[Federal Register Volume 79, Number 234 (Friday, December 5, 2014)]
[Proposed Rules]
[Pages 72160-72163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28508]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Indian Health Service

42 CFR Part 136

RIN 0917-AA12


Payment for Physician and Other Health Care Professional Services 
Purchased by Indian Health Programs and Medical Charges Associated With 
Non-Hospital-Based Care

AGENCY: Indian Health Service, HHS.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would amend Indian Health Service (IHS) 
Purchased and Referred Care (PRC), formally known as the Contract 
Health Services (CHS), regulations to apply Medicare payment 
methodologies to all physician and other health care professional 
services and non-hospital-based services that are either authorized 
under such regulations or purchased by urban Indian organizations. 
Specifically, it proposes that the health programs operated by IHS, 
Tribe, Tribal organization, or urban Indian organization (collectively, 
I/T/U programs) will pay the lowest of the amount provided for under 
the applicable Medicare fee schedule, prospective payment system, or 
Medicare waiver; the amount negotiated by a repricing agent, if 
available; or the usual and customary billing rate. Repricing agents 
may be used to determine whether IHS may benefit from savings by 
utilizing negotiated rates offered through commercial health care 
networks. This proposed rule seeks comment on how to establish 
reimbursement that is consistent across Federal health care programs, 
aligns payment with inpatient services, and enables the IHS to expand 
beneficiary access to medical care.

DATES: Comments must be received on or before January 20, 2015.

ADDRESSES: In commenting, please refer to file code [Federal Register 
insert No.]. Because of staff and resource limitations, we cannot 
accept comments by facsimile (FAX) transmission. You may submit 
comments in one of four ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://regulations.gov. Follow the ``Submit a Comment'' 
instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Betty Gould, Regulations Officer, Indian Health Service, 
801 Thompson Avenue, TMP STE 450, Rockville, Maryland 20852.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the above address.
    4. By hand or courier. If you prefer, you may deliver (by hand or 
courier) your written comments before the close of the comment period 
to the address above.
    If you intend to deliver your comments to the Rockville address, 
please call telephone number (301) 443-1116 in advance to schedule your 
arrival with a staff member.
    Comments will be made available for public inspection at the 
Rockville address from 8:30 a.m. to 5 p.m., Monday-Friday, 
approximately three weeks after publication of this notice.

FOR FURTHER INFORMATION CONTACT: Carl Harper, Director, Office of 
Resource Access and Partnerships, Indian Health Service, 801 Thompson 
Avenue, Rockville, Maryland 20852. Telephone: (301) 443-1553.

SUPPLEMENTARY INFORMATION: The Consolidated Appropriation Act of 2014 
signed by President Obama in January, 2014, adopted a new name, 
Purchased/Referred Care (PRC), for the CHS program. The name change was 
official with passage of the FY 2014 appropriation. The new name better 
describes the purpose of the program funding, which is for both 
purchased

[[Page 72161]]

care and referred care outside of IHS. The name change does not change 
the program, and all current policies, practices, will continue and is 
not intended to have any effect on the laws that govern or apply to 
CHS. IHS will administer PRC in accordance with all laws applicable to 
CHS. This proposed rule will use the term PRC. For the purposes of this 
rule, the terms provider of services (or ``provider'') and supplier 
have the same meaning as the terms defined at 42 U.S.C. 1395x.

I. Background

    This proposed rule would amend the IHS medical regulations at 42 
CFR part 136 to apply Medicare payment methodologies to all physician 
and other health professional services and non-hospital-based services 
provided through Contract Health Services (CHS), now Purchased Referred 
Care (PRC), or purchased by urban Indian organizations, and that are 
not otherwise subject to Medicare payment rates by law. Under 42 CFR 
136.23, when necessary health services are not reasonably accessible or 
available to IHS beneficiaries, the IHS and Tribes are authorized to 
pay for medical care provided to IHS beneficiaries by non-IHS or 
Tribal, public or private health care providers, depending on the 
availability of funds. Similarly, under section 503 of the Indian 
Health Care Improvement Act (IHCIA), 25 U.S.C. 1653, urban Indian 
organizations may refer eligible urban Indians, as defined under 
section 4 of the IHCIA, to non-I/T/U public and private health care 
providers and, depending on the availability of funds, may also cover 
the cost of care.
    Sec. 506 of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173) authorized the 
Secretary to establish a payment methodology, payment rates, and 
admissions practices for Medicare-participating hospitals that furnish 
inpatient services applicable when such hospitals provide to an 
eligible American Indian/Alaskan Native (AI/AN) beneficiary medical 
care authorized by an I/T/U. As implemented in 42 CFR part 136 subpart 
D, Medicare-participating hospitals, including Critical Access 
Hospitals (CAHs), are reimbursed by I/T/Us using ``Medicare-like'' 
rates that generally correspond to the applicable Medicare payment 
methodology for the medical service. In instances where Medicare-
participating hospitals furnish inpatient services, but are exempt from 
Medicare's Prospective Payment System (PPS) and receive reimbursement 
based on reasonable costs (for example, CAHs, children's hospitals, 
cancer hospitals, and certain other hospitals reimbursed by Medicare 
under special arrangements), payment is made per discharge based on the 
reasonable cost methods established under 42 CFR part 413, except that 
the interim payment rate, under 42 CFR part 413 subpart E, constitutes 
payment in full for authorized charges. Notwithstanding, if an amount 
has been negotiated with the hospital or its agent by the I/T/U, the I/
T/U will pay the lesser of the amount determined under the PPS or the 
amount negotiated with the hospital or its agent.
    The Medicare-like rate methodology established by 42 CFR part 136 
subpart D does not apply to non-hospital services, including physician 
and other health professional services, services provided by a 
comprehensive outpatient rehabilitation facility, a home health agency, 
or a hospice, or other non-hospital-based items and services. Rather, 
I/T/Us reimburse for authorized services at the rates provided by 
contracts negotiated at the local level with individual providers or 
according to a provider's billed charges. Given the small market share 
of individual I/T/U programs, I/T/Us historically have paid rates in 
substantial excess of Medicare's allowable rates or rates paid by 
private insurers for the same services. Despite establishing medical 
priorities to cover the most necessary care, IHS is still unable to 
provide care to all of its beneficiaries. The demand for PRC care 
consistently exceeds available funding. IHS recently reported to 
Congress that IHS and tribal PRC programs denied an estimated 
$760,855,000 for an estimated 146,928 contract care services needed by 
eligible beneficiaries in FY 2013.\1\
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    \1\ See Congress FY 2015 Congressional Justification Purchased/
Referred Care Program Description and Accomplishments page 92-95, 
available online at: http://www.ihs.gov/budgetformulation/congressionaljustifications/.
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    Based on an audit of fiscal year 2012, the Government 
Accountability Office (GAO) estimated that, by implementing a Medicare-
like rate methodology, the IHS PRC programs could have saved $32 
million on physician services alone, not including additional savings 
for other non-hospital services, or savings accrued to Tribal PRC 
programs. Government Accountability Office, Indian Health Service: 
Capping Payment Rates for Non-Hospital Services Could Save Millions of 
Dollars for Contract Health Services (April 2013) (``April 2013 
Study''). The GAO concluded that by setting PRC physician and other 
non-hospital payments at rates consistent with Medicare and other 
Federal agencies, the IHS could expand IHS beneficiary access to care. 
These findings and recommendations are substantiated by a report from 
the Department of Health and Human Services' Office of the Inspector 
General. Department of Health and Human Services, Office of Inspector 
General, IHS Contract Health Services Program: Overpayments and 
Potential Savings (Sept. 2009).

II. Provisions of the Proposed Rule

    This proposed rule is promulgated pursuant to 42 U.S.C. 2001(b), 
which provides that the Secretary ``[i]n carrying out [her] functions, 
responsibilities, authorities, and duties under [the Transfer Act] . . 
. is authorized, with the consent of the Indian people served, to 
contract with private or other non-Federal health agencies or 
organizations for the provision of health services to such people on a 
fee-for-service basis or on a prepayment or other basis'' and pursuant 
to 42 U.S.C. 2003, which authorizes the Secretary to promulgate 
regulations to carry out the Transfer Act. It amends the IHS regulation 
at 42 CFR part 136 by adding a new subpart I that applies ``Medicare-
like'' rate payment methodologies to all physicians and health care 
professional services and all non-hospital-based services that are not 
covered currently under 42 CFR part 136 subpart D. The proposed rule is 
similar to payment methodologies promulgated in other Federal health 
care programs, including the Department of Veterans Affairs, by 
applying a consistent reimbursement policy across Federal health care 
programs. The proposed rule provides that the I/T/U will pay the lowest 
of the amount provided under the applicable Medicare fee schedule, 
prospective payment system, or Medicare waiver; the amount negotiated 
by a repricing agent,\2\ if available; or the usual and customary 
billing rate. In the absence of a Medicare rate or Medicare waiver, or 
agreement, payment will be made at the amount that the provider or 
supplier bills the general public for the same service. The rule 
specifies the circumstances in which a non-hospital health care 
provider or supplier will be deemed to have accepted the rates 
established herein.
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    \2\ A repricing agent discounts rates charged by a health care 
provider to rates that the agent may have established with the 
health care provider as a condition of participating in the agent's 
provider network.
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    The rule caps the rate that I/T/Us are authorized to pay non-I/T/U 
health care providers and suppliers for services and leaves no 
discretion for the I/T/U and the health care provider to negotiate 
higher rates. The IHS recognizes this

[[Page 72162]]

constraint could impact the delivery of patient care, particularly in 
circumstances where the I/T/U cannot find a health care provider or 
supplier willing to accept the payment rates established herein or the 
patient receives emergency services from a provider or supplier that 
refuses to accept the rate. Under 25 U.S.C. 1621u, a patient who 
receives authorized contract care may not be held liable for the 
payment of any charges. If the medical provider or supplier does not 
agree to accept the payment rate as payment in full, the I/T/U is 
effectively precluded from authorizing the care or paying the health 
care provider or supplier for services rendered to a beneficiary. In 
such circumstances, the I/T/U will not authorize payment and the 
patient may be held financially responsible by the provider or supplier 
of care for the charges. The IHS also notes that, while Medicare-
participating hospitals are required to accept payment rates set forth 
in 42 CFR part 136 subpart D for facility services, subpart D does not 
apply to the professional service provided by a physician or 
practitioner through the hospital. To the extent the physician or 
practitioner does not agree to accept the rates established by this 
regulation, the I/T/U will not authorize payment for the service. The 
IHS seeks comment on whether exceptions should be incorporated into the 
rule to permit an I/T/U to pay in excess of the calculated rate in 
circumstances where it may be appropriate for the I/T/U to retain more 
flexibility over the payment rate. For example, a specialist that does 
not accept reduced rates and to access this specialty at a reduced rate 
it is located in another State. The travel costs and burden on the 
patient is too great to access the needed specialty care.
    The proposed rule also specifies that payments made in accordance 
with the described methodology shall constitute payment in full and 
that, in accordance with 25 U.S.C. 1621u, the provider, supplier or 
their agent, may not impose additional charge on an individual for I/T/
U authorized items and services. Consistent with IHS regulations, the 
rule further provides that, if an I/T/U has authorized payment for PRC 
services provided to an individual who is eligible for benefits under 
Medicare, Medicaid, or another third party payer, the I/T/U shall be 
the payer of last resort in accordance with 25 U.S.C. 1623(b). If there 
are any third party payers, the I/T/U will pay the amount for which the 
patient is being held responsible after the provider or supplier of 
services has coordinated benefits and all other alternate resources 
have been considered and paid, including applicable co-payments, 
deductibles, and coinsurance owed by the patient. For purposes of the 
payment methodology specified in Sec.  136.30(a), required co-payments, 
deductibles, and coinsurance are those that would have been owed by a 
Medicare beneficiary under the proposed methodology. Because the 
patient may not be held liable for the payment of costs or charges 
under 25 U.S.C. 1621u, the I/T/U will assume these costs to the extent 
all payments made by any payer, do not in aggregate, exceed the maximum 
payment rate set forth Sec.  136.201(a).

III. Collection of Information Requirements

    These regulations do not impose any new information collection 
requirements. The requirements for submitting a claim are currently 
approved under Office and Management and Budget approval number 0917-
0002, IHS Contract Health Services Report (Expires: 02/28/2016). 
Providers and suppliers will not be required to update information 
technology systems as a result of the provisions of this proposed rule. 
Claims will be re-priced by the IHS Fiscal Intermediary or the 
appropriate Tribal administrator according to the methodology adopted 
herein.

IV. Regulatory Impact Statement

    The IHS has examined the impact of this final rule as required by 
Executive Order 12866 (September 1993, Regulatory Planning and Review), 
the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-
354), section 1102(b) of the Social Security Act, and the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4).
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any one year). The April 
2013 Study released by the GAO found that if federal PRC programs had 
paid Medicare rates for physicians services in 2010, they could have 
realized an estimated $32 million in annual savings to pay for 
additional services. Although the analysis did not include other types 
of non-hospital services or funding that goes to tribal PRC programs, 
the increase in purchasing power brought about by this proposed rule 
would be unlikely to exceed $100 million annually. OMB has determined 
that this is a significant regulatory action under Executive Order 
12866.
    The Secretary hereby proposes to certify that this proposed rule 
will not have a significant economic impact on a substantial number of 
small entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601 through 612. The proposed rule will not cause significant 
economic impact on health care providers, suppliers, or entities since 
only a small portion of the business of such entities concerns IHS 
beneficiaries. The April 2013 Study released by the GAO found that of 
the physicians sampled, the PRC program represented a small portion of 
their practice and was not a significant source of revenue. Although 
the sampling of physicians was small, all of the sampled physicians 
were in the top 25% in terms of volume of paid services covered by PRC. 
IHS believes the sample to be representative of higher volume 
practitioners currently providing services paid for by PRC. 
Accordingly, pursuant to 5 U.S.C. 605(b), the proposed rule is exempt 
from the initial and final regulatory flexibility analysis requirements 
of sections 603 and 604.
    In addition, section 1102(b) of the Act requires IHS to prepare a 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 603 of the RFA. For purposes of section 
1102(b) of the Act, IHS defines a small rural hospital as a hospital 
that is located outside of a Metropolitan Statistical Area and has 
fewer than 100 beds. For the reasons provided above, IHS has determined 
that this rule will not have a significant impact on the operations of 
a substantial number of small rural hospitals. Section 202 of the 
Unfunded Mandates Reform Act of 1995 also requires that agencies assess 
anticipated costs and benefits before issuing any rule whose 
requirements mandate expenditure in any one year by State, local, or 
Tribal governments, in the aggregate, or by the private sector, of $141 
million. This proposal would not impose substantial Federal mandates on 
State, local or Tribal governments or private sector.

List of Subjects in 42 CFR Part 136

    Alaska Natives, American Indian, Health, Medicare.


[[Page 72163]]


    Dated: November 6, 2014 .
Yvette Roubideaux,
Acting Director, Indian Health Service.

    Dated: November 18, 2014.
Sylvia M. Burwell,
Secretary, Health and Human Services.

    For the reasons set forth in the preamble, the Indian Health 
Service proposes to amend 42 CFR chapter I as set forth below:

PART 136--INDIAN HEALTH

0
1. The authority citation for part 136 continues to read as follows:

    Authority: 25 U.S.C. 13; 42 U.S.C. 1395cc(a)(1)(U), 42 U.S.C. 
2001 and 2003, unless otherwise noted.

0
2. Add new subpart I consisting of Sec. Sec.  136.201 and 136.202, to 
read as follows:

Subpart I--Limitation on Charges for Health Care Professional 
Services and Non-Hospital-Based Care

Sec.
136.201 Payment for physician and other health care professional 
services purchased by Indian health programs and other medical 
charges associated with non-hospital-based care.
136.202 Authorization by urban Indian organizations.


Sec.  136.201  Payment for physician and other health care professional 
services purchased by Indian health programs and other medical charges 
associated with non-hospital-based care.

    (a) Payment to physicians and health care professionals and all 
other non-hospital-based entities, for any level of care authorized 
under part 136, subpart C by a Purchased/Referred Care (PRC) program of 
the Indian Health Service (IHS); or authorized by a Tribe or Tribal 
organization carrying out a PRC program of the IHS under the Indian 
Self-Determination and Education Assistance Act, as amended, Public Law 
93-638, 25 U.S.C. 450 et seq.; or authorized for purchase under Sec.  
136.31 by an urban Indian organization (as that term is defined in 25 
U.S.C. 1603(h)) (hereafter ``I/T/U''), shall be determined based on the 
applicable method in this section: The I/T/U will pay the lowest of the 
following amounts:
    (1) The applicable Medicare payment amount, including payment 
according to a fee schedule, a prospective payment system or based on 
reasonable cost (``Medicare rate'') for the period in which the service 
was provided), or in the event of a Medicare waiver, the payment amount 
will be calculated in accordance with such waiver.
    (2) An amount that has been negotiated with a specific provider or 
its agent, or supplier or its agent by the I/T/U or the amount 
negotiated by a repricing agent if the provider or supplier is 
participating within the repricing agent's network and an I/T/U has a 
pricing arrangement or contract with that repricing agent. For the 
purposes of this section, repricing agent means an entity that seeks to 
connect I/T/U with discounted rates from non-I/T/U public and private 
providers as a result of existing contracts that the non-I/T/U public 
or private provider may have within the commercial health care 
industry.
    (3) The amount that the provider or supplier bills the general 
public for the same service.
    (b) Coordination of benefits and limitation on recovery: If an I/T/
U has authorized payment for items and services provided to an 
individual who is eligible for benefits under Medicare, Medicaid, or 
another third party payer--
    (1) The I/T/U is the payer of last resort under 25 U.S.C. 1623(b);
    (2) If there are any third party payers, the I/T/U will pay the 
amount for which the patient is being held responsible after the 
provider or supplier of services has coordinated benefits and all other 
alternate resources have been considered and paid, including applicable 
co-payments, deductibles, and coinsurance that are owed by the patient; 
and
    (3) The maximum payment by the I/T/U will be only that portion of 
the payment amount determined under this section not covered by any 
other payer; and
    (4) The I/T/U payment will not exceed the rate calculated in 
accordance with paragraph (a) of this section (plus applicable cost 
sharing); and
    (5) When payment is made by Medicaid it is considered payment in 
full and there will be no additional payment made by the I/T/U to the 
amount paid by Medicaid.
    (c) Authorized services: Payment shall be made only for those items 
and services authorized by an I/T/U consistent with part 136 of this 
title or section 503(a) of the Indian Health Care Improvement Act 
(IHCIA), Public Law 94-437, as amended, 25 U.S.C. 1653(a).
    (d) No additional charges.
    (1) The health care provider or supplier shall be deemed to have 
accepted the applicable Medicare payment amount, including payment 
according to a fee schedule, a prospective payment system or based on 
reasonable cost (``Medicare rate'') for the period in which the service 
was provided), as payment in full if:
    (i) The services were provided based on a PRC referral authorized 
for payment; or,
    (ii) The health care provider or supplier submits a Notification of 
a Claim for payment to the I/T/U; or
    (iii) The health care provider or supplier accepts payment for the 
provision of services from the I/T/U.
    (2) A payment made and accepted in accordance with this section 
shall constitute payment in full and the provider or its agent, or 
supplier or its agent, may not impose any additional charge--
    (i) On the individual for I/T/U authorized items and services; or
    (ii) For information requested by the I/T/U or its agent or fiscal 
intermediary for the purposes of payment determinations or quality 
assurance.
    (e) For physicians and health care professionals and all other non-
hospital-based entities required by law to accept the rates specified 
in this section, the applicable rate shall be the lowest of any amount 
calculated under paragraph (a)(1) of this section, without regard to 
paragraph (d)(1) of this section.
    (f) No service shall be authorized and no payment shall be issued 
in excess of the rate authorized by this subpart.


Sec.  136.202  Authorization by an urban Indian organization.

    An urban Indian organization may authorize for purchase items and 
services for an eligible urban Indian (as those terms are defined in 25 
U.S.C. 1603(f) and (h)) according to section 503 of the IHCIA and 
applicable regulations. Services and items furnished by physicians and 
other health care professionals and non-hospital-based entities shall 
be subject to the payment methodology set forth in Sec.  136.30.

[FR Doc. 2014-28508 Filed 12-3-14; 8:45 am]
BILLING CODE 4165-16-P