to CMS or the approval of CMS, an affected Medicare-
Certified provider or supplier's deemed status will continue in effect 
for 180 calendar days if the Medicare-Certified provider or supplier 
takes the following steps set forth is Sec.  488.8(g).
    (i) The Medicare-certified provider or supplier must submit an 
application to another CMS-approved accreditation program within 60 
calendar days from the date of publication of the removal notice in the 
Federal Register; and
    (ii) The Medicare-certified provider or supplier must provide 
written notice to the SA that it has submitted an application for 
accreditation under another CMS-approved accreditation program within 
this same 60-calendar day timeframe in accordance with Sec.  488.8(g).
    (iii) Failure to comply with the timeframe requirements specified 
in Sec.  488.8(g) will place the provider or supplier under the SA's 
authority for continued participation in Medicare and on-going 
monitoring.
    (10) Requirements for continuation of accreditation for non-
certified suppliers when CMS withdraws the existing approval of the 
transferred accreditation program(s). If CMS withdraws its existing 
approval from a transferred non-certified accreditation program for 
Advanced Diagnostic Imaging (ADI) suppliers; Home Infusion Therapy 
(HIT) suppliers; Diabetic Self-Management Training (DSMT) entities; or 
clinical laboratories, because a change of ownership transaction was 
completed without notice to or the approval of CMS, such affected non-
certified supplier's deemed status would continue in effect for 1 year 
after the removal of the existing CMS accreditation approval, if such 
non-certified supplier take the steps specified paragraphs (f)(10)(i) 
and (ii) of this section--
    (i) The non-certified supplier must submit an application to 
another CMS-approved accreditation program within 60 calendar days from 
the date of publication of the removal notice in the Federal Register; 
and
    (ii) The non-certified supplier must provide written notice to CMS 
stating that it has submitted an application for accreditation under 
another CMS-approved accreditation program within the 60-calendar days 
from the date of publication of the removal notice in the Federal 
Register.
    (iii) Failure to comply with the above-stated timeframe 
requirements will result in de-recognition of such provider or 
supplier's accreditation.

0
7. Section 488.1030 is amended by adding paragraph (g) to read as 
follows:


Sec.  488.1030  Ongoing review of home infusion therapy accrediting 
organizations.

* * * * *
    (g) Change of ownership. An accrediting organization that wishes to 
undergo a change of ownership is subject to the requirements set out at 
Sec.  488.5(f).

[[Page 25429]]

PART 493--LABORATORY REQUIREMENTS

0
8. The authority citation for part 493 is revised to read as follows:

    Authority:  42 U.S.C. 263a, 1302, 1395x(e), the sentence 
following 1395x(s)(11) through 1395x(s)(16).


0
9. Section 493.553 is amended by adding paragraph (e) to read as 
follows:


Sec.  493.553  Approval process (application and reapplication) for 
accreditation organizations and State licensure programs.

* * * * *
    (e) Change of ownership. An accrediting organization that wishes to 
undergo a change of ownership is subject to the requirements set out at 
Sec.  488.5(f) of this chapter.

    Dated: April 25, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.
[FR Doc. 2022-09102 Filed 4-27-22; 4:15 pm]
BILLING CODE 4120-01-P