[Federal Register Volume 62, Number 214 (Wednesday, November 5, 1997)]
[Rules and Regulations]
[Pages 59818-59820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-29071]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Health Care Financing Administration
42 CFR Part 424
[BPD-875-NC]
Medicare Program; Home Health Agency Physician Certification
Regulations
AGENCY: Health Care Financing Administration (HCFA), HHS.
ACTION: Decision to reexamine interpretations, with comment.
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SUMMARY: This document with comment period announces our decision to
reexamine our recent interpretations of the Medicare regulations
pertaining to indirect compensation arrangements between home health
agencies (HHAs) and physicians who certify or recertify the need for
home health services or establish or review the home health plan of
care. We are withdrawing recent interpretations regarding indirect
compensation arrangements where the physicians are salaried employees
of, or have a contractual arrangement to provide services for, an
entity that also owns the HHA. This will enable us to evaluate our
recent interpretations of these regulations and related provisions of
section 1877 of the Social Security Act to ensure consistent
application of Medicare policy among providers of services.
DATES: Effective Date: This document is effective on December 5, 1997.
Comment Date: Written comments will be considered if we receive
them at the appropriate address, as provided below, no later than 5:00
p.m. on January 5, 1998.
ADDRESSES: Mail written comments (an original and three copies) to the
following address: Health Care Financing Administration, Department of
Health and Human Services, Attention: BPD-875-NC, P.O. Box 7517,
Baltimore, MD 21244-0517.
If you prefer, you may deliver your written comments (an original
and three copies) to one of the following addresses:
Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW,
Washington, DC 20201 or
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 BPD-875-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).
Copies: To order copies of the Federal Register containing this
document, send your request to: New Orders, Superintendent of
Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date
of the issue requested and enclose a check or money order payable to
the Superintendent of Documents, or enclose your Visa or Master Card
number and expiration date. Credit card orders can also placed by
calling the order desk at (202) 512-1800 or by faxing to (202) 512-
2250. The cost of each copy is $8.00. As an alternative, you can view
and photocopy the Federal Register document at most libraries
designated
[[Page 59819]]
as Federal Depository Libraries and at many other public and academic
libraries throughout the country that receive the Federal Register.
FOR FURTHER INFORMATION CONTACT:
Jennifer Carter, (410) 786-4615.
SUPPLEMENTARY INFORMATION:
I. Background
Section 903 of the Omnibus Reconciliation Act of 1980 amended
sections 1814(a) and 1835(a) of the Social Security Act (the Act) to
prohibit the certification of need for home healthy services under
Medicare, and the establishment and review of a home health plan of
care for those services, by a physician who has a significant interest
in, or a significant contractual or significant financial relationship
with, the HHA that provides those services. These amendments were
incorporated into the regulations at 42 CFR 405.1633(d) (which was
redesignated as Sec. 424.22(d)), by an interim final rule with comment
period that was published in the Federal Register on October 26, 1982
(47 FR 47388), and was made effective on November 26, 1992.
On June 30, 1986, we published a final rule in the Federal Register
(51 FR 23541) that confirmed the provisions of the October 1982 rule,
and clarified that under the term, ``significant interest or a
significant financial or contractual relationship'' with the HHA, we
intended to include salaried employment. This clarification was made
effective on August 29, 1986.
The only exceptions to the home health regulations were
uncompensated officers or directors of an HHA, HHAs operated by
Federal, State, or local governmental authority, and sole community
HHAs. The home health physician certification restrictions of sections
1814(a) and 1835(a) of the Act and Sec. 424.22(d) of the regulations
have not been revised or updated since 1986.
On December 19, 1989, section 6204 of the Omnibus Budget
Reconciliation Act of 1989 added section 1877, ``Limitation on Certain
Physician Referrals,'' to the Act. In general, section 1877 of the Act
prohibits a physician who has a financial relationship with an entity
that furnishes clinical laboratory services (or a physician with an
immediate family member who had such a relationship) from making
referrals to the entity for clinical laboratory services for which
Medicare may otherwise pay.
On August 10, 1993, section 13562 of the Omnibus Budget
Reconciliation Act of 1993 (OBRA '93) revised section 1877 of the Act
to cover 10 additional designated health services, including home
health services, beginning with referrals made after December 31, 1994.
The statute was also revised to provide for certain exceptions to the
prohibition, including a bona fide employment exception subject to
certain conditions. Additionally, referrals are defined in part to
include the request or establishment of a plan of care by a physician
which includes the provision of a plan of care by a physician which
includes the provision of a designated health service. On August 14,
1995, we published a final rule with comment in the Federal Register
(60 FR 41914) to implement the amendments of OBRA '93 that apply to
referrals for clinical laboratory services and which were effective
retroactively to January 1, 1992. In this final rule we indicated our
intention to rely on the language and interpretations of the final rule
when reviewing referrals in appropriate cases for the 10 designated
health services. Appropriate cases were defined as those in which our
interpretation of the statute clearly applied equally to clinical
laboratory services and other designated health services. We are
currently developing a proposed rule to implement the provisions of
section 1877 of the Act which were effective January 1, 1995, and
relate to the additional designated health services.
It is our intention to reconcile the statutory prohibitions in
sections 1814(a) and 1835(a) of the Act concerning physician
certification of home health services with the related section 1877
prohibitions as part of the proposed regulations implementing the OBR
'93 changes to section 1877. This proposed regulation is in the final
stages of development and should be published in the very near future.
In the meantime, we have received numerous inquiries about the
applicability of the current home health prohibitions at Sec. 424.22
regarding hospital-employed physicians certifying and recertifying the
need for home health services provided by the hospital-owned HHA. We
recently released an interpretation of Sec. 424.22(d)(3)(ii) and
indirect compensation in the case where a physician is employed by the
hospital that also owns the HHA. In that interpretation of Sec. 424.22,
we stated that hospital-employed physicians are prohibited from
certifying or recertifying the need for home health services for the
hospital-owned HHA. Furthermore, we stated that if the HHA is
separately incorporated and not included on the hospital's cost report,
the hospital-employed physicians are permitted to certify or recertify
the need for home health services for the hospital-owned HHA. We also
released an interpretation that indicated that payment of compensation
to a physician by the HHA's parent or related organization would very
likely be considered to be paid by the HHA.
As we begin to reconcile the home health prohibitions with the
section 1877 prohibitions, we have concluded that our recent
interpretations of this regulation have brought about unintended
consequences affecting rural areas, integrated delivery systems, and
current medical practice and may be inconsistent with the provisions of
section 1877. Therefore, we are going to address ``indirect
compensation'' and the relationship between the HHA regulations and the
section 1877 provisions in the separate proposed rule that is in the
final stages of development and should be published in the very near
future. We will address the scope of an indirect compensation
arrangement where the physicians are salaried employees of, or have a
contractual arrangement to provide services for, the entity that owns
the HHA in that proposed regulation. In the meantime, we withdraw these
recent interpretations concerning indirect compensation under
Sec. 424.22(d).
II. Purpose of This Notice
We have decided to reexamine appropriate provisions of section 1877
of the Act and the home health regulations as they pertain to indirect
compensation arrangements between physicians and home health agencies.
We are concerned with the situation in which the physician receives
compensation from the same entity that also owns the home health
agency. Pending that evaluation, we have decided to withdraw recent
interpretations of Sec. 424.22(d)(3)(ii) as it applies to certification
and recertification or establishment and review of plans of care by
physicians who are salaried employees of, or have a contractual
arrangement to provide services for, an entity that also owns the HHA.
Instead, we will address the issue of indirect compensation, applicable
to the health services specified in section 1877 of the Act, in the
proposed rule that is in the final stages of development and should be
published in the Federal Register in the very near future. In the
meantime, we withdraw these recent interpretations concerning indirect
compensation under 424.22(d).
We remain concerned about inappropriate physician certification for
home health services. However, we are also concerned about the effect
that the recent interpretations of the home
[[Page 59820]]
health regulation at Sec. 424.22(d)(3)(ii), as it applies to indirect
salaried employment or contractual arrangements, may have on rural
areas where the hospital or other entity is so pervasive a presence in
the community that, in addition to owning the home health agency, it
also employs the majority of the physicians.
We have asked the Medicare fiscal intermediaries to cooperate with
the Office of Inspector General to look into the referral patterns of
hospitals that own facilities providing ancillary services, including
home health services.
III. Other Required Information
A. Executive Order 12866 Review
In accordance with provisions of Executive Order 12866, this notice
with comment period was received by the Office of Management and
Budget.
B. Collection of Information Requirements
This notice with comment period does not impose information
collection and recordkeeping requirements. Consequently, it need not be
reviewed by the Office of Management and Budget for purposes of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
C. 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 notice, and, if we proceed with a subsequent document,
we will respond to the comments in that document.
(Authority: Secs. 1102, 1814(a), 1835(a), 1871, and 1877 of the
Social Security Act (42 U.S.C. 1302, 1395f(a), 1395(a), 1395hh, and
1395nn))
(Catalog of Federal Domestic Assistance Program No. 93.773
Medicare--Hospitals Insurance Program; and Program No. 93.774,
Medicare--Supplementary Medical Insurance Program)
Dated: October 17, 1997.
Nancy-Ann Min DeParle,
Deputy Administrator, Health Care Financing Administration.
Dated: October 23, 1997.
Donna E. Shalala,
Secretary.
[FR Doc. 97-29071 Filed 11-4-97; 8:45 am]
BILLING CODE 4120-01-M
