[Federal Register Volume 61, Number 18 (Friday, January 26, 1996)]
[Notices]
[Pages 2516-2519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1262]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES
[BPO-134-NC]


Medicare Program; Revised Criteria and Standards for Evaluating 
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies 
Regional Carriers' Performance Beginning February 1, 1996

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


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ACTION: Notice with comment period.

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SUMMARY: This notice revises the criteria and standards we use to 
evaluate the performance of Durable Medical Equipment, Prosthetics, 
Orthotics, and Supplies regional carriers in administering the Medicare 
program under their contracts with us.
    These revisions are necessary to make the performance standards 
consistent with HCFA's current expectations and to improve service to 
Medicare beneficiaries.

DATES: Effective Date: This notice is effective on February 1, 1996.
    Comment Date: Comments will be considered if we receive them at the 
appropriate address, as provided below, no later than 5 p.m. on 
February 26, 1996.

ADDRESSES: Mail written comments (1 original and 3 copies) to the 
following address: Health Care Financing Administration, Department of 
Health and Human Services, Attention: BPO-134-NC, P.O. Box 26676, 
Baltimore, MD 21207.
    If you prefer, you may deliver your written comments (1 original 
and 3 copies) to one of the following addresses: Room 309-G, Hubert H. 
Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201, 
Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    Because of staffing and resource limitations, we cannot accept 
comments by facsimile (FAX) transmission. In commenting, please refer 
to file code BPO-134-NC. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of a document, in Room 309-G of 
the Department's offices at 200 Independence Avenue, SW., Washington, 
DC, on Monday through Friday of each week from 8:30 a.m. to 5 p.m. 
(phone: (202) 690-7890).

FOR FURTHER INFORMATION CONTACT: Sue Lathroum, (410) 786-7409 or Rich 
Morrison, (410) 786-7142.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1842(a) of the Social Security Act (the Act) authorizes 
contracts with carriers for the payment of Part B claims for Medicare-
covered services and items. Section 1842(b) of the Act requires us to 
publish in the Federal Register criteria and standards for the 
effective and efficient performance of contract obligations before 
implementing them. On June 18, 1992, we published in the Federal 
Register (57 FR 27302) the criteria and standards to be used for 
evaluating the performance of regional carriers for durable medical 
equipment, prosthetics, orthotics, and supplies (DMEPOS) under their 
contracts with us. The criteria and standards measure the effectiveness 
and efficiency of the DMEPOS regional carriers in carrying out the 
requirements of their contracts. The initial evaluation period for the 
DMEPOS regional carriers was from October 1, 1993 through September 30, 
1994. We announced that we will consider the results of these 
evaluations in entering into, renewing/extending, or terminating 
contracts or contract amendments with the DMEPOS regional carriers. We 
also announced that we may revise the criteria and standards if changes 
are needed because of administrative mandate, congressional action, or 
performance expectations.
    The criteria and standards were included in the current contracts 
with the DMEPOS regional carriers, which were effective beginning 
January 1, 1993, with option periods extending to September 30, 1996. 
The criteria and standards are subject to possible revision if the 
contracts or contract amendments are renegotiated, new contracts are 
awarded, or different carrier contracts are amended to provide for the 
performance of the DMEPOS functions. In accordance with section 1842(b) 
of the Act, we must publish in the Federal Register any revisions to 
these criteria and standards before their implementation.
    The criteria and standards published in the June 1992 final rule 
(57 FR 27302) are structured into six criteria to evaluate the overall 
performance of the DMEPOS regional carriers. They include: (1) Quality; 
(2) efficiency; (3) service; (4) fraud and abuse; (5) National Supplier 
Clearinghouse; and (6) Statistical Analysis DMEPOS regional carrier. 
The six criteria contain a total of 12 standards. There are two for 
quality, four for efficiency, three for service, one for fraud and 
abuse, one for the National Supplier Clearinghouse, and one for the 
Statistical Analysis DMEPOS regional carrier.

II. Provisions of this Notice

A. Changes to the June 1992 Criteria and Standards

    We used the June 1992 criteria and standards to evaluate the 
performance of the DMEPOS regional carriers for the period October 1, 
1993 through September 30, 1994. We have determined through our 
experience that revisions to the ``Efficiency'' and ``Service'' 
criteria are necessary to reflect current needs. We also believe that 
some minor clarifications to the ``Quality'' and ``National Supplier 
Clearinghouse'' criteria are appropriate. Therefore, as described 
below, we will revise the criteria and standards we use to evaluate the 
performance of our DMEPOS regional carriers. The revised criteria and 
standards will be effective February 1, 1996. These criteria will 
replace those listed in the June 1992 final rule (57 FR 27302).
Efficiency Criterion
    We will retain Standard 1 under the ``Efficiency'' criterion. We 
will no longer use Standards 2 through 4. Standard 2 for Electronic 
Media Claims (EMC) is no longer included since DMEPOS regional carriers 
are no longer assigned specific EMC goals previously measured under 
this standard. Now that specific goals are no longer being assigned, 
more focus can be placed on standardization of file formats. Standards 
3 and 4 relating to expenditures and costs under these contracts no 
longer apply because contracts are awarded or contract amendments are 
entered into on the basis of proposed costs related to the entire 
DMEPOS regional carrier workload. Consequently, under the 
``Efficiency'' criterion, beginning February 1, 1996, the DMEPOS 
regional carrier is required to: (1) Process 95.0 percent of clean 
claims within mandated timeframes, and (2) process 97.0 percent of all 
claims within 60 days.
Service Criterion
    We will retain Standard 1 under the Service criterion. Under 
Standard 2, we will retain the requirement for DMEPOS regional carriers 
to ensure that 95 percent of written inquiries are responded to timely 
and accurately. We will revise the standard to require DMEPOS regional 
carriers to respond to 97.5 percent of telephone inquiries timely and 
accurately to increase our ongoing efforts to improve services to 
Medicare beneficiaries.
    We will revise Standard 3 regarding responses to beneficiaries and 
supplier education and training needs. When this standard was 
established, it was necessary for carriers to publish, as well as 
update, a supplier manual that explains the program requirements. Now 
that carriers have a supplier manual in place, they only need to update 
the manual. Therefore, we will remove the requirement for publishing 
the manual and retain only the requirement to update the supplier 
manual. 

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Quality Criterion
    In Standard 2, concerning measures to improve program 
effectiveness, we will clarify that the DMEPOS regional carrier is not 
limited to performing only the listed activities.
National Supplier Clearinghouse Criterion
    We will also clarify under the National Supplier Clearinghouse 
criterion that the National Supplier Clearinghouse DMEPOS regional 
carrier function is assigned to one of the DMEPOS regional carriers.

B. Complete List of Revised Criteria and Standards

    The complete list of the criteria and standards for evaluating the 
performance of DMEPOS regional carriers beginning February 1, 1996 
follows:
    We will use six criteria to evaluate the overall performance of 
DMEPOS regional carriers. They are: (1) Quality; (2) efficiency; (3) 
service; (4) fraud and abuse; (5) National Supplier Clearinghouse; and 
(6) Statistical Analysis DMEPOS regional carrier.
    The six criteria contain a total of 9 standards. There are two for 
quality, one for efficiency, three for service, one for fraud and 
abuse, one for the National Supplier Clearinghouse, and one for the 
Statistical Analysis DMEPOS regional carrier.
1. Quality Criterion
    A DMEPOS regional carrier must pay claims accurately and in 
accordance with program instructions. The DMEPOS regional carrier is 
required to:
    Standard 1. Process claims at an accuracy rate of 98.5 percent.
    Claims are processed accurately with respect to coverage 
determinations, secondary payer consideration, supplier enrollment, and 
the correct payment amount.
    Standard 2. Implement measures to improve program effectiveness.
    The DMEPOS regional carriers must undertake actions to promote 
effective program administration with respect to DMEPOS claims. These 
activities include, but are not limited to the following: overpayment 
recovery and offsetting of claim payment; assuring the proper 
submission of certificates of medical necessity; review of the 
implementation of fee schedules and reasonable charge updates; medical 
review activities; and implementation of coverage policy.
2. Efficiency Criterion
    Standard 1. The DMEPOS regional carrier is required to process 95.0 
percent of clean claims within mandated timeframes and 97.0 percent of 
all claims within 60 days.

3. Service Criterion

    Beneficiaries and suppliers are served by prompt and accurate 
administration of the program in accordance with all applicable laws, 
regulations, and general instructions. The DMEPOS regional carrier is 
required to:
    Standard 1. Ensure that 95.0 percent of reviews and hearings are 
accurate and timely.
    We evaluate the reviews and hearings to determine that decisions 
are accurate and communicated to the appropriate party within 45 days 
for reviews and 120 days for hearings.
    Standard 2. Ensure that 97.5 percent of telephone inquiries and 95 
percent of written inquires are responded to accurately and timely.
    The DMEPOS regional carriers must answer calls within 120 seconds, 
callers do not get a busy signal more than 20 percent of the time, and 
responses are accurate. Written responses must be accurate and prepared 
within 30 calendar days of date of receipt.
    Standard 3. Respond to beneficiary and supplier education and 
training needs.
    The DMEPOS regional carriers must undertake actions that serve the 
beneficiary and supplier communities by explaining program requirements 
through up-to-date information, periodic educational training and 
bulletins, updating the supplier manual, meeting with trade 
associations, and coordinating with local contractors on DMEPOS issues.
4. Fraud and Abuse Criterion
    Standard 1. The DMEPOS regional carrier is required to conduct an 
effective program integrity program.
    We evaluate the DMEPOS regional carriers on a number of activities 
including: effectiveness in identifying and developing cases of fraud 
and abuse, bringing the cases to conclusion and collecting 
inappropriate payments, promoting beneficiary education in referring 
questionable suppliers or practices, and searching out supplier 
practices that are inappropriate.
5. National Supplier Clearinghouse Criterion
    (The National Supplier Clearinghouse DMEPOS regional carrier 
function is assigned to one of the DMEPOS regional carriers. It 
performs the functions measured under this criterion.)
    Standard 1. The National Supplier Clearinghouse DMEPOS regional 
carrier is required to properly administer the National Supplier 
Clearinghouse.
    We review the National Supplier Clearinghouse activities to ensure 
the National Supplier Clearinghouse DMEPOS regional carrier meets 
various requirements such as: processing new and renewal applications 
for billing numbers, maintaining supplier files, matching Office of the 
Inspector General sanctioned suppliers, and enforcing supplier 
standards. In addition, we evaluate the National Supplier Clearinghouse 
DMEPOS regional carrier's performance in conducting statistical 
analysis of data to identify potential areas of overutilization, 
overpayments, fraudulent or abusive claims practices, and other areas 
of concern we identify.
6. Statistical Analysis DMEPOS Regional Carrier Criterion
    (The Statistical Analysis DMEPOS regional carrier function is 
assigned to one of the DMEPOS regional carriers. It performs the 
functions measured under this criterion.)
    Standard 1. The Statistical Analysis DMEPOS regional carrier is 
required to properly administer the Statistical Analysis DMEPOS 
regional carrier program.
    We review the activities of the Statistical Analysis DMEPOS 
regional carrier to ensure it meets various requirements such as: 
Analyzing national reports to identify trends, aberrancies, and 
utilization patterns; generating reports according to our 
specifications; serving as the HCFA Common Procedure Coding System 
definition resource center; and developing national parental and 
enteral nutrition pricing and national floors and ceiling for DME 
prices.

III. Response To Comments

    Because of the large number of items of correspondence we normally 
receive on Federal Register documents published for comment, we are not 
able to acknowledge or respond to them individually. We will consider 
all comments we receive by the date and time specified in the DATES 
section of this preamble, and, if we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

IV. Waiver of Prior Notice and 30-Day Delay in the Effective Date

    We are publishing this notice as a final notice without prior 
publication of a proposed notice for public comment. For the reasons 
discussed below, we believe that publishing a proposed notice is 
unnecessary.
    This notice only makes minor revisions to the criteria for 
evaluating 

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DMEPOS regional carriers' performance and has no major impact on public 
interest. Therefore, we believe that publication of a proposal is 
unnecessary, and we find good cause to waive the procedure.
    We also normally provide a delay of 30 days in the effective date. 
However, if adherence to this procedure would be impractical, 
unnecessary, or contrary to public interest, we may waive the delay in 
the effective date. As a practical matter, if we allowed a 30-day delay 
in the effective date of this notice, those DMEPOS regional carriers 
would not be in compliance with the performance standards for fiscal 
year 1996. This would be contrary to public interest. Therefore, we 
find good cause to waive the usual 30-day delay in the effective date.
    In accordance with the provisions of Executive Order 12866, this 
notice was reviewed by the Office of Management and Budget.

    Authority: Section 1842(b) of the Social Security Act (42 U.S.C. 
1395u).

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

    Dated: August 14, 1995.
Bruce C. Vladeck,
Administrator, Health Care Financing Administration.

    Note: This document was received at the Office of the Federal 
Register on January 22, 1996.
[FR Doc. 96-1262 Filed 1-25-96; 8:45 am]
BILLING CODE 4120-01-P