Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12419

List of Subjects in 29 CFR Part 1952

Intergovernmental relations, Law

enforcement, Occupational safety and

health.

Signed at Washington, DC, this 20th day of

February, 1995.

Joseph A. Dear,

Assistant Secretary.

Accordingly, 29 CFR Part 1952 is

hereby amended as follows:

PART 1952—[AMENDED]

1. The authority citation for part 1952

continues to read:

Authority: Secs. 8, 18 Pub. L. 91–596, 84

Stat. 1608 Occupational Safety and Health

Act of 1970 (29 U.S.C. 657, 667); Secretary

of Labor’s Order No. 12–71 (36 FR 8754), 8–

76 (41 FR 25059), or 9–83 (48 FR 35736), as

applicable.

2. New paragraphs (b) through (f) are

added to § 1952.316 of Subpart Y to read

as follows:

§ 1952.316 Changes to approved plans.

* * * * *

(b) Regulations.

(1) The State’s regulation on the

Division of Occupational Safety and

Health’s Access to Employee Medical

Records, and amendments to State

regulations covering the Labor and

Industrial Relations Appeals Board;

General Provisions and Definitions;

Recording and Reporting Occupational

Injuries and Illnesses; Inspections,

Citations, and Proposed Penalties; and

Variances, promulgated by the State

through March 22, 1991, were approved

by the Assistant Secretary on February

20, 1995.

(2) [Reserved]

(c) Legislation.

(1) An amendment to the Hawaii

Occupational Safety and Health Law,

enacted in 1987, which expands the

type of information that is protected

from disclosure in any discovery or civil

action arising out of enforcement or

administration of the law, was approved

by the Assistant Secretary on February

20, 1995.

(2) [Reserved]

(d) Consultation Manual. The State’s

Consultation Policies and Procedures

Manual was approved by the Assistant

Secretary on February 20, 1995.

(e) Occupational Safety and Health

Administration Technical Manual. The

State’s adoption of the Federal OSHA

Technical Manual, through Change 1,

was approved by the Assistant Secretary

on February 20, 1995.

(f) Reorganized Plan. The

reorganization of the Hawaii plan was

approved by the Assistant Secretary on

February 20, 1995.

[FR Doc. 95–5505 Filed 3–6–95; 8:45 am]

BILLING CODE 4510–26–M

DEPARTMENT OF DEFENSE

Office of the Secretary

32 CFR Part 199

RIN 0720–AA23

Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS);

Mental Health Services

AGENCY: Office of the Secretary, DoD.

ACTION: Final rule.

SUMMARY: This final rule is to reform

CHAMPUS quality of care standards

and reimbursement methods for

inpatient mental health services. The

rule updates existing standards for

residential treatment centers (RTCs) and

establishes new standards for approval

as CHAMPUS-authorized providers for

substance use disorder rehabilitation

facilities (SUDRFs) and partial

hospitalization programs (PHPs);

implements recommendations of the

Comptroller General of the United

States that DoD establish cost-based

reimbursement methods for psychiatric

hospitals and residential treatment

facilities; adopts another Comptroller

General recommendation that DoD

remove the current incentive for the use

of inpatient mental health care; and

eliminates payments to residential

treatment centers for days in which the

patient is on a leave of absence.

DATES: This rule is effective April 6,

1995, except amendments to § 199.4

which are effective October 1, 1995.

ADDRESSES: Office of the Civilian Health

and Medical Program of the Uniformed

Services (OCHAMPUS), Office of

Program Development; Aurora,

Colorado 80045–6900.

FOR FURTHER INFORMATION CONTACT:

CAPT Deborah Kamin, NC, USN, Office

of the Assistant Secretary of Defense

(Health Affairs), (703) 697–8975.

Questions regarding payment of

specific claims should be addressed to

the appropriate CHAMPUS contractor.

SUPPLEMENTARY INFORMATION: Provisions

of this rule apply to the CHAMPVA

(Civilian Health and Medical Program of

the Department of Veterans Affairs) in

the same manner as they apply to

CHAMPUS.

I. Introduction

Quality assurance and cost

effectiveness of mental health care

services under CHAMPUS continue to

be major reform issues for the Defense

Department and Congress. In recent

years, a series of DoD initiatives,

legislative and regulatory actions, and

Congressional hearings have spotlighted

both progress made and the need for

more improvement.

Two recent Comptroller General

Reports are indicative of the importance

of these issues and the need for reform.

The first of these, ‘‘Defense Health Care:

Additional Improvements Needed in

CHAMPUS’s Mental Health Program,’’

GAO/HRD–93–34, May 1993, stated

that, although DoD has taken actions to

improve the program ‘‘several problems

persist.’’ The Report (hereafter referred

to as ‘‘GAO Report #1’’) elaborated:

For example, reviews of medical records

have identified numerous instances of poor

medical record documentation, potentially

inappropriate admissions, excessive hospital

stays, and poor-quality care. Also,

inspections of RTCs [Residential Treatment

Centers] continue to reveal significant health

and safety problems, and corrective actions

often take many months.

Moreover, DoD * * * pays considerably

higher rates for comparable services than do

other public programs.

GAO Report #1, p. 2. The Report

referenced the General Accounting

Office’s 1991 Congressional testimony

regarding CHAMPUS mental health care

and inspections of residential treatment

facilities conducted for DoD since then:

Inspections conducted since our 1991

testimony have identified some of the same

problems we described then: unlicensed and

unqualified staff, inappropriate use of

seclusion and medication, inadequate staffto-patient ratios, and inadequate

documentation of treatment.

The principal conclusions of this

Report were: (1) ‘‘Standards, which

include termination for noncompliance,

should be specified and termination

proceedings, time frames, and

reinspection provisions * * * should be

adopted;’’ and (2) because ‘‘DoD

reimburses psychiatric hospitals and

RTCs at higher rates than do other

government payers, it should modify its

payment system to more closely

resemble other programs such as

Medicare.’’ GAO Report #1, p. 9.

A second recent Comptroller General

Report, ‘‘Psychiatric Fraud and Abuse:

Increased Scrutiny of Hospital Stays Is

Needed to Lessen Federal Health

Program Vulnerability,’’ GAO/HRD–93–

92, September 1993, also called for

improvements in the CHAMPUS mental

health program. The Report (hereafter

referred to as GAO Report #2) said:

Investigations to date have revealed that

federal health programs have been subject to

fraudulent and abusive psychiatric hospital
12420 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

practices, but apparently to a lesser extent

than private insurers * * *

Some federal control weaknesses do exist

which have resulted in unnecessary hospital

admissions, excessive stays, and sometimes

inadequate quality of care * * *

DOD has also identified numerous

instances of quality problems and

unnecessary hospital admissions.

GAO Report #2, pp. 9–10.

These two recent Comptroller General

Reports, as well as a substantial body of

other documentation, highlight the need

for a very active quality assurance

program. As discussed further below,

two primary issues are presented. First,

there is a need for clear, specific

standards for psychiatric facilities on

staff qualifications, clinical practices,

and all other aspects directly impacting

the quality of care. These standards are

needed for residential treatment

facilities, substance use disorder

rehabilitation facilities, and partial

hospitalization programs. These

standards will help bring those

facilities, a minority in the industry,

that have been unwilling or unable to

comply with necessary requirements, up

to an appropriate standard of care.

The second key issue is

reimbursement rates. As documented by

the Comptroller General, CHAMPUS

needs to discontinue payment rates

based on historical billed charges and

establish payment rates based on the

actual costs of providing the services.

This final rule puts into place as part

of the CHAMPUS regulation

comprehensive quality of care

certification standards for residential

treatment facilities, substance abuse

rehabilitation facilities, and partial

hospitalization programs. It also

modifies current payment

methodologies, which will result in

rates approximating the costs of

providing services in psychiatric

hospitals and moving toward cost levels

for residential treatment facilities. In

addition, the rule addresses several

other issues, addressed below.

II. Provisions of Rule to Reform

Certification Standards for Mental

Health Care Facilities

The Comptroller General’s call for

stronger management by CHAMPUS to

assure quality of care in the mental

health programs was based partially on

a review of serious abuses on the part

of some providers. The GAO presented

audit findings identifying program

weaknesses. Texas, which is one of four

states which account for more than half

of CHAMPUS mental health hospital

costs, surfaced in recent audits as

number one in CHAMPUS mental

health expenditures. Of particular

concern are practices described during

1991 hearings conducted before the

Texas state senate and summarized in

GAO Report #2. In over 80 hours of

testimony, 175 witnesses—some

beneficiaries of federal programs—

brought forth allegations which

included exorbitant charges for care

never rendered; kickbacks for patient

referrals; restraint of voluntary patients

against their will; discharge of patients

upon exhaustion of benefits, regardless

of their condition; and isolation of

family from patients, including

withholding of visitation and mail/

telephone privileges. While privately

insured patients are the most common

target of unethical practices, increasing

benefit limits and payment controls by

private third party payers may place

federal programs at increased risk for

fraudulent practices. GAO auditors

point out that, because CHAMPUS

reimburses mental health at rates higher

than other federal programs, it may be

particularly vulnerable to the minority

of unethical providers seeking

additional revenue sources.

In recent years, the Department has

worked to strengthen oversight and

monitoring of mental health programs,

particularly with respect to treatment of

children and adolescents. Through the

contract with HMS, and other efforts,

CHAMPUS has paid much more

attention to care in RTCs. In [insert 30

days after date of publication] of 1992,

Health Management Strategies

International (HMS) expressed specific

concerns about several of the

CHAMPUS-authorized residential

treatment centers. Numerous quality of

care issues surfaced during on-site

facility visits to residential treatment

centers where CHAMPUS beneficiaries

were receiving care.

Here are several examples:

—Staff qualifications were deficient. In

some cases, patient treatment was not

being directed by qualified

psychiatrists. At one facility,

psychiatry residents were acting as

facility medical directors. In some

facilities, one psychiatrist may be

responsible for as many as 90 children

and their families, seriously limiting

professional time available for

individual attention. In some RTCs,

group therapy was being conducted

by child care workers with high

school diplomas.

—Several facilities failed to

individualize treatment plans. At one

facility all treatment plans were the

same, regardless of history, needs or

problems. Similarly, some facilities

were discovered to focus on one type

of treatment to the exclusion of all

other approaches. This was true

regardless of whether or not patients

responded to this type of treatment.

—In several facilities, registered nurses

were not available on a full-time

basis. For example, at one facility

children were ordering their own

medications ‘‘as needed’’ and

medications were dispensed—without

further evaluation—by untrained

child care workers. In one instance a

child who developed tardive

dyskinesia (a motion disorder

resulting from medication) was

described by a child care worker as

having a ‘‘nervous tic.’’

—There was evidence of excessive use

of restraints and seclusion as methods

of behavioral management. Examples

including placing children as young

as three or four in restraint and

seclusion. In one facility, seclusion

was used 146 times in one month.

The practice of zipping children into

so-called ‘‘body bags’’ was employed

by several facilities. Use of a body

bag, which leaves an opening only for

the head, carries risk of overheating to

the point of lethal hyperthermia. One

facility policy governing this practice

did not require physician evaluation

of the patient for 72 to 96 hours after

the event.

—Certain RTCs employed unnecessary

strip searches and other intrusive acts.

Searches involve adult authority

figures for forcing children between

the ages of four and 18 to remove all

clothing and submit to cavity

searches. Cavity searches involve

finger probes to the mouth, vagina,

and rectum. Some facilities were

requiring such searches whenever the

patient returned from a pass or having

a visitor. In many cases, children

subjected to such searches were

victims of abuse and, for some, these

methods of search re-enact the

original trauma.

These HMS case findings pointed out

shortcomings in practices in some RTCs

that can be addressed through improved

standards. Although standards for

residential treatment centers exist, they

have evolved over time from attempts to

address individual issues with

incremental change. Further, existing

CHAMPUS standards for residential

treatment centers were written as

supplements to standards employed by

the Joint Commission on Accreditation

of Hospital Organizations (JCAHO). In

recent years, the JCAHO has moved

toward a more general set of facility

standards, with less specific reference to

unique requirements of medical

specialties. The result has been that

CHAMPUS standards—which were not
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12421

intended to stand alone—do not address

the full spectrum of requirements and

expectations for mental health facilities

and providers.

Originally drafted in the late 1970s,

CHAMPUS standards for RTCs have

undergone multiple revisions to ensure

they reflect currently accepted clinical

practice. This rule incorporates

revisions necessary to update existing

standards. With shorter lengths of stay

in acute care facilities, mental health

patients are reaching residential

treatment centers at earlier—and less

stable—stages of treatment. Similar to

trends in other medical specialties, the

growing intensity of illness among

inpatients has dictated a need for higher

standards of care and increasing levels

of professional supervision and

treatment. Current CHAMPUS standards

for RTCs must be updated to reflect

more clearly professional skill levels

and intervention strategies employed in

today’s mental health environment.

Based on a clear record of problems

among some institutional mental health

providers and the shortcomings of

current standards, DoD has developed a

comprehensive, unified set of standards

for residential treatment centers, partial

hospitalization programs and substance

use disorder rehabilitation facilities.

This rule updates existing standards to

reflect current mental health practices,

account for policy shifts in the JCAHO,

and communicate clearly CHAMPUS

policy with regard to quality and scope

of care provided to its beneficiaries.

The standards will work to prevent

recurrence of abuses such as those

discussed by defining more completely

and specifically quality indicators

which will be used to judge care

rendered in these facilities. Among

areas addressed by the standards are:

Qualifications and authority of

clinical director. Standards require the

clinical director of any RTC to have

completed appropriate training and

have at least five years’ experience in

treating children and adolescents. In

addition to oversight of all clinical care

provided, standards for RTCs, substance

abuse rehabilitation facilities and partial

hospitalization programs outline

specific requirements for clinical

director participation in program

development, peer review, quality

monitoring and improvement and

coordination with the governing body.

Adequate staffing with qualified

professionals. Standards require written

staffing plans. Specific information is

provided concerning requirements for

staffing levels and professional

qualifications 24 hours per day, seven

days per week (or, in the case of partial

hospitalization programs, during all

hours of operation). Standards require

that all clinical care provided under

clinical supervision is the responsibility

of a licensed or certified mental health

professional. Additionally, there must

be evidence to show that ultimate

authority for management of the

medical aspects of care is vested in a

physician.

Patient rights and limitations on use

of seclusion and restraint. Standards

require provisions for protection of all

individual patient rights, including civil

rights, provided for under federal law

and the laws of the state where the

residential treatment center is located.

Specific requirements address privacy,

personal freedoms, contact with families

and environmental safety. Detailed

guidelines for use, supervision and

medical monitoring of behavior

management—including use of

seclusion and retraint—are also

provided.

Implementation of individualized

treatment plans addressing each

patient’s needs. Responsibility of

development, supervision,

implementation and assessment of

written, individualized and

interdisciplinary treatment plans is

assigned to a qualified mental health

professional. Treatment goals must be

communicated to the family, must

undergo regular review and must

include specific, measurable and

observable criteria for discharge.

Comprehensive evaluation system to

guide an ongoing quality improvement

program. Standards provide detailed

expectations with respect to evaluation

systems by which quality, efficiency,

appropriateness and effectiveness of

care, treatments, and services are

provided. The evaluation system must

involve all disciplines, services, and

programs of the facility, including

administrative and support activities.

Responsibility for development and

implementation of quality assurance

and quality improvement programs rests

with the clinical director and must

support overall facility and

philosophical assumptions and values.

The standards are designed to foster

interdisciplinary communication and

patient protection through involvement

and oversight of the Governing Body,

Chief Executive Officer, Clinical

Director, and Professional Staff with

respect to administrative, utilization

review, and clinical activities. DoD has

also strengthened standards for

substance abuse treatment programs in

a manner similar to residential

treatment centers. For partial

hospitalization, these standards occur as

part of implementation of this new

benefit, which became effective

September 29, 1993.

This rule incorporates basic

requirements governing CHAMPUS

approval of facilities providing mental

health services as residential treatment

centers, as partial hospitalization

providers, and substance use disorder

rehabilitation facilities. More detailed

definition of these basic standards have

been issued under the authority of this

regulation. It should be noted that only

the requirements included in this final

regulation have, by themselves, the

force and effect of law. Additional detail

in the more lengthy standards are

extensions of the regulation. They

establish the agency’s interpretations of

the regulation and will serve as

guidelines for compliance with the

regulatory requirements. The complete

standards are available to the public

from the Office of CHAMPUS. These

more lengthy standards are finalized

coincident with issuance of this final

regulation.

III. Provisions of Rule to Reform

Payment Methods for Mental Health

Care Facilities

This rule implements payment

reforms in keeping with the Comptroller

General’s recommendations regarding

payment reform for mental health care

facilities. The Comptroller General’s

findings regarding current CHAMPUS

payment rates are especially

noteworthy. According to the report:

‘‘Our work indicates that DoD pays

psychiatric facilities considerably more

than other government programs do for

comparable services.’’ GAO Report #1,

p.6. The Comptroller General very

accurately summarized the background

of the current CHAMPUS payment

methods for psychiatric hospitals and

RTCs:

Although the current CHAMPUS system of

per diem reimbursements has helped limit

program cost increases for inpatient mental

health, the per diem rates were based on

providers’ billed charges, not their costs. The

rates were based on billing data from a period

when providers’ charges were not subject to

controls and had just increased significantly.

Before 1989 when no upper limit on rates

existed, hospitals, and RTCs essentially set

their own CHAMPUS payment rates. Before

the per diem calculations, hospitals and RTC

rates increased significantly. For example,

average daily charges per CHAMPUS

inpatient day rose by 17 percent from fiscal

years 1987 to 1988. One RTC boosted its

daily charges from an average of $331 in

fiscal year 1987 to $531 in June 1988—a 60%

increase.

GAO Report #1, pp 6–7.

Because CHAMPUS payments are

based on historical billed charges, they

substantially exceed the facilities’ actual
12422 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

costs and Medicare reimbursement

rates. Based on an analysis of payments

to a number of high CHAMPUS volume

psychiatric hospitals, the Comptroller

General concluded ‘‘The hospitals made

large profits, on average, on CHAMPUS

patients.’’ GAO Report #1, p. 7.

A similar pattern emerges on payment

rates for RTCs. Using fiscal year 1991

data, the Comptroller General compared

CHAMPUS payments to stateauthorized daily rates for a number of

RTCs in Florida and Virginia, and found

that the average daily CHAMPUS rate

was 36 percent more than the average

state rate. RTC cost data were available

for three RTCs in Texas, the state with

the highest total CHAMPUS RTC costs.

These data showed ‘‘an average profit

margin of 27 percent.’’ Id., p. 8. The

Comptroller General also stated that the

index factor used to annually update

CHAMPUS RTC per diems, the

consumer price index for urban medical

services (CPI–U), results in excessive

increases. The GAO Report says the

hospital market basket index factor that

CHAMPUS and Medicare use for

hospital payments ‘‘would be more

appropriate than the CPI–U because it

reflects increases in the amounts

hospitals pay for goods and services’’

rather than ‘‘increases in charges by

health practitioners and facilities.’’ Id.

The problem of excessive payments

also involves substance use disorder

rehabilitation facilities, which continue

to be paid by CHAMPUS billed charges.

According to the Comptroller General:

These facilities set their own fees and can

increase them freely—without controls over

their charges. Some of the facilities are paid

more on a daily basis than are psychiatric

hospitals. Id.

Based on these findings, the Comptroller

General recommended that the Secretary of

Defense:

Establish a system of reimbursing

psychiatric facilities, RTCs, and specialized

treatment facilities based on a cost-based

system similar to Medicare, adjusted

appropriately for differences in beneficiary

demographics, rather than the present per

diem or billed charges system.

Id., p. 10.

Under the proposed rule, CHAMPUS

payments to specialty psychiatric

hospitals and units and residential

treatment facilities would have

gradually transitioned from the present

system of per diem rates based on

historical billed charges to a new system

of per diem rates based on detailed

facility cost reports. Comments from

providers and the professional

community pointed out the significant

administrative complexity and costs

associated with payments based on cost

reporting. They proposed alternatives

premised on adjustments to the current

system. We have been persuaded by

these comments and have made

adjustments to current payment

structures which, although not based on

detailed facility cost reports, move

CHAMPUS reimbursement rates

significantly closer to the costs of

delivering care in mental health

facilities. This rule is based on the legal

authority of 10 USC 1079(j)(2) which

authorizes CHAMPUS to adopt payment

methods for institutional providers

similar to those applicable to Medicare.

Under the final rule, CHAMPUS

payments to specialty psychiatric

hospitals and units will remain at FY95

rates for a two-year period beginning in

FY96. Additionally, effective [insert 30

days after date of publication], the cap

on per diem rates for these hospitals and

units will be reduced from the current

80th percentile to the 70th percentile of

all CHAMPUS base year charges in high

volume hospitals. In FY98, payments

will again be updated using the

Medicare update factor for hospitals and

units exempt from the Medicare

Prospective Payment System.

With respect to RTCs, the rule makes

similar adjustments to current payment

methodologies. Per diem rates will

remain at FY95 rates during fiscal years

1996 and 1997 and will be subject to a

cap set at the 70th percentile of all

CHAMPUS RTC per diem rates. RTCs

with FY95 payment rates below the 30th

percentile of all RTC CHAMPUS per

diem rates will be exempt from the two

year freeze in rates, instead continuing

the current methodology for annual

updates, up to the 30th percentile rate.

Beginning in FY 1998, payment updates

for all RTCs will be based on the

Medicare update factor used for

hospitals and units exempt from

Medicare’s Prospective Payment

System.

We estimate that payment

methodologies under this rule will lead

to aggregate expenditures which

approximate average costs in psychiatric

hospitals and units. While cost data are

not generally available for RTCs, we

estimate that under this rule, aggregate

expenditures for RTC care will move

closer to the level of average facility

costs. We expect that over the next two

years, we will obtain more data on

actual RTC costs that will facilitate an

assessment of whether additional

regulatory changes should be

considered.

With respect to substance use

disorder rehabilitation facilities, this

rule includes services provided by these

facilities under the CHAMPUS DRGbased payment system. Currently, most

substance use disorder rehabilitation

services reimbursed by CHAMPUS are

provided by facilities covered by the

CHAMPUS DRG system or mental

health per diem system. Only a small

portion are provided by facilities that

continue to be paid on the basis of

billed charges. Under Medicare, these

facilities are covered by the Medicare

Prospective Payment System. Based on

these factors, we believe inclusion of

services provided by substance use

disorder rehabilitation facilities should

be included with the similar services

already covered by the CHAMPUS DRGbased payment system. Partial

hospitalization for substance use

disorder rehabilitation will be

reimbursed in the same manner as

psychiatric partial hospitalization

programs and the rates will be frozen at

the FY95 level for fiscal years 1996 and

1997.

The payment system changes appear

at the proposed revisions to section

199.14.

IV. Other Provisions of Rule

A. Therapeutic Leave of Absence Days

Currently, DoD pays RTCs for days a

patient is away from the facility on an

approved therapeutic leave of absence.

The payment amount is 100% of the

normal per diem for the first three days

and 75% for additional days. It is our

view that current rates are not justified

by any costs to the facility. In addition,

we are aware of no other public payer

that pays for leave days. Therefore, for

care provided on or after July 1, 1995,

this rule eliminates payment for days in

which patients are on leave from the

residential treatment center. We

received a number of comments

objecting to this on the grounds that

therapeutic leave of absence are an

important part of therapy, and should be

recognized in reimbursement for

services. We agree that therapeutic

leaves are an important component in

the patient’s overall treatment plan.

However, because payment rates to

RTCs under this rule will probably

remain above average costs, we believe

they will be sufficient to cover facility

costs associated with reserving space for

the patient’s return. This change applies

only to RTCs; in psychiatric hospitals,

substance use disorder rehabilitation

facilities and partial hospitalization

programs, leave days are not reimbursed

by CHAMPUS.

B. Reversing Incentive for Inpatient Care

Another of the recommendations of

the Comptroller General was to ‘‘reverse

the financial incentives to use inpatient

care by introducing larger copayments

for CHAMPUS inpatient care.’’ GAO
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12423

Report #1, p. 10. This recommendation

was based on the Comptroller General’s

conclusion that there is a ‘‘bias toward

patients receiving inpatient rather than

outpatient care’’ because inpatient care

is less expensive for dependents of

active duty members than outpatient

care. Id., p. 8–9. These beneficiaries

currently pay approximately $10.00 per

day or $25 per admission, whichever is

greater, for inpatient care. For outpatient

care, dependents of active duty

members pay a $150 deductible (subject

to a $300 family limit) and 20 percent

of the allowable payment for individual

professional services. Consequently, as a

general matter, there is a financial

incentive for beneficiaries to seek

services on an inpatient, rather than an

outpatient basis. Under 10 U.S.C.

section 1079(i)(2), DoD has authority to

establish mental health copayment

requirements different from those for

other CHAMPUS services.

This rule establishes a per day

copayment of $20 for dependents of

active duty beneficiaries. This is based

on the fact that an outpatient mental

health visit is generally approximately

$100, meaning that the copayment

would be $20. Thus, an inpatient day

would have a roughly equal beneficiary

copayment as an outpatient visit

(excluding the deductible). One

commenter objected to this proposal.

Based on DoD experience in delivery of

mental health services, information

collected during utilization management

reviews, and reports from the GAO, our

observation is that inpatient mental

health services remain vulnerable to

over utilization. We believe this modest

increase in inpatient cost share

addresses the Comptroller General’s

recommendation, without impairing

access to care or imposing hardship on

beneficiaries. (With respect to avoidance

of hardship, we note that the

catastrophic cap for active duty

dependents is $1000 per family per

year.) To ensure adequate notice of

providers and beneficiaries we have

established an effective date of October

1, 1995 for the copayment requirements

as stated above.

C. Equalization of Alcoholism and Drug

Abuse Benefit Provisions

The frequent coexistence of alcohol

and other chemical dependency or

abuse suggests existing differences in

benefit structures for treatment of

alcohol and drug abuse should be

eliminated. Effective for admissions on

or after October 1, 1995, this rule

includes treatment for both alcohol and

drug dependency/abuse under a broad

benefit package designed to include

treatment of all substance use disorders.

IV. Additional Discussion of Public

Comments

The proposed rule was published in

the Federal Register June 29, 1994 (59

FR Page 33465). We received 23

comment letters, all of which were from

providers and provider associations.

Many of the comments were quite

similar in wording and content. Some

were very detailed and provided helpful

insight and analysis. We thank those

who provided input on this important

issue. Significant items raised by

commenters and our analysis of the

comments are summarized below.

1. GAO Recommendations are Based

Upon Outdated Information. We

received a significant number of

comments regarding our reliance on

GAO reports for developing components

of the proposed rule. Findings and

recommendations provided in GAO

reports relied to some extent on

information gathered prior to realization

of impact from several DoD quality, cost

and utilization management initiatives.

Response. Although substantial

progress has been made as a result of

earlier DoD efforts, ongoing utilization

reviews and facility inspections

continue to reveal departures from

minimum CHAMPUS health and safety

standards. Additionally, in many areas

CHAMPUS continues to reimburse

mental health services at significantly

higher rates than many other third party

payers. While the GAO analysis does

not reflect the specific impact of recent

initiatives, we believe the themes which

emerged from their two reports remain

current.

2. Specificity of Standards. Several

commenters asserted that standards in

the proposed rule were stated too

broadly, leaving excessive room for

interpretation and significant doubt as

to the exact CHAMPUS requirements.

Examples included the absence of stated

requirements for specific staff-to-patient

ratios and specific numbers for

professional staffing. A similar comment

was that terms like ‘‘essentially

stabilized’’ and ‘‘reasonable and

observable’’ treatment goals should be

better defined. Commenters pointed out

that specific standards which provide

explicit requirements for all aspects of

facility certification should be

published for public review and

comment prior to their application in

the certification process.

Response. A more detailed set of

standards which provide the agency’s

interpretation of standards contained in

the rule are available from OCHAMPUS.

These were made available for public

review concurrent with publication of

the proposed rule. The more detailed set

of standards does not include specific

requirements with respect to

professional staff mix and staff-topatient ratios because these will vary

depending upon the characteristics of

each facility. Consistent with regulatory

standards in the rule and further

described in the supplemental set

available from OCHAMPUS, facilities

should develop staffing patterns which

reflect the characteristics and special

needs of the population served, the

patient census, and acuity/intensity of

services required. With respect to

specific definitions of terms, the unique

requirements brought by each patient to

the treatment setting necessarily require

individual assessments, and

professional judgment as to required

level of care for the presenting

symptoms or dysfunction and progress

being made in addressing the patient’s

specific needs. As such, we do not think

it appropriate to establish a fixed list of

criteria which must be applied to all

patients.

3. Requirement for Physician Medical

Directors. Physician professional

associations agreed with a requirement

for physician medical directors, but

associations representing non-physician

mental health professionals objected to

this. Several commenters recommended

that current non-physician medical

directors who are serving successfully

should be exempt from this

requirement.

Response. We have reconsidered the

provisions in the proposed rule

regarding physician oversight of all

clinical services and agree that some of

the language may have had the effect of

unduly restricting the scope of practice

for some providers, particularly doctoral

level psychologists. We are also aware

that widely recognized accrediting

bodies, as well as several states, permit

independent practice and hospital

admitting privileges for certain nonphysician providers. We have made

revisions to language contained in the

proposed rule to assure our standards

are consistent with those of the Joint

Commission on Accreditation of

Hospital Organizations (JCAHO) and in

keeping with changing practice patterns

in the mental health community.

Because treatment of mental health

patients often includes pharmacologic

intervention and evaluation and

treatment for related or co-existing

medical problems, physician

management for these components of

therapy is still required. We require

medical management of patients to be

under the supervision of a physician

medical director. However, we also

agree that oversight of the spectrum of

clinical services provided in a program
12424 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

may be accomplished by doctoral level

psychologists. We have added language

which allows clinical directors to be

physicians or, where permitted by law

and by the facility, doctoral level

psychologists who meet CHAMPUS

requirements for individual professional

providers.

4. Admitting Privileges for Nonphysician Providers. A number of

commenters objected to proposed

language which limited admitting

privileges to physicians. They argued

that such limitations on certain nonphysician mental health professionals,

for example, master’s level clinical

social workers, were unnecessarily

restrictive and counter to legislative and

industry trends toward an expanded

scope of practice for these providers.

Response. We are aware of these

changes and agree that, where permitted

by law and by the facility, individuals

who meet the CHAMPUS definition of

individual professional mental health

provider should be allowed to refer

patients for admission. We have

included language in the final rule

which reflects this position.

5. Qualifications for CEOs. We

received a number of comments

suggesting that upgraded CEO

requirements should not apply to

individuals who, although they do not

meet these standards, are currently

serving in that capacity successfully.

Response. We believe the proposed

standards for CEOs are appropriate,

given the level and scope of

responsibility attached to this position.

However, we have included language

which makes CEO qualification

standards effective October 1, 1997.

This should provide sufficient time for

CEOs currently serving to undertake

appropriate education and/or training to

meet increased requirements.

5. Upgraded Standards are Costly and

May Limit Treatment Options for

CHAMPUS Beneficiaries. A number of

commenters suggested that standards in

the proposed rule were costly to

implement. They argued that the

increased cost of doing business, in

addition to potential reductions in

reimbursement caused by the rule’s

payment reforms, may cause some

providers to drop participation in

CHAMPUS programs. Commenters

viewed this as a particular problem for

providers with limited CHAMPUS

volume and those in rural areas. Some

commenters argued that treatment

methods not relying upon a medical

model should be expanded, rather than

changed to conform.

Response. Standards in this final rule

are based upon accepted standards of

practice, requirements of the Joint

Commission on Accreditation of

Healthcare Organizations, and input

from Department consultants and the

provider community. Although we have

made significant progress in addressing

quality issues raised by GAO’s study

and highlighted in various forms,

rapidly evolving practice patterns and

treatment settings require CHAMPUS

standards which reflect the character

and pace of these changes. We believe

these updated standards are necessary

minimums which ensure CHAMPUS

beneficiaries receive high quality care

by appropriately trained professionals

and staff. We believe the cost of

upgraded standards will be

accommodated within projected

reimbursement rates. Facilities unable

or unwilling to comply with these

standards are not in a position to

provide a proper standard of care.

6. Implementation of Seclusion and

Restraint. We received a large number of

comments objecting to standards which

restricted implementation of seclusion

and restraint to qualified mental health

professionals. Additionally, the

proposed rule excluded seclusion and

restraint as behavior management

devices in substance use disorder

rehabilitation facilities. Commenters

argued that these restrictions were

unworkable, that they may pose safety

issues when professional staff are not

immediately available, and that facility

staff are trained to use these techniques

for behavior management.

Response. Seclusion and restraint

imply a severity of dysfunction and

need for treatment beyond the scope of

care settings addressed in this rule. If

seclusion and/or restraint is frequently

required for behavior management in

RTCs, PHPs, or SUDRFs, this suggests

patients who require a more intense

level of care. Facilities should evaluate

policies and practices to determine their

effectiveness in identifying patients who

have not been assigned to the

appropriate level of care. All facility

staff should be trained in temporary

holds which provide immediate

intervention for safety of the patient and

others. Also, facilities should have clear

emergency response procedures which

define appropriate intervention in crisis

situations.

With the exception of brief physical

holds and time outs, use of seclusion

and restraint is excluded in SUDRFs, as

patients who require this level of

intervention are not appropriate to this

treatment setting. The use of time out or

physical holds should be infrequent,

since behavior routinely requiring this

type of intervention suggests a need for

care at a higher level of intensity. We do

agree that proposed rule language may

have restricted appropriate response to

emergency situations. We have added

clarifying language which requires a

qualified mental health professional to

be responsible for implementation of

seclusion and restraint, but allows

actual implementation by facility staff

under supervision of the responsible

provider.

7. Inclusion of Spiritual and Skills

Assessments. A number of commenters

questioned inclusion of new

requirements for spiritual and skills

assessments in the proposed standards

and requested more detailed description

of this requirement.

Response. Spiritual assessments are

part of a comprehensive,

multidisciplinary assessment which

should address the full range of a

patient’s clinical needs, including the

impact of religious, ethnic and cultural

influences upon the patient or family.

Spiritual assessments, which occur in

the context of obtaining a social history,

are not new to the CHAMPUS standards

and are included specifically in

standards of other widely recognized

accrediting bodies. A skills assessment

is an important component of patient

evaluation and includes activities of

daily living, perceptual-motor skills,

sensory integration factors, cognitive

skills, communication skills, social

interaction skills, creative abilities,

vocational skills, and the impact of

physical limitations. Activity services

related to this assessment should be part

of the therapeutic plan and should be

supervised by a qualified mental health

professional.

8. Requirement for Clinical

Formulation. Several commenters

questioned the need for clinical

formulation in addition to development

of a treatment plan. Additionally,

several comments pointed out the

standards allowed less time for

completion of a treatment plan (10 days)

than for development of the clinical

formulation (14 days) which forms the

basis of the treatment plan.

Response. The clinical formulation

summarizes significant clinical

interpretations from each of the

multidisciplinary assessments, forming

the basis for development of a master

treatment plan. Interrelating findings

from all assessments, the clinical

formulation should clearly describe

problems to be addressed in the

treatment plan and indicate appropriate

focus for the treatment strategies. We

view this as a necessary, and not

redundant, part of the process for

developing a plan of care responsive to

the unique requirements of each patient.

We agree the proposed time

requirements were not consistent with
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12425

this logic and have modified language

accordingly.

Treatment plans must be completed

within 10 days; clinical formulations no

longer have a specific deadline, but

must be completed prior to

development of the interdisciplinary

treatment plan.

9. Family Therapy. A large number of

commenters raised the issue of logistical

problems which present difficulty in

accomplishing family therapy for

CHAMPUS beneficiaries. An example

frequently used was the deployment of

military members which caused

geographic separations. The argument

was made that CHAMPUS should be

more flexible regarding this

requirement.

Response. Family therapy is not a

new requirement for CHAMPUS

beneficiaries. Geographical distance is

not considered a reason to exclude the

family from a treatment plan. For

patients separated from their families by

deployment or for other reasons,

CHAMPUS allows geographically

distant family therapy. If one or both

parents reside a minimum of 250 miles

from the RTC, the RTC has the

flexibility to arrange for therapy with

parents at the distant locality. If family

therapy is clinically contraindicated,

rationale for this conclusion must be

documented in the patient’s record.

10. Annual Facility Evaluation. We

received several comments arguing that

a service specific annual evaluation was

overly burdensome to facilities and

‘‘unheard of’’ outside academic settings.

Response. The proposed rule

identified this requirement in the

context of facility development of a

strategic plan which contains specific

goals and objectives for each program

component or service and patient

population served. Sound business

practices would suggest regular

organizational assessments to identify

progress toward established

performance and fiscal goals and

objectives. The Department, as well as

other accrediting agencies, expect

governing bodies, through their CEOs, to

provide sufficient resources to achieve

the organization’s missions, goals,

philosophy and objectives. Without a

clear idea of resource allocation and

performance across the range of services

provided, it is unclear how facilities

would evaluate outcomes, or the need

for change. We do not agree that this is

overly burdensome and find it

surprising that such reviews would be

limited only to academic settings.

11. Education Hours in Partial

Hospitalization Programs. The proposed

rule does not count educational hours

towards total hours for ‘‘full day’’ partial

hospitalization programs. Several

commenters argued that, by not

including time spent in school, those

hours, combined with the required six

hours for a full day partial program,

result in an excessively long day for

patients.

Response. Patients who meet the

criteria for admission to partial

hospitalization programs do not require

a professionally managed milieu

twenty-four hours a day, as do

individuals in residential treatment

programs. Therefore, we find it

reasonable to expect that school hours

may be accommodated separately from

the hours spent in therapy and other

treatment activities. Determinations as

to school hours vs. time spent in

treatment or other activities should be

considered as part of an overall

assessment of the patient’s needs and

addressed in an individualized

treatment plan.

12. Benefit Limitations. One provider

association objected to CHAMPUS

limits on treatment of substance use

disorders, stating that these limits do

not consider the chronic nature of this

problem.

Response. Compared to many third

party payers, CHAMPUS provides one

of the more generous benefits for

treatment of substance use disorders.

We do recognize the chronic as well as

individual nature of these problems

and, consistent with that, provide an

allowance for waivers of benefit limits

when continued treatment is justified.

13. Burden and Expense Associated

With Cost Based Reimbursement. The

overwhelming majority of comments on

the proposed cost based reimbursement

system argued that the cost and

administrative burden associated with

these changes, for both the Department

and providers, far exceeded any benefit

to the government. A number of

commenters pointed out that the GAO

reports which provided impetus for

payment reform were based on outdated

information which did not reflect the

results of earlier initiatives. Commenters

suggested that, if DoD is required to

implement additional cost containment

measures, these could be accomplished

more efficiently through adjustments to

existing payment mechanisms.

Response. After full consideration of

comments from the provider

community, as well as our continuing

analysis of costs associated with

implementation of a cost based system

for mental health, we agree that

implementation of the proposed system

is not appropriate at this time. Although

cost containment and utilization

management programs have achieved

program savings, we agree with GAO

conclusion that additional

improvements are needed. While the

GAO report may not reflect the full

measure of cost and quality

improvements achieved by earlier

efforts, continuing program reviews and

findings gathered through utilization

management programs suggest

CHAMPUS mental health programs

require additional controls.

In keeping with comments from the

industry and our own analysis,

additional cost containment in

CHAMPUS mental health programs will

be accomplished through adjustments to

current reimbursement mechanisms. For

specialty psychiatric hospitals and

units, payment will be held at FY95

rates for two years, beginning in FY96

and extending through FY97.

Additionally, April 6, 1995, payment

will be capped at a rate not to exceed

the 70th percentile of payment rates in

all high volume CHAMPUS psychiatric

hospitals. We estimate that these

adjustments will result in CHAMPUS

payments at the level of average

aggregate costs for psychiatric hospitals

and units, thereby addressing concerns

expressed by the GAO.

The general lack of availability with

respect to RTC cost information

presented some difficulties in our

attempt to analyze impact of payment

reforms for this community. In measures

similar to those for psychiatric

hospitals, RTC payment rates for

facilities at or above the 30th percentile

of all CHAMPUS RTC payment rates in

FY95 will be held constant, with no

additional update through fiscal years

FY96 and FY97. Additionally, effective

April 6, 1995, payments will be capped

at level not to exceed the 70th percentile

of all RTC rates nationally. For those

RTCs paid at levels below the 30th

percentile of national CHAMPUS RTC

rates, payments will be updated by the

lesser of the CPI–U for medical care or

the amount that brings the rate up to the

30th percentile level. The update factor

for payments beginning in FY98 will be

the Medicare update factor for hospitals

and units exempt from the Medicare

prospective payment system. In order to

determine the effectiveness of RTC cost

containment measures established in

this final rule, the Department will

continue to explore avenues for

obtaining accurate cost data for RTC

services.

V. Rulemaking Procedures

This rule is a significant regulatory

action as determined by the Office of

Management and Budget. Also, we

certify that this rule will not

significantly affect a large number of
12426 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

small entities within the meaning of the

Regulatory Flexibility Act.

This rule does not impose new

information collection requirements.

List of Subjects in 32 CFR Part 199

Claims, handicapped, health

insurance, and military personnel.

Accordingly, 32 CFR part 199 is

amended as follows:

PART 199—[AMENDED]

1. The authority citation for part 199

is revised to read as follows:

Authority: 5 U.S.C. 301; 10 U.S.C. chapter

55.

2. Section 199.4 is amended by

revising the heading of paragraph (e)(4),

paragraph (e)(4) introductory text,

(e)(4)(i), (e)(4)(ii), (e)(4)(iv), and the

introductory text of paragraph (f)(2)(ii),

and by adding new paragraphs (e)(4)(v),

and (f)(2)(ii)(D), as follows:

§ 199.4 Basic program benefits.

* * * * *

(e) * * *

* * * * *

(4) Treatment of substance use

disorders. Emergency and inpatient

hospital care for complications of

alcohol and drug abuse or dependency

and detoxification are covered as for any

other medical condition. Specific

coverage for the treatment of substance

use disorders includes detoxification,

rehabilitation, and outpatient care

provided in authorized substance use

disorder rehabilitation facilities.

(i) Emergency and inpatient hospital

services. Emergency and inpatient

hospital services are covered when

medically necessary for the active

medical treatment of the acute phases of

substance abuse withdrawal

(detoxification), for stabilization, and for

treatment of medical complications of

substance use disorders. Emergency and

inpatient hospital services are

considered medically necessary only

when the patient’s condition is such

that the personnel and facilities of a

hospital are required. Stays provided for

substance use disorder rehabilitation in

a hospital-based rehabilitation facility

are covered, subject to the provisions of

paragraph (e)(4)(ii) of this section.

Inpatient hospital services also are

subject to the provisions regarding the

limit on inpatient mental health

services.

(ii) Authorized substance use disorder

treatment. Only those services provided

by CHAMPUS-authorized institutional

providers are covered. Such a provider

must be either an authorized hospital, or

an organized substance use disorder

treatment program in an authorized freestanding or hospital-based substance

use disorder rehabilitation facility.

Covered services consist of any or all of

the services listed below. A qualified

mental health provider (physicians,

clinical psychologists, clinical social

workers, psychiatric nurse specialists)

(see paragraph (c)(3)(ix) of this section)

shall prescribe the particular level of

treatment. Each CHAMPUS beneficiary

is entitled to three substance use

disorder treatment benefit periods in his

or her lifetime, unless this limit is

waived pursuant to paragraph (e)(4)(v)

of this section. (A benefit period begins

with the first date of covered treatment

and ends 365 days later, regardless of

the total services actually used within

the benefit period. Unused benefits

cannot be carried over to subsequent

benefit periods. Emergency and

inpatient hospital services (as described

in paragraph (e)(4)(i) of this section) do

not constitute substance abuse treatment

for purposes of establishing the

beginning of a benefit period.)

(A) Rehabilitative care. Rehabilitative

care in a authorized hospital or

substance use disorder rehabilitative

facility, whether free-standing or

hospital-based, is covered on either a

residential or partial care (day or night

program) basis. Coverage during a single

benefit period is limited to no more than

inpatient stay (exclusive of stays

classified in DRG 433) in hospitals

subject to CHAMPUS DRG-based

payment system or 21 days in a DRGexempt facility for rehabilitation care,

unless the limit is waived pursuant to

paragraph (e)(4)(v) of this section. If the

patient is medically in need of chemical

detoxification, but does not require the

personnel or facilities of a general

hospital setting, detoxification services

are covered in addition to the

rehabilitative care, but in a DRG-exempt

facility detoxification services are

limited to 7 days unless the limit is

waived pursuant to paragraph (e)(4)(v)

of this section. The medical necessity

for the detoxification must be

documented. Any detoxification

services provided by the substance use

disorder rehabilitation facility must be

under general medical supervision.

(B) Outpatient care. Outpatient

treatment provided by an approved

substance use disorder rehabilitation

facility, whether free-standing or

hospital-based, is covered for up to 60

visits in a benefit period, unless the

limit is waived pursuant to paragraph

(e)(4)(v) of this section.

(C) Family therapy. Family therapy

provided by an approved substance use

disorder rehabilitation facility, whether

free-standing or hospital-based, is

covered for up to 15 visits in a benefit

period, unless the limit is waived

pursuant to paragraph (e)(4)(v) of this

section.

* * * * *

(iv) Confidentialty. Release of any

patient identifying information,

including that required to adjudicate a

claim, must comply with the provisions

of section 544 of the Public Health

Service Act, as amended, (42 U.S.C.

290dd–3), which governs the release of

medical and other information from the

records of patients undergoing treatment

of substance abuse. If the patient refuses

to authorize the release of medical

records which are, in the opinion of the

Director, OCHAMPUS, or a designee,

necessary to determine benefits on a

claim for treatment of substance abuse

the claim will be denied.

(v) Waiver of benefit limits. The

specific benefit limits set forth in

paragraphs (e)(4)(ii) of this section may

be waived by the Director, OCHAMPUS

in special cases based on a

determination that all of the following

criteria are met:

(A) Active treatment has taken place

during the period of the benefit limit

and substantial progress has been made

according to the plan of treatment.

(B) Further progress has been delayed

due to the complexity of the illness.

(C) Specific evidence has been

presented to explain the factors that

interfered with further treatment

progress during the period of the benefit

limit.

(D) The waiver request includes

specific time frames and a specific plan

of treatment which will complete the

course of treatment.

* * * * *

(f) * * *

(2) * * *

(ii) Inpatient cost-sharing. Except in

the case of mental health services (see

paragraph (f)(2)(ii)(D) of this section),

dependents of active duty members of

the Uniformed Services or their

sponsors are responsible for the

payment of the first $25 of the allowable

institutional costs incurred with each

covered inpatient admission to a

hospital or other authorized

institutional provider (refer to § 199.6),

or the amount the beneficiary or sponsor

would have been charged had the

inpatient care been provided in a

Uniformed Service hospital, whichever

is greater.

* * * * *

(D) Inpatient cost-sharing for mental

health services. For care provided on or

after October 1, 1995, the inpatient costsharing for mental health services is $20

per day for each day of the inpatient

admission. This $20 per day cost
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12427

sharing amount applies to admissions to

any hospital for mental health services,

any residential treatment facility, any

substance abuse rehabilitation facility,

and any partial hospitalization program

providing mental health or substance

use disorder rehabilitation services.

* * * * *

3. Section 199.6 is amended by

revising paragraphs (b)(4)(vii) and

(b)(4)(xii), by removing paragraph

(b)(4)(x)(B)(3), and by adding a new

paragraph (b)(4)(xiv) to read as follows:

§ 199.6 Authorized providers.

* * * * *

(b) Institutional providers. * * *

* * * * *

(4) Categories of institutional

providers. * * *

* * * * *

(vii) Residential treatment centers.

This paragraph (b)(4)(vii) establishes

standards and requirements for

residential treatment centers (RTCs).

(A) Organization and administration.

(1) Definition. A Residential

Treatment Center (RTC) is a facility or

a distinct part of a facility that provides

to beneficiaries under 21 years of age a

medically supervised, interdisciplinary

program of mental health treatment. An

RTC is appropriate for patients whose

predominant symptom presentation is

essentially stabilized, although not

resolved, and who have persistent

dysfunction in major life areas. The

extent and pervasiveness of the patient’s

problems require a protected and highly

structured therapeutic environment.

Residential treatment is differentiated

from:

(i) Acute psychiatric care, which

requires medical treatment and 24-hour

availability of a full range of diagnostic

and therapeutic services to establish and

implement an effective plan of care

which will reverse life-threatening and/

or severely incapacitating symptoms;

(ii) Partial hospitalization, which

provides a less than 24-hour-per-day,

seven-day-per-week treatment program

for patients who continue to exhibit

psychiatric problems but can function

with support in some of the major life

areas;

(iii) A group home, which is a

professionally directed living

arrangement with the availability of

psychiatric consultation and treatment

for patients with significant family

dysfunction and/or chronic but stable

psychiatric disturbances;

(iv) Therapeutic school, which is an

educational program supplemented by

psychological and psychiatric services;

(v) Facilities that treat patients with a

primary diagnosis of chemical abuse or

dependence; and

(vi) Facilities providing care for

patients with a primary diagnosis of

mental retardation or developmental

disability.

(2) Eligibility.

(i) Every RTC must be certified

pursuant to CHAMPUS certification

standards. Such standards shall

incorporate the basic standards set forth

in paragraphs (b)(4)(vii) (A) through (D)

of this section, and shall include such

additional elaborative criteria and

standards as the Director, OCHAMPUS

determines are necessary to implement

the basic standards.

(ii) To be eligible for CHAMPUS

certification, the facility is required to

be licensed and fully operational for six

months (with a minimum average daily

census of 30 percent of total bed

capacity) and operate in substantial

compliance with state and federal

regulations.

(iii) The facility is currently

accredited by the Joint Commission on

Accreditation of Healthcare

Organizations (JCAHO) under the

current edition of the Manual for Mental

Health, Chemical Dependency, and

Mental Retardation/Developmental

Disabilities Services which is available

from JCAHO, P.O. Box 75751, Chicago,

IL 60675.

(iv) The facility has a written

participation agreement with

OCHAMPUS. The RTC is not a

CHAMPUS-authorized provider and

CHAMPUS benefits are not paid for

services provided until the date upon

which a participation agreement is

signed by the Director, OCHAMPUS.

(3) Governing body.

(i) The RTC shall have a governing

body which is responsible for the

policies, bylaws, and activities of the

facility. If the RTC is owned by a

partnership or single owner, the

partners or single owner are regarded as

the governing body. The facility will

provide an up-to-date list of names,

addresses, telephone numbers and titles

of the members of the governing body.

(ii) The governing body ensures

appropriate and adequate services for all

patients and oversees continuing

development and improvement of care.

Where business relationships exist

between the governing body and

facility, appropriate conflict-of-interest

policies are in place.

(iii) Board members are fully informed

about facility services and the governing

body conducts annual review of its

performance in meeting purposes,

responsibilities, goals and objectives.

(4) Chief executive officer. The chief

executive officer, appointed by and

subject to the direction of the governing

body, shall assume overall

administrative responsibility for the

operation of the facility according to

governing body policies. The chief

executive officer shall have five years’

administrative experience in the field of

mental health. On October 1, 1997, the

CEO shall possess a degree in business

administration, public health, hospital

administration, nursing, social work, or

psychology, or meeting similar

educational requirements as prescribed

by the Director, OCHAMPUS.

(5) Clinical Director. The clinical

director, appointed by the governing

body, shall be a psychiatrist or doctoral

level psychologist who meets applicable

CHAMPUS requirements for individual

professional providers and is licensed to

practice in the state where the

residential treatment center is located.

The clinical director shall possess

requisite education and experience,

credentials applicable under state

practice and licensing laws appropriate

to the professional discipline, and a

minimum of five years’ clinical

experience in the treatment of children

and adolescents. The clinical director

shall be responsible for planning,

development, implementation, and

monitoring of all clinical activities.

(6) Medical director. The medical

director, appointed by the governing

body, shall be licensed to practice

medicine in the state where the

residential treatment center is located

and shall possess requisite education

and experience, including graduation

from an accredited school of medicine

or osteopathy, an approved residency in

psychiatry and a minimum of five years

clinical experience in the treatment of

children and adolescents. The Medical

Director shall be responsible for the

planning, development,

implementation, and monitoring of all

activities relating to medical treatment

of patients. If qualified, the Medical

Director may also serve as Clinical

Director.

(7) Medical or professional staff

organization. The governing body shall

establish a medical or professional staff

organization to assure effective

implementation of clinical privileging,

professional conduct rules, and other

activities directly affecting patient care.

(8) Personnel policies and records.

The RTC shall maintain written

personnel policies, updated job

descriptions and personnel records to

assure the selection of qualified

personnel and successful job

performance of those personnel.

(9) Staff development. The facility

shall provide appropriate training and

development programs for

administrative, professional support,

and direct care staff.
12428 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

(10) Fiscal accountability. The RTC

shall assure fiscal accountability to

applicable government authorities and

patients.

(11) Designated teaching facilities.

Students, residents, interns or fellows

providing direct clinical care are under

the supervision of a qualified staff

member approved by an accredited

university. The teaching program is

approved by the Director, OCHAMPUS.

(12) Emergency reports and records.

The facility notifies OCHAMPUS of any

serious occurrence involving

CHAMPUS beneficiaries.

(B) Treatment services.

(1) Staff composition.

(i) The RTC shall follow written plans

which assure that medical and clinical

patient needs will be appropriately

addressed 24 hours a day, seven days a

week by a sufficient number of fully

qualified (including license, registration

or certification requirements,

educational attainment, and

professional experience) health care

professionals and support staff in the

respective disciplines. Clinicians

providing individual, group, and family

therapy meet CHAMPUS requirements

as qualified mental health providers and

operate within the scope of their

licenses. The ultimate authority for

planning, development,

implementation, and monitoring of all

clinical activities is vested in a

psychiatrist or doctoral level

psychologist. The management of

medical care is vested in a physician.

(ii) The RTC shall ensure adequate

coverage by fully qualified staff during

all hours of operation, including

physician availability, other

professional staff coverage, and support

staff in the respective disciplines.

(2) Staff qualifications. The RTC will

have a sufficient number of qualified

mental health providers, administrative,

and support staff to address patients’

clinical needs and to coordinate the

services provided. RTCs which employ

individuals with master’s or doctoral

level degrees in a mental health

discipline who do not meet the

licensure, certification and experience

requirements for a qualified mental

health provider but are actively working

toward licensure or certification, may

provide services within the all-inclusive

per diem rate, provided the individual

works under the clinical supervision of

a fully qualified mental health provider

employed by the RTC. All other

program services shall be provided by

trained, licensed staff.

(3) Patient rights.

(i) The RTC shall provide adequate

protection for all patient rights,

including rights provided by law,

privacy, personnel rights, safety,

confidentiality, informed consent,

grievances, and personal dignity.

(ii) The facility has a written policy

regarding patient abuse and neglect.

(iii) Facility marketing and advertising

meets professional standards.

(4) Behavioral management. The RTC

shall adhere to a comprehensive,

written plan of behavioral management,

developed by the clinical director and

the medical or professional staff and

approved by the governing body,

including strictly limited procedures to

assure that the restraint or seclusion are

used only in extraordinary

circumstances, are carefully monitored,

and are fully documented. Only trained

and clinically privileged RNs or

qualified mental health professionals

may be responsible for the

implementation of seclusion and

restraint procedures in an emergency

situation.

(5) Admission process. The RTC shall

maintain written policies and

procedures to ensure that, prior to an

admission, a determination is made, and

approved pursuant to CHAMPUS

preauthorization requirements, that the

admission is medically and/or

psychologically necessary and the

program is appropriate to meet the

patient’s needs. Medical and/or

psychological necessity determinations

shall be rendered by qualified mental

health professionals who meet

CHAMPUS requirements for individual

professional providers and who are

permitted by law and by the facility to

refer patients for admission.

(6) Assessments. The professional

staff of the RTC shall complete a current

multidisciplinary assessment which

includes, but is not limited to physical,

psychological, developmental, family,

educational, social, spiritual and skills

assessment of each patient admitted.

Unless otherwise specified, all required

clinical assessments are completed prior

to development of the multidisciplinary

treatment plan.

(7) Clinical formulation. A qualified

mental health professional of the RTC

will complete a clinical formulation on

all patients. The clinical formulation

will be reviewed and approved by the

responsible individual professional

provider and will incorporate

significant findings from each of the

multidisciplinary assessments. It will

provide the basis for development of an

interdisciplinary treatment plan.

(8) Treatment planning. A qualified

mental health professional shall be

responsible for the development,

supervision, implementation, and

assessment of a written, individualized,

interdisciplinary plan of treatment,

which shall be completed within 10

days of admission and shall include

individual, measurable, and observable

goals for incremental progress and

discharge. A preliminary treatment plan

is completed within 24 hours of

admission and includes at least an

admission note and orders written by

the admitting mental health

professional. The master treatment plan

is reviewed and revised at least every 30

days, or when major changes occur in

treatment.

(9) Discharge and transition planning.

The RTC shall maintain a transition

planning process to address adequately

the anticipated needs of the patient

prior to the time of discharge. The

planning involves determining

necessary modifications in the treatment

plan, facilitating the termination of

treatment, and identifying resources to

maintain therapeutic stability following

discharge.

(10) Clinical documentation. Clinical

records shall be maintained on each

patient to plan care and treatment and

provide ongoing evaluation of the

patient’s progress. All care is

documented and each clinical record

contains at least the following:

demographic data, consent forms,

pertinent legal documents, all treatment

plans and patient assessments,

consultation and laboratory reports,

physician orders, progress notes, and a

discharge summary. All documentation

will adhere to applicable provisions of

the JCAHO and requirements set forth in

§ 199.7(b)(3). An appropriately qualified

records administrator or technician will

supervise and maintain the quality of

the records. These requirements are in

addition to other records requirements

of this Part, and documentation

requirements of the Joint Commission

on Accreditation of Healthcare

Organizations.

(11) Progress notes. RTC’s shall

document the course of treatment for

patients and families using progress

notes which provide information to

review, analyze, and modify the

treatment plans. Progress notes are

legible, contemporaneous, sequential,

signed and dated and adhere to

applicable provisions of the Manual of

Mental Health, Chemical Dependency,

and Mental Retardation/Development

Disabilities Services and requirements

set forth in § 199.7(b)(3).

(12) Therapeutic services.

(i) Individual, group, and family

psychotherapy are provided to all

patients, consistent with each patient’s

treatment plan, by qualified mental

health providers.

(ii) A range of therapeutic activities,

directed and staffed by qualified
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12429

personnel, are offered to help patients

meet the goals of the treatment plan.

(iii) Therapeutic educational services

are provided or arranged that are

appropriate to the patients educational

and therapeutic needs.

(13) Ancillary services. A full range of

ancillary services is provided.

Emergency services include policies and

procedures for handling emergencies

with qualified personnel and written

agreements with each facility providing

the service. Other ancillary services

include physical health, pharmacy and

dietary services.

(C) Standards for physical plant and

environment.

(1) Physical environment. The

buildings and grounds of the RTC shall

be maintained so as to avoid health and

safety hazards, be supportive of the

services provided to patients, and

promote patient comfort, dignity,

privacy, personal hygiene, and personal

safety.

(2) Physical plant safety. The RTC

shall be of permanent construction and

maintained in a manner that protects

the lives and ensures the physical safety

of patients, staff, and visitors, including

conformity with all applicable building,

fire, health, and safety codes.

(3) Disaster planning. The RTC shall

maintain and rehearse written plan for

taking care of casualities and handling

other consequences arising from

internal and external disasters.

(D) Standards for evaluation system.

(1) Quality assessment and

improvement. The RTC shall develop

and implement a comprehensive quality

assurance and quality improvement

program that monitors the quality,

efficiency, appropriateness, and

effectiveness of the care, treatments, and

services it provides for patients and

their families, primarily utilizing

explicit clinical indicators to evaluate

all functions of the RTC and contribute

to an ongoing process of program

improvement. The clinical director is

responsible for developing and

implementing quality assessment and

improvement activities throughout the

facility.

(2) Utilization review. The RTC shall

implement a utilization review process,

pursuant to a written plan approved by

the professional staff, the

administration, and the governing body,

that assesses the appropriateness of

admission, continued stay, and

timeliness of discharge as part of an

effort to provide quality patient care in

a cost-effective manner. Findings of the

utilization review process are used as a

basis for revising the plan of operation,

including a review of staff qualifications

and staff composition.

(3) Patient records review. The RTC

shall implement a process, including

monthly reviews of a representative

sample of patient records, to determine

the completeness and accuracy of the

patient records and the timeliness and

pertinence of record entries, particularly

with regard to regular recording of

progress/non-progress in treatment.

(4) Drug utilization review. The RTC

shall implement a comprehensive

process for the monitoring and

evaluating of the prophylactic,

therapeutic, and empiric use of drugs to

assure that medications are provided

appropriately, safely, and effectively.

(5) Risk management. The RTC shall

implement a comprehensive risk

management program, fully coordinated

with other aspects of the quality

assurance and quality improvement

program, to prevent and control risks to

patients and staff and costs associated

with clinical aspects of patient care and

safety.

(6) Infection control. The RTC shall

implement a comprehensive system for

the surveillance, prevention, control,

and reporting of infections acquired or

brought into the facility.

(7) Safety. The RTC shall implement

an effective program to assure a safe

environment for patients, staff, and

visitors, including an incident report

system, a continuous safety surveillance

system, and an active multidisciplinary

safety committee.

(8) Facility evaluation. The RTC

annually evaluates accomplishment of

the goals and objectives of each clinical

program and service of the RTC and

reports findings and recommendations

to the governing body.

(E) Participation agreement

requirements. In addition to other

requirements set forth in paragraph

(b)(4)(vii), of this section in order for the

services of an RTC to be authorized, the

RTC shall have entered into a

Participation Agreement with

OCHAMPUS. The period of a

participation agreement shall be

specified in the agreement, and will

generally be for not more than five

years. Participation agreements entered

into prior April 6, 1995 must be

renewed not later than October 1, 1995.

In addition to review of a facility’s

application and supporting

documentation, an on-site inspection by

OCHAMPUS authorized personnel may

be required prior to signing a

Participation Agreement. Retroactive

approval is not given. In addition, the

Participation Agreement shall include

provisions that the RTC shall, at a

minimum:

(1) Render residential treatment

center impatient services to eligible

CHAMPUS beneficiaries in need of such

services, in accordance with the

participation agreement and CHAMPUS

regulation;

(2) Accept payment for its services

based upon the methodology provided

in § 199.14(f) or such other method as

determined by the Director,

OCHAMPUS;

(3) Accept the CHAMPUS allinclusive per diem rate as payment in

full and collect from the CHAMPUS

beneficiary or the family of the

CHAMPUS beneficiary only those

amounts that represent the beneficiary’s

liability, as defined in section 199.4,

and charges for services and supplies

that are not a benefit of CHAMPUS;

(4) Make all reasonable efforts

acceptable to the Director, OCHAMPUS,

to collect those amounts, which

represents the beneficiary’s liability, as

defined in § 199.4;

(5) Comply with the provisions of

§ 199.8, and submit claims first to all

health insurance coverage to which the

beneficiary is entitled that is primary to

CHAMPUS;

(6) Submit claims for services

provided to CHAMPUS beneficiaries at

least 30 days (except to the extent a

delay is necessitated by efforts to first

collect from other health insurance). If

claims are not submitted at least every

30 days, the RTC agrees not to bill the

beneficiary or the beneficiary’s family

for any amounts disallowed by

CHAMPUS;

(7) Certify that:

(i) It is and will remain in compliance

with the provisions of paragraph

(b)(4)(vii) of this section establishing

standards for Residential Treatment

Centers;

(ii) It has conducted a self assessment

of the facility’s compliance with the

CHAMPUS Standards for Residential

Treatment Centers Serving Children and

Adolescents with Mental Disorders, as

issued by the Director, OCHAMPUS and

notified the Director, OCHAMPUS of

any matter regarding which the facility

is not in compliance with such

standards; and

(iii) It will maintain compliance with

the CHAMPUS Standards for

Residential Treatment Centers Serving

Children and Adolescents with Mental

Disorders, as issued by the Director,

OCHAMPUS, except for any such

standards regarding which the facility

notifies the Director, OCHAMPUS that it

is not in compliance.

(8) Designate an individual who will

act as liaison for CHAMPUS inquiries.

The RTC shall inform OCHAMPUS in

writing of the designated individual;

(9) Furnish OCHAMPUS, as requested

by OCHAMPUS, with cost data certified
12430 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

by an independent accounting firm or

other agency as authorized by the

Director, OCHAMPUS;

(10) Comply with all requirements of

this section applicable to institutional

providers generally concerning

preauthorization, concurrent care

review, claims processing, beneficiary

liability, double coverage, utilization

and quality review and other matters;

(11) Grant the Director, OCHAMPUS,

or designee, the right to conduct quality

assurance audits or accounting audits

with full access to patients and records

(including records relating to patients

who are not CHAMPUS beneficiaries) to

determine the quality and costeffectiveness of care rendered. The

audits may be conducted on a

scheduled or unscheduled

(unannounced) basis. This right to

audit/review includes, but is not limited

to:

(i) Examination of fiscal and all other

records of the RTC which would

confirm compliance with the

participation agreement and designation

as an authorized CHAMPUS RTC

provider;

(ii) Conducting such audits of RTC

records including clinical, financial,

and census records, as may be necessary

to determine the nature of the services

being provided, and the basis for

charges and claims against the United

States for services provided CHAMPUS

beneficiaries;

(iii) Examining reports of evaluations

and inspections conducted by federal,

state and local government, and private

agencies and organizations;

(iv) Conducting on-site inspections of

the facilities of the RTC and

interviewing employees, members of the

staff, contractors, board members,

volunteers, and patients, as required;

(v) Audits conducted by the United

States General Accounting Office.

(F) Other requirements applicable to

RTCs.

(1) Even though an RTC may qualify

as a CHAMPUS-authorized provider and

may have entered into a participation

agreement with CHAMPUS, payment by

CHAMPUS for particular services

provided is contingent upon the RTC

also meeting all conditions set forth in

section 199.4 especially all

requirements of paragraph (b)(4) of that

section.

(2) The RTC shall provide inpatient

services to CHAMPUS beneficiaries in

the same manner it provides inpatient

services to all other patients. The RTC

may not discriminate against

CHAMPUS beneficiaries in any manner,

including admission practices,

placement in special or separate wings

or rooms, or provisions of special or

limited treatment.

(3) The RTC shall assure that all

certifications and information provided

to the Director, OCHAMPUS incident to

the process of obtaining and retaining

authorized provider status is accurate

and that it has no material errors or

omissions. In the case of any

misrepresentations, whether by

inaccurate information being provided

or material facts withheld, authorized

status will be denied or terminated, and

the RTC will be ineligible for

consideration for authorized provider

status for a two year period.

* * * * *

(xii) Psychiatric partial

hospitalization programs. Paragraph

(b)(4)(xii) of this section establishes

standards and requirements for

psychiatric partial hospitalization

programs.

(A) Organization and administration.

(1) Definition. Partial hospitalization

is defined as a time-limited, ambulatory,

active treatment program that offers

therapeutically intensive, coordinated,

and structured clinical services within a

stable therapeutic milieu. Partial

hospitalization programs serve patients

who exhibit psychiatric symptoms,

disturbances of conduct, and

decompensating conditions affecting

mental health.

(2) Eligibility.

(i) Every psychiatric partial

hospitalization program must be

certified pursuant to CHAMPUS

certification standards. Such standards

shall incorporate the basic standards set

forth in paragraphs (b)(4)(xii) (A)

through (D) of this section, and shall

include such additional elaborative

criteria and standards as the Director,

OCHAMPUS determines are necessary

to implement the basic standards. Each

psychiatric partial hospitalization

program must be either a distinct part of

an otherwise authorized institutional

provider or a freestanding program.

(ii) To be eligible for CHAMPUS

certification, the facility is required to

be licensed and fully operational for a

period of at least six months (with a

minimum patient census of at least 30

percent of bed capacity) and operate in

substantial compliance with state and

federal regulations.

(iii) The facility is currently

accredited by the Joint Commission on

Accreditation of Healthcare

Organizations under the current edition

of the Accreditation Manual for Mental

Health, Chemical Dependency, and

Mental Retardation/Developmental

Disabilities Services.

(iv) The facility has a written

participation agreement with

OCHAMPUS. On October 1, 1995, the

PHP is not a CHAMPUS-authorized

provider and CHAMPUS benefits are

not paid for services provided until the

date upon which a participation

agreement is signed by the Director,

OCHAMPUS. Partial hospitalization is

capable of providing an

interdisciplinary program of medical

and therapeutic services a minimum of

three hours per day, five days per week,

and may include full- or half-day,

evening, and weekend treatment

programs.

(3) Governing body.

(i) The PHP shall have a governing

body which is responsible for the

policies, bylaws, and activities of the

facilities. If the PHP is owned by a

partnership or single owner, the

partners or single owner are regarded as

the governing body. The facility will

provide an up-to-date list of names,

addresses, telephone numbers, and titles

of the members of the governing body.

(ii) The governing body ensures

appropriate and adequate services for all

patients and oversees continuing

development and improvement of care.

Where business relationships exist

between the governing body and

facility, appropriate conflict-of-interest

policies are in place.

(iii) Board members are fully informed

about facility services and the governing

body conducts annual review of its

performance in meeting purposes,

responsibilities, goals and objectives.

(4) Chief executive officer. The Chief

Executive Officer, appointed by and

subject to the direction of the governing

body, shall assume overall

administrative responsibility for the

operation of the facility according to

governing body policies. The chief

executive officer shall have five years’

administrative experience in the field of

mental health. On October 1, 1997, the

CEO shall possess a degree in business

administration, public health, hospital

administration, nursing, social work, or

psychology, or meet similar educational

requirements as prescribed by the

Director, OCHAMPUS.

(5) Clinical Director. The clinical

director, appointed by the governing

body, shall be a psychiatrist or doctoral

level psychologist who meets applicable

CHAMPUS requirements for individual

professional providers and is licensed to

practice in the state where the PHP is

located. The clinical director shall

possess requisite education and

experience, credentials applicable under

state practice and licensing laws

appropriate to the professional

discipline, and a minimum of five years’

clinical experience in the treatment of

mental disorders specific to the ages and
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12431

disabilities of the patients served. The

clinical director shall be responsible for

planning, development,

implementation, and monitoring of all

clinical activities.

(6) Medical director. The medical

director, appointed by the governing

body, shall be licensed to practice

medicine in the state where the

residential treatment center is located

and shall possess requisite education

and experience, including graduation

from an accredited school of medicine

or osteopathy, an approved residency in

psychiatry and a minimum of five years

clinical experience in the treatment of

mental disorders specific to the ages and

disabilities of the patients served. The

Medical Director shall be responsible for

the planning, development,

implementation, and monitoring of all

activities relating to medical treatment

of patients. If qualified, the Medical

Director may also serve as Clinical

Director.

(7) Medical or professional staff

organization. The governing body shall

establish a medical or professional staff

organization to assure effective

implementation of clinical privileging,

professional conduct rules, and other

activities directly affecting patient care.

(8) Personnel policies and records.

The PHP shall maintain written

personnel policies, updated job

descriptions, personnel records to

assure the selection of qualified

personnel and successful job

performance of those personnel.

(9) Staff development. The facility

shall provide appropriate training and

development programs for

administrative, professional support,

and direct care staff.

(10) Fiscal accountability. The PHP

shall assure fiscal accountability to

applicable government authorities and

patients.

(11) Designated teaching facilities.

Students, residents, interns, or fellows

providing direct clinical care are under

the supervision of a qualified staff

member approved by an accredited

university. The teaching program is

approved by the Director, OCHAMPUS.

(12) Emergency reports and records.

The facility notifies OCHAMPUS of any

serious occurrence involving

CHAMPUS beneficiaries.

(B) Treatment services.

(1) Staff composition.

(i) The PHP shall ensure that patient

care needs will be appropriately

addressed during all hours of operation

by a sufficient number of fully qualified

(including license, registration or

certification requirements, educational

attainment, and professional

experience) health care professionals.

Clinicians providing individual, group,

and family therapy meet CHAMPUS

requirements as qualified mental health

providers, and operate within the scope

of their licenses. The ultimate authority

for managing care is vested in a

psychiatrist or licensed doctor level

psychologist. The management of

medical care is vested in a physician.

(ii) The PHP shall establish and follow

written plans to assure adequate staff

coverage during all hours of operation,

including physician availability, other

professional staff coverage, and support

staff in the respective disciplines.

(2) Staff qualifications. The PHP will

have a sufficient number of qualified

mental health providers, administrative,

and support staff to address patients’

clinical needs and to coordinate the

services provided. PHPs which employ

individuals with master’s or doctoral

level degrees in a mental health

discipline who do not meet the

licensure, certification and experience

requirements for a qualified mental

health provider but are actively working

toward licensure or certification, may

provide services within the all-inclusive

per diem rate, provided the individual

works under the clinical supervision of

a fully qualified mental health provider

employed by the PHP. All other

program services shall be provided by

trained, licensed staff.

(3) Patient rights.

(i) The PHP shall provide adequate

protection for all patient rights,

including rights provided by law,

privacy, personal rights, safety,

confidentiality, informed consent,

grievances, and personal dignity.

(ii) The facility has a written policy

regarding patient abuse and neglect.

(iii) Facility marketing and advertising

meets professional standards.

(4) Behavioral management. The PHP

shall adhere to a comprehensive,

written plan of behavior management,

developed by the clinical director and

the medical or professional staff and

approved by the governing body,

including strictly limited procedures to

assure that restraint or seclusion are

used only in extraordinary

circumstances, are carefully monitored,

and are fully documented. Only trained

and clinically privileged RNs or

qualified mental health professionals

may be responsible for implementation

of seclusion and restraint procedures in

an emergency situation.

(5) Admission process. The PHP shall

maintain written policies and

procedures to ensure that prior to an

admission, a determination is made, and

approved pursuant to CHAMPUS

preauthorization requirements, that the

admission is medically and/or

psychologically necessary and the

program is appropriate to meet the

patient’s needs. Medical and/or

psychological necessity determinations

shall be rendered by qualified mental

health professionals who meet

CHAMPUS requirements for individual

professional providers and who are

permitted by law and by the facility to

refer patients for admission.

(6) Assessments. The professional

staff of the PHP shall complete a

multidisciplinary assessment which

includes, but is not limited to physical

health, psychological health,

physiological, developmental, family,

educational, spiritual, and skills

assessment of each patient admitted.

Unless otherwise specified, all required

clinical assessment are completed prior

to development of the interdisciplinary

treatment plan.

(7) Clinical formulation. A qualified

mental health provider of the PHP will

complete a clinical formulation on all

patients. The clinical formulation will

be reviewed and approved by the

responsible individual professional

provider and will incorporate

significant findings from each of the

multidisciplinary assessments. It will

provide the basis for development of an

interdisciplinary treatment plan.

(8) Treatment planning. A qualified

mental health professional with

admitting privileges shall be responsible

for the development, supervision,

implementation, and assessment of a

written, individualized,

interdisciplinary plan of treatment,

which shall be completed by the fifth

day following admission to a full-day

PHP, or by the seventh day following

admission to a half-day PHP, and shall

include measurable and observable

goals for incremental progress and

discharge. The treatment plan shall

undergo review at least every two

weeks, or when major changes occur in

treatment.

(9) Discharge and transition planning.

The PHP shall develop an

individualized transition plan which

addresses anticipated needs of the

patient at discharge. The transition plan

involves determining necessary

modifications in the treatment plan,

facilitating the termination of treatment,

and identifying resources for

maintaining therapeutic stability

following discharge.

(10) Clinical documentation. Clinical

records shall be maintained on each

patient to plan care and treatment and

provide ongoing evaluation of the

patient’s progress. All care is

documented and each clinical record

contains at least the following:

demographic data, consent forms,
12432 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

pertinent legal documents, all treatment

plans and patient assessments,

consultation and laboratory reports,

physician orders, progress notes, and a

discharge summary. All documentation

will adhere to applicable provisions of

the JCAHO and requirements set forth in

§ 199.7(b)(3). An appropriately qualified

records administrator or technician will

supervise and maintain the quality of

the records. These requirements are in

addition to other records requirements

of this Part, and documentation

requirements of the Joint Commission

on Accreditation of Health Care

Organization.

(11) Progress notes. PHPs shall

document the course of treatment for

patients and families using progress

notes which provide information to

review, analyze, and modify the

treatment plans. Progress notes are

legible, contemporaneous, sequential,

signed and dated and adhere to

applicable provisions of the Manual for

Mental Health, Chemical Dependency,

and Mental Retardation/Developmental

Disabilities Services and requirements

set forth in section 199.7(b)(3).

(12) Therapeutic services.

(i) Individual, group, and family

therapy are provided to all patients,

consistent with each patient’s treatment

plan by qualified mental health

providers.

(ii) A range of therapeutic activities,

directed and staffed by qualified

personnel, are offered to help patients

meet the goals of the treatment plan.

(iii) Educational services are provided

or arranged that are appropriate to the

patient’s needs.

(13) Ancillary services. A full range of

ancillary services are provided.

Emergency services include policies and

procedures for handling emergencies

with qualified personnel and written

agreements with each facility providing

these services. Other ancillary services

include physical health, pharmacy and

dietary services.

(C) Standards for physical plant and

environment.

(1) Physical environment. The

buildings and grounds of the PHP shall

be maintained so as to avoid health and

safety hazards, be supportive of the

services provided to patients, and

promote patient comfort, dignity,

privacy, personal hygiene, and personal

safety.

(2) Physical plant safety. The PHP

shall be of permanent construction and

maintained in a manner that protects

the lives and ensures the physical safety

of patients, staff, and visitors, including

conformity with all applicable building,

fire, health, and safety codes.

(3) Disaster planning. The PHP shall

maintain and rehearse written plans for

taking care of casualities and handling

other consequences arising from

internal and external disasters.

(D) Standards for evaluation system.

(1) Quality assessment and

improvement. The PHP shall develop

and implement a comprehensive quality

assurance and quality improvement

program that monitors the quality,

efficiency, appropriateness, and

effectiveness of care, treatments, and

services the PHP provides for patients

and their families. Explicit clinical

indicators shall be used to be used to

evaluate all functions of the PHP and

contribute to an ongoing process of

program improvement. The clinical

director is responsible for developing

and implementing quality assessment

and improvement activities throughout

the facility.

(2) Utilization review. The PHP shall

implement a utilization review process,

pursuant to a written plan approved by

the professional staff, the administration

and the governing body, that assesses

distribution of services, clinical

necessity of treatment, appropriateness

of admission, continued stay, and

timeliness of discharge, as part of an

overall effort to provide quality patient

care in a cost-effective manner. Findings

of the utilization review process are

used as a basis for revising the plan of

operation, including a review of staff

qualifications and staff composition.

(3) Patient records. The PHP shall

implement a process, including regular

monthly reviews of a representative

sample of patient records, to determine

completeness, accuracy, timeliness of

entries, appropriate signatures, and

pertinence of clinical entries.

Conclusions, recommendations, actions

taken, and the results of actions are

monitored and reported.

(4) Drug utilization review. The PHP

shall implement a comprehensive

process for the monitoring and

evaluating of the prophylactic,

therapeutic, and empiric use of drugs to

assure that medications are provided

appropriately, safely, and effectively.

(5) Risk management. The PHP shall

implement a comprehensive risk

management program, fully coordinated

with other aspects of the quality

assurance and quality improvement

program, to prevent and control risks to

patients and staff, and to minimize costs

associated with clinical aspects of

patient care and safety.

(6) Infection control. The PHP shall

implement a comprehensive system for

the surveillance, prevention, control,

and reporting of infections acquired or

brought into the facility.

(7) Safety. The PHP shall implement

an effective program to assure a safe

environment for patients, staff, and

visitors, including an incident reporting

system, disaster training and safety

education, a continuous safety

surveillance system, and an active

multidisciplinary safety committee.

(8) Facility evaluation. The PHP

annually evaluates accomplishment of

the goals and objectives of each clinical

program component or facility service of

the PHP and reports findings and

recommendations to the governing

body.

(E) Participation agreement

requirements. In addition to other

requirements set forth in paragraph

(b)(4)(xii) of this section, in order for the

services of a PHP to be authorized, the

PHP shall have entered into a

Participation Agreement with

OCHAMPUS. The period of a

Participation Agreement shall be

specified in the agreement, and will

generally be for not more than five

years. On October 1, 1995, the PHP shall

not be considered to be a CHAMPUS

authorized provider and CHAMPUS

payments shall not be made for services

provided by the PHP until the date the

participation agreement is signed by the

Director, OCHAMPUS. In addition to

review of a facility’s application and

supporting documentation, an on-site

inspection by OCHAMPUS authorized

personnel may be required prior to

signing a participation agreement. The

Participation Agreement shall include at

least the following requirements:

(1) Render partial hospitalization

program services to eligible CHAMPUS

beneficiaries in need of such services, in

accordance with the participation

agreement and CHAMPUS regulation.

(2) Accept payment for its services

based upon the methodology provided

in section 199.14, or such other method

as determined by the Director,

OCHAMPUS;

(3) Accept the CHAMPUS allinclusive per diem rate as payment in

full and collect from the CHAMPUS

beneficiary or the family of the

CHAMPUS beneficiary only those

amounts that represent the beneficiary’s

liability, as defined in § 199.4, and

charges for services and supplies that

are not a benefit of CHAMPUS;

(4) Make all reasonable efforts

acceptable to the Director, OCHAMPUS,

to collect those amounts, which

represent the beneficiary’s liability, as

defined in § 199.4;

(5) Comply with the provisions of

§ 199.8, and submit claims first to all

health insurance coverage to which the

beneficiary is entitled that is primary to

CHAMPUS;
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12433

(6) Submit claims for services

provided to CHAMPUS beneficiaries at

least every 30 days (except to the extent

a delay is necessitated by efforts to first

collect from other health insurance). If

claims are not submitted at least every

30 days, the PHP agrees not to bill the

beneficiary or the beneficiary’s family

for any amounts disallowed by

CHAMPUS;

(7) Certify that:

(i) It is and will remain in compliance

with the provisions of paragraph

(b)(4)(xii) of this section establishing

standards for psychiatric partial

hospitalization programs;

(ii) It has conducted a self assessment

of the facility’s compliance with the

CHAMPUS Standards for Psychiatric

Partial Hospitalization Programs, as

issued by the Director, OCHAMPUS,

and notified the Director, OCHAMPUS

of any matter regarding which the

facility is not in compliance with such

standards; and

(iii) It will maintain compliance with

the CHAMPUS Standards for

Psychiatric Partial Hospitalization

Programs, as issued by the Director,

OCHAMPUS, except for any such

standards regarding which the facility

notifies the Director, OCHAMPUS that it

is not in compliance.

(8) Designate an individual who will

act as liaison for CHAMPUS inquiries.

The PHP shall inform OCHAMPUS in

writing of the designated individual;

(9) Furnish OCHAMPUS with cost

data, as requested by OCHAMPUS,

certified by an independent accounting

firm or other agency as authorized by

the Director, OCHAMPUS;

(10) Comply with all requirements of

this section applicable to institutional

providers generally concerning

preauthorization, concurrent care

review, claims processing, beneficiary

liability, double coverage, utilization

and quality review and other matters;

(11) Grant the Director, OCHAMPUS,

or designee, the right to conduct quality

assurance audits or accounting audits

with full access to patients and records

(including records relating to patients

who are not CHAMPUS beneficiaries) to

determine the quality and costeffectiveness of care rendered. The

audits may be conducted on a

scheduled or unscheduled

(unannounced) basis. This right to

audit/review includes, but is not limited

to:

(i) Examination of fiscal and all other

records of the PHP which would

confirm compliance with the

participation agreement and designation

as an authorized CHAMPUS PHP

provider;

(ii) Conducting such audits of PHP

records including clinical, financial,

and census records, as may be necessary

to determine the nature of the services

being provided, and the basis for

charges and claims against the United

States for services provided CHAMPUS

beneficiaries;

(iii) Examining reports of evaluations

and inspections conducted by federal,

state and local government, and private

agencies and organizations;

(iv) Conducting on-site inspections of

the facilities of the PHP and

interreviewing employees, members of

the staff, contractors, board members,

volunteers, and patients, as required;

(v) Audits conducted by the United

States General Account Office.

(F) Other requirements applicable to

PHPs.

(1) Even though a PHP may qualify as

a CHAMPUS-authorized provider and

may have entered into a participation

agreement with CHAMPUS, payment by

CHAMPUS for particular services

provided is contingent upon the PHP

also meeting all conditions set forth in

section 199.4 of this part.

(2) The PHP shall provide patient

services to CHAMPUS beneficiaries in

the same manner it provides inpatient

services to all other patients. The PHP

may not discriminate against

CHAMPUS beneficiaries in any manner,

including admission practices,

placement in special or separate wings

or rooms, or provisions of special or

limited treatment.

(3) The PHP shall assure that all

certifications and information provided

to the Director, OCHAMPUS incident to

the process of obtaining and retaining

authorized provider status is accurate

and that is has no material errors or

omissions. In the case of any

misrepresentations, whether by

inaccurate information being provided

or material facts withheld, authorized

provider status will be denied or

terminated, and the PHP will be

ineligible for consideration for

authorized provider status for a two year

period.

* * * * *

(xiv) Substance use disorder

rehabilitation facilities. Paragraph

(b)(4)(xiv) of this section establishes

standards and requirements for

substance use order rehabilitation

facilities (SUDRF). This includes both

inpatient rehabilitation centers for the

treatment of substance use disorders

and partial hospitalization centers for

the treatment of substance use

disorders.

(A) Organization and administration.

(1) Definition of inpatient

rehabilitation center. An inpatient

rehabilitation center is a facility, or

distinct part of a facility, that provides

medically monitored, interdisciplinary

addiction-focused treatment to

beneficiaries who have psychoactive

substance use disorders. Qualified

health care professionals provide 24-

hour, seven-day-per-week, medically

monitored assessment, treatment, and

evaluation. An inpatient rehabilitation

center is appropriate for patients whose

addiction-related symptoms, or

concomitant physical and emotional/

behavioral problems reflect persistent

dysfunction in several major life areas.

Inpatient rehabilitation is differentiated

from:

(i) Acute psychoactive substance use

treatment and from treatment of acute

biomedical/emotional/behavioral

problems; which problems are either

life-threatening and/or severely

incapacitating and often occur within

the context of a discrete episode of

addiction-related biomedical or

psychiatric dysfunction;

(ii) A partial hospitalization center,

which serves patients who exhibit

emotional/behavioral dysfunction but

who can function in the community for

defined periods of time with support in

one or more of the major life areas;

(iii) A group home, sober-living

environment, halfway house, or threequarter way house;

(iv) Therapeutic schools, which are

educational programs supplemented by

addiction-focused services;

(v) Facilities that treat patients with

primary psychiatric diagnoses other

than psychoactive substance use or

dependence; and

(vi) Facilities that care for patients

with the primary diagnosis of mental

retardation or developmental disability.

(2) Definition of partial

hospitalization center for the treatment

of substance use disorders. A partial

hospitalization center for the treatment

of substance use disorders is an

addiction-focused service that provides

active treatment to adolescents between

the ages of 13 and 18 or adults aged 18

and over. Partial hospitalization is a

generic term for day, evening, or

weekend programs that treat patients

with psychoactive substance use

disorders according to a comprehensive,

individualized, integrated schedule of

care. A partial hospitalization center is

organized, interdisciplinary, and

medically monitored. Partial

hospitalization is appropriate for those

whose addiction-related symptoms or

concomitant physical and emotional/

behavioral problems can be managed

outside the hospital environment for

defined periods of time with support in

one or more of the major life areas.
12434 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

(3) Eligibility.

(i) Every inpatient rehabilitation

center and partial hospitalization center

for the treatment of substance use

disorders must be certified pursuant to

CHAMPUS certification standards. Such

standards shall incorporate the basic

standards set forth in paragraphs

(b)(4)(xiv) (A) through (D) of this

section, and shall include such

additional elaborative criteria and

standards as the Director, OCHAMPUS

determines are necessary to implement

the basic standards.

(ii) To be eligible for CHAMPUS

certification, the SUDRF is required to

be licensed and fully operational (with

a minimum patient census of the lesser

of: six patients or 30 percent of bed

capacity) for a period of at least six

months and operate in substantial

compliance with state and federal

regulations.

(iii) The SUDRF is currently

accredited by the Joint Commission on

Accreditation of Healthcare

Organizations under the Accreditation

Manual for Mental Health, Chemical

Dependency, and Mental Retardation/

Developmental Disabilities Services, or

by the Commission on Accreditation of

Rehabilitation Facilities as an

alcoholism and other drug dependency

rehabilitation program under the

Standards Manual for Organizations

Serving People with Disabilities, or

other designated standards approved by

the Director, OCHAMPUS.

(iv) The SUDRF has a written

participation agreement with

OCHAMPUS. On October 1, 1995, the

SUDRF is not considered a CHAMPUSauthorized provider, and CHAMPUS

benefits are not paid for services

provided until the date upon which a

participation agreement is signed by the

Director, OCHAMPUS.

(4) Governing body.

(i) The SUDRF shall have a governing

body which is responsible for the

policies, bylaws, and activities of the

facility. If the SUDRF is owned by a

partnership or single owner, the

partners or single owner are regarded as

the governing body. The facility will

provide an up-to-date list of names,

addresses, telephone numbers and titles

of the members of the governing body.

(ii) The governing body ensures

appropriate and adequate services for all

patients and oversees continuing

development and improvement of care.

Where business relationships exist

between the governing body and

facility, appropriate conflict-of-interest

policies are in place.

(iii) Board members are fully informed

about facility services and the governing

body conducts annual reviews of its

performance in meeting purposes,

responsibilities, goals and objectives.

(5) Chief executive officer. The chief

executive officer, appointed by and

subject to the direction of the governing

body, shall assume overall

administrative responsibility for the

operation of the facility according to

governing body policies. The chief

executive officer shall have five years’

administrative experience in the field of

mental health or addictions. On October

1, 1997 the CEO shall possess a degree

in business administration, public

health, hospital administration, nursing,

social work, or psychology, or meet

similar educational requirements as

prescribed by the Director,

OCHAMPUS.

(6) Clinical Director. The clinical

director, appointed by the governing

body, shall be a qualified psychiatrist or

doctoral level psychologist who meets

applicable CHAMPUS requirements for

individual professional providers and is

licensed to practice in the state where

the SUDRF is located. The clinical

director shall possess requisite

education and experience, including

credentials applicable under state

practice and licensing laws appropriate

to the professional discipline. The

clinical director shall satisfy at least one

of the following requirements:

certification by the American Society of

Addiction Medicine; one year or 1,000

hours of experience in the treatment of

psychoactive substance use disorders; or

is a psychiatrist or doctoral level

psychologist with experience in the

treatment of substance use disorders.

The clinical director shall be

responsible for planning, development,

implementation, and monitoring of all

clinical activities.

(7) Medical director. The medical

director, appointed by the governing

body, shall be licensed to practice

medicine in the state where the center

is located and shall possess requisite

education including graduation from an

accredited school of medicine or

osteopathy. The medical director shall

satisfy at least one of the following

requirements: certification by the

American Society of Addiction

Medicine; one year or 1,000 hours of

experience in the treatment of

psychoactive substance use disorders; or

is a psychiatrist with experience in the

treatment of substance use disorders.

The medical director shall be

responsible for the planning,

development, implementation, and

monitoring of all activities relating to

medical treatment of patients. If

qualified, the Medical Director may also

serve as Clinical Director.

(8) Medical or professional staff

organization. The governing body shall

establish a medical or professional staff

organization to assure effective

implementation of clinical privileging,

professional conduct rules, and other

activities directly affecting patient care.

(9) Personnel policies and records.

The SUDRF shall maintain written

personnel policies, updated job

descriptions, personnel records to

assure the selection of qualified

personnel and successful job

performance of those personnel.

(10) Staff development. The SUDRF

shall provide appropriate training and

development programs for

administrative, support, and direct care

staff.

(11) Fiscal accountability. The SUDRF

shall assure fiscal accountability to

applicable government authorities and

patients.

(12) Designated teaching facilities.

Students, residents, interns, or fellows

providing direct clinical care are under

the supervision of a qualified staff

member approved by an accredited

university or approved training

program. The teaching program is

approved by the Director, OCHAMPUS.

(13) Emergency reports and records.

The facility notifies OCHAMPUS of any

serious occurrence involving

CHAMPUS beneficiaries.

(B) Treatment services.

(1) Staff composition.

(i) The SUDRF shall follow written

plans which assure that medical and

clinical patient needs will be

appropriately addressed during all

hours of operation by a sufficient

number of fully qualified (including

license, registration or certification

requirements, educational attainment,

and professional experience) health care

professionals and support staff in the

respective disciplines. Clinicians

providing individual, group and family

therapy meet CHAMPUS requirements

as qualified mental health providers and

operate within the scope of their

licenses. The ultimate authority for

planning, development,

implementation, and monitoring of all

clinical activities is vested in a

psychiatrist or doctoral level clinical

psychologist. The management of

medical care is vested in a physician.

(ii) The SUDRF shall establish and

follow written plans to assure adequate

staff coverage during all hours of

operation of the center, including

physician availability and other

professional staff coverage 24 hours per

day, seven days per week for an

inpatient rehabilitation center and

during all hours of operation for a

partial hospitalization center.
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12435

(2) Staff qualifications. Within the

scope of its programs and services, the

SUDRF has a sufficient number of

professional, administrative, and

support staff to address the medical and

clinical needs of patients and to

coordinate the services provided.

SUDRFs that employ individuals with

master’s or doctoral level degrees in a

mental health discipline who do not

meet the licensure, certification and

experience requirements for a qualified

mental health provider but are actively

working toward licensure or

certification, may provide services

within the DRG, provided the

individual works under the clinical

supervision of a fully qualified mental

health provider employed by the

SUDRF.

(3) Patient rights.

(i) The SUDRF shall provide adequate

protection for all patient rights, safety,

confidentiality, informed consent,

grievances, and personal dignity.

(ii) The SUDRF has a written policy

regarding patient abuse and neglect.

(iii) SUDRF marketing and advertising

meets professional standards.

(4) Behavioral management. When a

SUDRF uses a behavioral management

program, the center shall adhere to a

comprehensive, written plan of

behavioral management, developed by

the clinical director and the medical or

professional staff and approved by the

governing body. It shall be based on

positive reinforcement methods and,

except for infrequent use of temporary

physical holds or time outs, does not

include the use of restraint or seclusion.

Only trained and clinically privileged

RNs or qualified mental health

professionals may be responsible for the

implementation of seclusion and

restraint in an emergency situation.

(5) Admission process. The SUDRF

shall maintain written policies and

procedures to ensure that, prior to an

admission, a determination is made, and

approved pursuant to CHAMPUS

preauthorization requirements, that the

admission is medically and/or

psychologically necessary and the

program is appropriate to meet the

patient’s needs. Medical and/or

psychological necessity determinations

shall be rendered by qualified mental

health professionals who meet

CHAMPUS requirements for individual

professional providers and who are

permitted by law and by the facility to

refer patients for admission.

(6) Assessment. The professional staff

of the SUDRF shall provide a complete,

multidisciplinary assessment of each

patient which includes, but is not

limited to, medical history, physical

health, nursing needs, alcohol and drug

history, emotional and behavioral

factors, age-appropriate social

circumstances, psychological condition,

education status, and skills. Unless

otherwise specified, all required clinical

assessments are completed prior to

development of the multidisciplinary

treatment plan.

(7) Clinical formulation. A qualified

mental health care professional of the

SUDRF will complete a clinical

formulation on all patients. The clinical

formulation will be reviewed and

approved by the responsible individual

professional provider and will

incorporate significant findings from

each of the multidisciplinary

assessments. It will provide the basis for

development of an interdisciplinary

treatment plan.

(8) Treatment planning. A qualified

health care professional with admitting

privileges shall be responsible for the

development, supervision,

implementation, and assessment of a

written, individualized, and

interdisciplinary plan of treatment,

which shall be completed within 10

days of admission to an inpatient

rehabilitation center or by the fifth day

following admission to full day partial

hospitalization center, and by the

seventh day of treatment for half day

partial hospitalization. The treatment

plan shall include individual,

measurable, and observable goals for

incremental progress towards the

treatment plan objectives and goals and

discharge. A preliminary treatment plan

is completed within 24 hours of

admission and includes at least a

physician’s admission note and orders.

The master treatment plan is regularly

reviewed for effectiveness and revised

when major changes occur in treatment.

(9) Discharge and transition planning.

The SUDRF shall maintain a transition

planning process to address adequately

the anticipated needs of the patient

prior to the time of discharge.

(10) Clinical documentation. Clinical

records shall be maintained on each

patient to plan care and treatment and

provide ongoing evaluation of the

patient’s progress. All care is

documented and each clinical record

contains at least the following:

demographic data, consent forms,

pertinent legal documents, all treatment

plans and patient assessments,

consultation and laboratory reports,

physician orders, progress notes, and a

discharge summary. All documentation

will adhere to applicable provisions of

the JCAHO and requirements set forth in

§ 199.7(b)(3). An appropriately qualified

records administrator or technician will

supervise and maintain the quality of

the records. These requirements are in

addition to other records requirements

of this Part, and provisions of the

JCAHO Manual for Mental Health,

Chemical Dependency, and Mental

Retardation/Developmental Disabilities

Services.

(11) Progress notes. Timely and

complete progress notes shall be

maintained to document the course of

treatment for the patient and family.

(12) Therapeutic services.

(i) Individual, group, and family

psychotherapy and addiction

counseling services are provided to all

patients, consistent with each patient’s

treatment plan by qualified mental

health providers.

(ii) A range of therapeutic activities,

directed and staffed by qualified

personnel, are offered to help patients

meet the goals of the treatment plan.

(iii) Therapeutic educational services

are provided or arranged that are

appropriate to the patient’s educational

and therapeutic needs.

(13) Ancillary services. A full range of

ancillary services is provided.

Emergency services include policies and

procedures for handling emergencies

with qualified personnel and written

agreements with each facility providing

the service. Other ancillary services

include physical health, pharmacy and

dietary services.

(C) Standards for physical plant and

environment.

(1) Physical environment. The

buildings and grounds of the SUDRF

shall be maintained so as to avoid

health and safety hazards, be supportive

of the services provided to patients, and

promote patient comfort, dignity,

privacy, personal hygiene, and personal

safety.

(2) Physical plant safety. The SUDRF

shall be maintained in a manner that

protects the lives and ensures the

physical safety of patients, staff, and

visitors, including conformity with all

applicable building, fire, health, and

safety codes.

(3) Disaster planning. The SUDRF

shall maintain and rehearse written

plans for taking care of casualties and

handling other consequences arising

from internal or external disasters.

(D) Standards for evaluation system.

(1) Quality assessment and

improvement. The SUDRF develop and

implement a comprehensive quality

assurance and quality improvement

program that monitors the quality,

efficiency, appropriateness, and

effectiveness of the care, treatments, and

services it provides for patients and

their families, utilizing clinical

indicators of effectiveness to contribute

to an ongoing process of program

improvement. The clinical director is
12436 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

responsible for developing and

implementing quality assessment and

improvement activities throughout the

facility.

(2) Utilization review. The SUDRF

shall implement a utilization review

process, pursuant to a written plan

approved by the professional staff, the

administration, and the governing body,

that assesses the appropriateness of

admissions, continued stay, and

timeliness of discharge as part of an

effort to provide quality patient care in

a cost-effective manner. Findings of the

utilization review process are used as a

basis for revising the plan of operation,

including a review of staff qualifications

and staff composition.

(3) Patient records review. The center

shall implement a process, including

monthly reviews of a representative

sample of patient records, to determine

the completeness and accuracy of the

patient records and the timeliness and

pertinence of record entries, particularly

with regard to regular recording of

progress/non-progress in treatment plan.

(4) Drug utilization review. An

inpatient rehabilitation center and,

when applicable, a partial

hospitalization center, shall implement

a comprehensive process for the

monitoring and evaluating of the

prophylactic, therapeutic, and empiric

use of drugs to assure that medications

are provided appropriately, safely, and

effectively.

(5) Risk management. The SUDRF

shall implement a comprehensive risk

management program, fully coordinated

with other aspects of the quality

assurance and quality improvement

program, to prevent and control risks to

patients and staff and costs associated

with clinical aspects of patient care and

safety.

(6) Infection control. The SUDRF shall

implement a comprehensive system for

the surveillance, prevention, control,

and reporting of infections acquired or

brought into the facility.

(7) Safety. The SUDRF shall

implement an effective program to

assure a safe environment for patients,

staff, and visitors.

(8) Facility evaluation. The SUDRF

annually evaluates accomplishment of

the goals and objectives of each clinical

program and service of the SUDRF and

reports findings and recommendations

to the governing body.

(E) Participation agreement

requirements. In addition to other

requirements set forth in paragraph

(b)(4)(xiv) of this section, in order for

the services of an inpatient

rehabilitation center or partial

hospitalization center for the treatment

of substance abuse disorders to be

authorized, the center shall have

entered into a Participation Agreement

with OCHAMPUS. The period of a

Participation Agreement shall be

specified in the agreement, and will

generally be for not more than five

years. On October 1, 1995, the SUDRF

shall not be considered to be a

CHAMPUS authorized provider and

CHAMPUS payments shall not be made

for services provided by the SUDRF

until the date the participation

agreement is signed by the Director,

OCHAMPUS. In addition to review of

the SUDRFS application and supporting

documentation, an on-site visit by

OCHAMPUS representatives may be

part of the authorization process. In

addition, such a Participation

Agreement may not be signed until an

SUDRF has been licensed and

operational for at least six months. The

Participation Agreement shall include at

least the following requirements:

(1) Render applicable services to

eligible CHAMPUS beneficiaries in need

of such services, in accordance with the

participation agreement and CHAMPUS

regulation;

(2) Accept payment for its services

based upon the methodology provided

in § 199.14, or such other method as

determined by the Director,

OCHAMPUS;

(3) Accept the CHAMPUS-determined

rate as payment in full and collect from

the CHAMPUS beneficiary or the family

of the CHAMPUS beneficiary only those

amounts that represent the beneficiary’s

liability, as defined in § 199.4, and

charges for services and supplies that

are not a benefit of CHAMPUS;

(4) Make all reasonable efforts

acceptable to the Director, OCHAMPUS,

to collect those amounts which

represent the beneficiary’s liability, as

defined in § 199.4;

(5) Comply with the provisions of

§ 199.8, and submit claims first to all

health insurance coverage to which the

beneficiary is entitled that is primary to

CHAMPUS;

(6) Furnish OCHAMPUS with cost

data, as requested by OCHAMPUS,

certified to by an independent

accounting firm or other agency as

authorized by the Director,

OCHAMPUS;

(7) Certify that:

(i) It is and will remain in compliance

with the provisions of paragraph

(b)(4)(xiv) of the section establishing

standards for substance use disorder

rehabilitation facilities;

(ii) It has conducted a self assessment

of the SUDRF’S compliance with the

CHAMPUS Standards for Substance Use

Disorder Rehabilitation Facilities, as

issued by the Director, OCHAMPUS,

and notified the Director, OCHAMPUS

of any matter regarding which the

facility is not in compliance with such

standards; and

(iii) It will maintain compliance with

the CHAMPUS Standards for Substance

Use Disorder Rehabilitation Facilities,

as issued by the Director, OCHAMPUS,

except for any such standards regarding

which the facility notifies the Director,

OCHAMPUS that it is not in

compliance.

(8) Grant the Director, OCHAMPUS,

or designee, the right to conduct quality

assurance audits or accounting audits

with full access to patients and records

(including records relating to patients

who are not CHAMPUS beneficiaries) to

determine the quality and cost

effectiveness of care rendered. The

audits may be conducted on a

scheduled or unscheduled

(unannounced) basis. This right to

audit/review included, but is not

limited to:

(i) Examination of fiscal and all other

records of the center which would

confirm compliance with the

participation agreement and designation

as an authorized CHAMPUS provider;

(ii) Conducting such audits of center

records including clinical, financial,

and census records, as may be necessary

to determine the nature of the services

being provided, and the basis for

charges and claims against the United

States for services provided CHAMPUS

beneficiaries;

(iii) Examining reports of evaluations

and inspection conducted by federal,

state and local government, and private

agencies and organizations;

(iv) Conducting on-site inspections of

the facilities of the SUDRF and

interviewing employees, members of the

staff, contractors, board members,

volunteers, and patients, as required.

(v) Audits conducted by the United

States General Accounting Office.

(F) Other requirements applicable to

substance use disorder rehabilitation

facilities.

(1) Even though a SUDRF may qualify

as a CHAMPUS-authorized provider and

may have entered into a participation

agreement with CHAMPUS, payment by

CHAMPUS for particular services

provided is contingent upon the SUDRF

also meeting all conditions set forth in

§ 199.4.

(2) The center shall provide inpatient

services to CHAMPUS beneficiaries in

the same manner it provides services to

all other patients. The center may not

discriminate against CHAMPUS

beneficiaries in any manner, including

admission practices, placement in

special or separate wings or rooms, or
Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations 12437

provisions of special or limited

treatment.

(3) The substance use disorder facility

shall assure that all certifications and

information provided to the Director,

OCHAMPUS incident to the process of

obtaining and retaining authorized

provider status is accurate and that it

has no material errors or omissions. In

the case of any misrepresentations,

whether by inaccurate information

being provided or material facts

withheld, authorized provider status

will be denied or terminated, and the

facility will be ineligible for

consideration for authorized provider

status for a two year period.

* * * * *

4. Section 199.14 is amended by

designating the current text of paragraph

(a)(2)(ii)(A) as paragraph (a)(2)(ii)(A)(1),

revising paragraphs (a)(2)(ii)(B) and

(a)(2)(iv)(C), the heading of paragraph

(a)(2)(ix), paragraphs (a)(2)(ix)(A),

(a)(2)(ix)(C), (f)(3), and (f)(5), and by

adding new paragraphs (a)(1)(ii)(F),

(a)(2)(ii)(A)(2), and (f)(6) as follows:

§ 199.14 Provider reimbursement

methods.

(a) Hospitals. * * *

(1) CHAMPUS Diagnosis Related

Group (DRG)-based payment system.

* * *

(ii) Applicability of the DRG system.

* * *

(F) Substance Use Disorder

Rehabilitation facilities.

With admissions on or after July 1,

1995, substance use disorder

rehabilitation facilities, authorized

under § 199.6(b)(4)(xiv), are subject to

the DRG-based payment system.

* * * * *

(2) CHAMPUS mental health per diem

payment system.

* * * * *

(ii) Hospital-specific per diems for

higher volume hospitals and units.

* * *

(A) Per diem amount. * * *

(2) In states that have implemented a

payment system in connection with

which hospitals in that state have been

exempted from the CHAMPUS DRGbased payment system pursuant to

paragraph (a)(1)(ii)(A) of this section,

psychiatric hospitals and units may

have per diem amounts established

based on the payment system applicable

to such hospitals and units in the state.

The per diem amount, however, may

not exceed the cap amount applicable to

other higher volume hospitals.

(B) Cap.

(1) As it affects payment for care

provided to patients prior to April 6,

1995, the base period per diem amount

may not exceed the 80th percentile of

the average daily charge weighted for all

discharges throughout the United States

from all higher volume hospitals.

(2) Applicable to payments for care

provided to patients on or after April 6,

1996, the base period per diem amount

may not exceed the 70th percentile of

the average daily charge weighted for all

discharges throughout the United States

from all higher volume hospitals. For

this purpose, base year charges shall be

deemed to be charges during the period

of July 1, 1991 to June 30, 1992,

adjusted to correspond to base year (FY

1988) charges by the percentage change

in average daily charges for all higher

volume hospitals and units between the

period of July 1, 1991 to June 30, 1992

and the base year.

* * * * *

(iv) Base period and update factors.

* * * * *

(C) Update factors.

(1) The hospital-specific per diems

and the regional per diems calculated

for the base period pursuant to

paragraphs (a)(2)(ii) of this section shall

remain in effect for federal fiscal year

1989; there will be no additional update

for fiscal year 1989.

(2) Except as provided in paragraph

(a)(2)(iv)(C)(3) of this section, for

subsequent federal fiscal years, each per

diem shall be updated by the Medicare

update factor for hospitals and units

exempt from the Medicare prospective

payment system.

(3) As an exception to the update

required by paragraph (a)(2)(iv)(C)(2) of

this section, all per diems in effect at the

end of fiscal year 1995 shall remain in

effect, with no additional update,

throughout fiscal years 1996 and 1997.

For fiscal year 1998 and thereafter, the

per diems in effect at the end of fiscal

year 1997 will be updated in accordance

with paragraph (a)(2)(iv)(C)(2).

(4) Hospitals and units with hospitalspecific rates will be notified of their

respective rates prior to the beginning of

each Federal fiscal year. New hospitals

shall be notified at such time as the

hospital rate is determined. The actual

amounts of each regional per diem that

will apply in any Federal fiscal year

shall be published in the Federal

Register at approximately the start of

that fiscal year.

* * * * *

(ix) Per diem payment for psychiatric

and substance use disorder

rehabilitation partial hospitalization

services.

(A) In general. Psychiatric and

substance use disorder rehabilitation

partial hospitalization services

authorized by § 199.4 (b)(10) and (e)(4)

and provided by institutional providers

authorized under § 199.6 (b)(4)(xii) and

(b)(4)(xiv), are reimbursed on the basis

of prospectively determined, allinclusive per diem rates. The per diem

payment amount must be accepted as

payment in full for all institutional

services provided, including board,

routine nursing services, ancillary

services (includes art, music, dance,

occupational and other such therapies),

psychological testing and assessments,

overhead and any other services for

which the customary practice among

similar providers is included as part of

the institutional charges.

* * * * *

(C) Per diem rate. For any full day

partial hospitalization program

(minimum of 6 hours), the maximum

per diem payment amount is 40 percent

of the average inpatient per diem

amount per case established under the

CHAMPUS mental health per diem

reimbursement system for both high and

low volume psychiatric hospitals and

units (as defined in § 199.14(a)(2)) for

the fiscal year. A partial hospitalization

program of less than 6 hours (with a

minimum of three hours) will be paid a

per diem rate of 75 percent of the rate

for a full-day program.

* * * * *

(f) Reimbursement of Residential

Treatment Centers.

* * * * *

(3) For care on or after April 6, 1995,

the per diem amount may not exceed a

cap of the 70th percentile of all

established Federal fiscal year 1994 RTC

rates nationally, weighted by total

CHAMPUS days provided at each rate

during the first half of Federal fiscal

year 1994, and updated to FY95. For

Federal fiscal years 1996 and 1997, the

cap shall remain unchanged. For

Federal fiscal years after fiscal year

1997, the cap shall be adjusted by the

Medicare update factor for hospitals and

units exempt from the Medicare

prospective payment system.

* * * * *

(5) Subject to the applicable RTC cap,

adjustments to the RTC rates may be

made annually.

(i) For Federal fiscal years through

1995, the adjustment shall be based on

the Consumer Price Index-Urban (CPI–

U) for medical care as determined

applicable by the Director, OCHAMPUS.

(ii) For purposes of rates for Federal

fiscal years 1996 and 1997:

(A) for any RTC whose 1995 rate was

at or above the thirtieth percentile of all

established Federal fiscal year 1995 RTC

rates normally, weighted by total

CHAMPUS days provided at each rate

during the first half of Federal fiscal
12438 Federal Register / Vol. 60, No. 44 / Tuesday, March 7, 1995 / Rules and Regulations

year 1994, that rate shall remain in

effect, with no additional update,

throughout fiscal years 1996 and 1997;

and

(B) For any RTC whose 1995 rate was

below the 30th percentile level

determined under paragraph (f)(5)(ii)(A)

of this section, the rate shall be adjusted

by the lesser of: the CPI–U for medical

care, or the amount that brings the rate

up to that 30th percentile level.

(iii) For subsequent Federal fiscal

years after fiscal year 1997, RTC rates

shall be updated by the Medicare

update factor for hospitals and units

exempt from the Medicare prospective

payment system.

(6) For care provided on or after July

1, 1995, CHAMPUS will not pay for

days in which the patient is absent on

leave from the RTC. The RTC must

identify these days when claiming

reimbursement.

Dated: March 1, 1995.

L.M. Bynum,

Alternate OSD Federal Register Liaison

Officer, Department of Defense.

[FR Doc. 95–5375 Filed 3–6–95; 8:45 am]

BILLING CODE 5000–04–M

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[TX–17–1–5600a; FRL–5163–3]

Approval and Promulgation of

Implementation Plans; Texas State

Implementation Plan Revision;

Corrections for Reasonably Available

Control Technology (RACT) Rules;

Volatile Organic Compounds (VOC)

RACT Catch-Ups

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Direct final rule.

SUMMARY: The EPA is approving

revisions to the Texas State

Implementation Plan (SIP) submitted by

the State of Texas on June 8, 1992, and

additional revisions which were

submitted on November 13, 1992. These

SIP revisions contain regulations which

require the implementation of RACT for

various types of VOC sources. These

revisions respond to the requirements of

section 182(b)(2) of the Federal Clean

Air Act, as amended in 1990 (CAA), for

States to adopt RACT rules by

November 15, 1992, for major VOC

sources which are not covered by an

existing EPA Control Techniques

Guideline (CTG) and for all sources

covered by an existing CTG. These

revisions also include corrections to the

monitoring, recordkeeping, and

reporting requirements for Victoria

County, in order to make the VOC rules

more enforceable in that County.

DATES: This final rule is effective on

May 8, 1995, unless critical or adverse

comments are received by April 6, 1995.

If the effective date is delayed, timely

notice will be published in the Federal

Register (FR).

ADDRESSES: Comments should be

mailed to Guy R. Donaldson, Acting

Chief, Air Planning Section (6T–AP),

U.S. EPA Region 6, 1445 Ross Avenue,

Dallas, Texas 75202–2733. Copies of the

State’s submittals and other information

relevant to this action are available for

inspection during normal business

hours at the following locations:

U.S. Environmental Protection Agency,

Region 6, Air Programs Branch (6T–

A), 1445 Ross Avenue, Suite 700,

Dallas, Texas 75202–2733.

Air and Radiation Docket and

Information Center, U.S.

Environmental Protection Agency,

401 M Street S.W, Washington, DC

20460.

Texas Natural Resource Conservation

Commission, Office of Air Quality,

12124 Park 35 Circle, Austin, Texas

78753.

Anyone wishing to review these

documents at the U.S. EPA office is

asked to contact the person below to

schedule an appointment 24 hours in

advance.

FOR FURTHER INFORMATION CONTACT: Mr.

Mick Cote, Planning Section (6T–AP),

Air Programs Branch, U.S.

Environmental Protection Agency,

Region 6, 1445 Ross Avenue, Dallas,

Texas 75202–2733, telephone (214)

655–7219.

SUPPLEMENTARY INFORMATION:

Background

Section 182(b)(2) of the CAA, as

amended in 1990, requires States to

adopt RACT rules for all areas

designated nonattainment for ozone and

classified as moderate or above. There

are three parts to the section 182(b)(2)

RACT requirement: (1) RACT for

sources covered by an existing CTG—

i.e., a CTG issued prior to the enactment

of the CAAA of 1990; (2) RACT for

sources covered by a post-enactment

CTG; and (3) all major sources not

covered by a CTG. This action does not

address requirements to implement

RACT at sources covered by postenactment CTG’s. Texas has identified

sources in these post-enactment CTG

source categories. RACT requirements

will be addressed for these sources in

future actions.

Section 182(b)(2) calls for

nonattainment areas that previously

were exempt from certain VOC RACT

requirements to ‘‘catch up’’ to those

nonattainment areas that became subject

to those requirements under the

preamended Act. In addition, it requires

newly designated ozone nonattainment

areas to adopt RACT rules consistent

with those for previously designated

nonattainment areas. In addition, the

major source threshold is lowered for

certain nonattainment areas (50 tons/yr

for serious areas and 25 tons/yr in

severe areas). States are required to

ensure that RACT is implemented based

on these new major source definitions.

In Texas, there are four ozone

nonattainment areas: Dallas/Fort Worth

(moderate), Beaumont/Port Arthur

(serious), El Paso (serious) and Houston

(severe). These VOC RACT revisions

pending before EPA expand the

applicability of control requirements to

include the newly-designated perimeter

counties (Chambers, Collin, Denton,

Fort Bend, Hardin, Liberty,

Montgomery, and Waller). In addition,

the applicability of control requirements

has been expanded to include all

previously-designated ozone

nonattainment counties (Brazoria,

Dallas, El Paso, Galveston, Harris,

Jefferson, Orange, and Tarrant). The

existing requirements for Gregg, Nueces,

and Victoria Counties have been

relocated to a separate (new) subsection

in each applicable section. Non-CTG

RACT rules for mirror backing coating

facilities have been added. Finally,

monitoring/recordkeeping requirements

for VOC sources in Victoria County

were revised to be made more

enforceable.

Procedural Background

The Clean Air Act (the Act) requires

states to observe certain procedural

requirements in developing

implementation plans for submission to

the EPA. Section 110(a)(2) of the Act

provides that each implementation plan

submitted by a state must be adopted

after reasonable notice and public

hearing. Section 110(l) of the Act

similarly provides that each revision to

an implementation plan submitted by a

state under the Act must be adopted by

such state after reasonable notice and

public hearing. The EPA also must

determine whether a submittal is

complete and therefore warrants further

EPA review and action (see section

110(k)(1) and 57 FR 13565). The EPA’s

completeness criteria for SIP submittals

are set out at 40 Code of Federal

Regulations (CFR) part 51, appendix V.

The EPA attempts to make completeness

determinations within 60 days of