[Federal Register Volume 59, Number 167 (Tuesday, August 30, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-21354]
[[Page Unknown]]
[Federal Register: August 30, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Public Health Service
42 CFR Part 124
RIN 0905-AE06
Medical Facility Construction and Modernization; Requirements for
Uncompensated Services for Persons Unable to Pay
AGENCY: Public Health Service, DHHS.
ACTION: Final rule.
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SUMMARY: The rules below revise the rules currently governing how
certain health care facilities, assisted under Titles VI and XVI of the
Public Health Service Act, fulfill the assurance given in their
applications for assistance that they would provide a reasonable volume
of services to persons unable to pay for such services. The revisions
below amend the rules to permit facilities that provide substantial
free or below cost medical services but nonetheless cannot receive
credit for such services under current requirements with an alternative
method of compliance that will enable them to fulfill their
uncompensated services obligations.
DATES: This rule is effective on August 30, 1994.
FOR FURTHER INFORMATION CONTACT:
Mr. Eulas Dortch, 301-443-5656.
SUPPLEMENTARY INFORMATION: On November 4, 1993, the Secretary of Health
and Human Services published a Notice of Proposed Rulemaking (NPRM)
proposing to revise the rules governing what is popularly known as the
Hill-Burton uncompensated services program. 58 FR 58828. Health care
facilities covered by the program received construction assistance
under two titles of the Public Health Service Act, Title VI (the
``Hill-Burton Act'', 42 U.S.C. 291, et seq.) and Title XVI (42 U.S.C.
300q, et seq.). Under both titles, facilities receiving construction
assistance have been required, as a condition of receiving the
construction assistance, to provide an assurance that ``there will be
available in the facility or portion thereof to be constructed or
modernized a reasonable volume of services to persons unable to pay
therefor * * *.'' 42 U.S.C. 291c(e)(2). See also 42 U.S.C. 300s-
1(b)(1)(K)(ii). This assurance is known as the ``uncompensated services
assurance.''
Background of the Regulations
The groundwork of the present uncompensated services compliance
requirements was laid by comprehensive regulations that were issued in
1979. 44 FR 29372 (May 18, 1979). The 1979 regulations established
numerous compliance requirements for uncompensated services programs.
These included requirements for a minimum level of uncompensated
services to be provided by facilities, an annual compliance level (ACL)
of uncompensated services to be provided, make-up of any deficit in
meeting the ACL, national eligibility criteria for determining who is
unable to pay, notice requirements, requirements regarding the timing
and documentation of eligibility determinations, reporting and
recordkeeping requirements, and so on.
When experience with the 1979 regulations showed that they created
substantial compliance problems for a number of public facilities,
which were amassing large deficits despite serving large numbers of
indigent patients on a free or below cost basis, the regulations were
amended. A compliance alternative for public facilities, which is
codified at 42 CFR 124.513, was created. 51 FR 33208 (Sept. 18, 1986).
The public facility compliance alternative provides that a publicly
owned and operated facility or quasi-public facility may be certified
if it provides health services to eligible persons under a program of
discounted health services and either received for the past three
fiscal years at least 10 percent of its total operating revenue from
state and/or local sources to cover operating deficits attributable to
the provision of discounted health services, or provided in those
fiscal years uncompensated services or free or discounted health
services in an amount equal to or greater than twice the facility's
annual compliance level. The facility must comply with separate
reporting and recordkeeping requirements and is required only to comply
with the requirements relating to certified facilities. A facility may
make up previously assessed deficits by showing that it met the
conditions for certification in the deficit period; a Title VI facility
may also make up a previously assessed deficit by remaining certified
after its original period of obligation for a period equal to the
deficit period, while a Title XVI facility that cannot show that it met
the conditions of certification in the deficit period must make up any
remaining deficit whenever its certification is withdrawn. A facility
with an unassessed deficit may submit an independent certified audit to
establish that no, or a lesser, deficit exists.
In 1987, the Secretary again revised the 1979 regulations. 52 FR
46022 (Dec. 3, 1987). As pertinent here, an additional compliance
alternative for facilities with annual obligations of $10,000 or less
was created. See Sec. 124.514. This alternative was adopted to bring
the administrative costs of compliance for such facilities more into
line with the actual level of uncompensated services available, with
the requirements applicable under Sec. 124.514 resembling those
applicable under the public facility compliance alternative.
Proposed Rules
In the NPRM, the Secretary proposed an additional compliance
alternative designed to address the compliance problems of another
class of facilities whose operational characteristics have created
intractable compliance problems, but which cannot qualify for the
existing compliance alternatives. Many of these facilities provide
substantial amounts of free or below cost services, generally because
they were created to provide services at no or a nominal charge to all
persons, or they serve an indigent population that is entirely covered
by third-party programs such as Medicaid. These facilities, which are
generally private, nonprofit organizations, include facilities such as
sheltered workshops, crippled children rehabilitation facilities,
cerebral palsy centers, chronic disease hospitals, Goodwill Centers,
facilities for the blind, mental health centers, and Easter Seal
Centers. Based on experience monitoring such facilities' compliance
with the uncompensated services regulations since 1979, the Department
determined that many such facilities have accumulated large
uncompensated services deficits, typically because their policies of
not charging or of serving populations covered under governmental
indigent care programs preclude receiving credit under the
uncompensated services regulations for the free and below cost care
they in fact provide.
The Department identified 180 private, nonprofit outpatient,
rehabilitation, and community mental health center facilities with
outstanding uncompensated services obligations which were likely to
have provided a large volume of free or below cost care while receiving
little or no uncompensated services credit. A survey of 28 of these
confirmed that there are a number of facilities for which compliance
with the uncompensated services requirements is difficult or
impossible, given their charging policies, legal requirements
applicable to their operations, characteristics of their patient
populations, or some combination of these factors, but which clearly
provide health services without regard to ability to pay.
Accordingly, the Secretary proposed to adopt a compliance
alternative for private, nonprofit facilities which provide a
substantial amount of services without regard to ability to pay, but
which find it difficult, if not impossible, to comply with the present
uncompensated services requirements. The proposed compliance
alternative was substantially similar to the public facility compliance
alternative with respect to requirements for reporting, recordkeeping,
and the make-up of deficits. However, the eligibility criteria differed
somewhat. Under the proposed rule, a facility could qualify for the
compliance alternative if it was a private, nonprofit entity falling
into one of two categories: either (1) it received no monies directly
from patients with incomes up to twice the poverty level (exclusive of
certain deductible and coinsurance amounts and other required
collections), or (2) it received for the three most recent fiscal years
at least 10 percent of its non-Medicaid and non-Medicare operating
revenue from philanthropic sources to cover operating deficits and
either provided services under a ``program of discounted health
services'' or provided all services to all persons at no or a nominal
charge (exclusive of certain deductible and coinsurance amounts and
other required collections). With respect to the first category, the
NPRM stated that in the Department's view those facilities that collect
no monies from patients with incomes up to twice the poverty level are
meeting the statute's objectives. Similarly, with respect to the second
category, the proposed percentage of private philanthropic support was
considered to be a proxy for tax support in the public facility
context, as such monies are generally contributed to fund services
which are deemed essential or worthwhile, but which are not self-
supporting. The ``program of discounted health services'' criterion is
analogous to a similar criterion in the public facility compliance
alternative, and reflects a recognition that many such facilities have
in place a mechanism for determining eligibility for such services by
screening for ability to pay. The rationale for the other criterion is
self-evident: Clearly, facilities that provide all services at no or a
nominal charge are adequately serving those in their patient population
who are unable to pay. The NPRM also solicited comment on whether the
compliance alternative should be expanded to cover public facilities
that do not qualify for the public facility compliance alternative but
whose operational characteristics are similar to the private, nonprofit
entities the alternative would cover.
Public Comment and the Department's Responses
The Department received 23 comments on the proposed rules,
principally from rehabilitation and other facilities and provider
associations. While most of the comments received were in favor of the
proposed compliance alternative in principle, many suggested specific
changes to the proposed policies. The comments and the Department's
responses thereto are summarized below.
1. Criteria for Certification.
a. Inclusion of Public Facilities
A number of commenters recommended that the criteria for
certification be changed to permit the inclusion of public facilities
that otherwise meet the criteria for certification. They argued that
there is operationally no difference between such facilities and non-
profit facilities that meet the criteria, and that it is unreasonable
to penalize public facilities just because they are public. The
Department agrees with these comments and has changed the rules
accordingly, by eliminating proposed Sec. 124.516(b)(1), which would
have restricted the compliance alternative to private, nonprofit
facilities.
b. No Monies Received From the Indigent
Proposed Sec. 124.516(b)(2) would have established, as one
alternative criterion for certification, that a facility received no
monies directly from persons with incomes up to twice the poverty
level, exclusive of amounts charged or received for purposes of
obtaining reimbursement under third party programs. Several commenters
urged that this criterion be revised to permit receipt of funds from
such persons, on the grounds that it is unrealistic to expect a
facility to receive no money from such persons. It was suggested that
the criterion be revised to permit receipt of funds up to some amount,
such as 10 percent of operating revenues. The Department has not
accepted this suggestion. This criterion was intended to accommodate
those exceptional facilities which routinely provide all services at no
charge to persons unable to pay or which entirely serve populations
ineligible for uncompensated services and are thus unable to comply
with the regulations. Facilities that collect monies from patients with
incomes below twice the poverty level do not come within the intent of
this criterion. It should be noted, however, that such facilities may
nonetheless be able to qualify for the compliance alternative under a
different criterion of the regulation, if they have a ``program of
discounted health services'' and receive the requisite amount of
philanthropy. See Sec. 124.516(b)(2) below.
Another suggestion made with respect to this criterion was that
amounts collected from patients as part of their Medicaid ``spenddown''
be considered to be included under the exclusionary language of this
section, so that collection of such monies by a facility would not
render it ineligible under this criterion. This suggestion has likewise
not been accepted. Spenddown amounts are clearly not within the scope
of the exclusionary language as written, as Medicaid eligibility does
not exist until the patient has spent down the requisite amount, and
therefore they are not amounts charged that are reimbursable. Nor do we
think the language should be revised to permit inclusion of spenddown
amounts in the amounts permitted to be charged or claimed. As stated
above, this criterion is intended to cover a narrow class of
facilities--ones which can be considered to be meeting their Hill-
Burton obligation because they are in fact not receiving monies
directly from any patients who would otherwise be eligible for Hill-
Burton uncompensated services. Permitting collection of spenddown
amounts would thus not be consistent with the intended scope of this
criterion.
This criterion has been revised, however, to require that the
facility demonstrate that it met the criterion for the preceding three
fiscal years. This revision brings this criterion into line with the 10
percent philanthropy criterion of Sec. 124.516(b)(2), which also
requires a demonstration of compliance over the preceding three years.
The purpose of the three-year demonstration in both cases is to give
the Secretary a basis for the conclusion that a facility applying for
certification in fact comes within the intended scope of the compliance
alternative because of its characteristics and problems, and that
certification is not made based on what may be a one-time aberration in
the facility's circumstances. See Sec. 124.516(b)(1) below.
Another commenter suggested that, in view of the difficulty many
nursing homes have in finding individuals who are eligible for
uncompensated services and not also eligible for Medicaid, the
Department create a new eligibility category for persons in nursing
homes with incomes up to four times the poverty level. In fact, the
Secretary is considering such a change to the regulations; an NPRM
proposing to establish a new ``Category C,'' consisting of persons with
incomes up to three times the poverty level was recently published. 59
FR 15693 (April 4, 1994). It should be noted that, should this latter
policy subsequently be adopted, the Secretary would expect to revise
Sec. 124.516(b)(1) below to be consistent with the revision in the
underlying regulations.
c. Definition of ``Philanthropy''
Consistent with the elimination of the restriction of the
compliance alternative to private facilities, the Department has also
broadened the examples of ``philanthropy'' in the new
Sec. 124.516(b)(2)(i). As revised, the term ``philanthropy'' includes
state and/or local funding, as it is anticipated that most
philanthropic funding for public facilities will originate from such
sources.
The term ``philanthropy'' has also been clarified by the addition
of the phrase ``to cover operating deficits attributable to the
provision of discounted services.'' The added words, among other
things, make clear that philanthropic state or local funding within the
scope of this section is different than state or local funds received
under entitlement programs, which have long been considered not to be
``uncompensated services''; see Sec. 124.505(a). The additional
language imposes a similar restriction on other forms of philanthropy.
Several commenters suggested that the term ``philanthropy'' be
further revised to include interest earned on donated funds. However,
since it is the Department's view that interest on donated funds is
clearly from a ``philanthropic source,'' further clarification of the
regulation in this respect is not needed.
d. Program of Discounted Services
One provider group opposed the eligibility criterion permitting
certification where a facility has a ``program of discounted
services.'' The group argued that this provision would create a problem
under Medicaid and Medicare, the rules of which prohibit those programs
from subsidizing other patients. The Department does not believe that
this is a problem, since the discounts made to patients under a
facility's discounted health services program are not required to be
reflected in charges to those programs. Certainly, this has not proved
to be a problem with facilities operating under the general compliance
requirements or with facilities certified under the public facility
compliance alternative, which contains the same eligibility criterion.
The definition of ``program of discounted health services'' has
been revised, however, by the addition of language making clear that
charges may be made under such a program for the purpose of obtaining
third party reimbursements. This policy was discussed in the preamble
to the proposed rule, but was omitted from the proposed rule itself.
The change simply makes the policy of this section consistent with the
policy throughout the remainder of the subpart that third party
collections are to be encouraged. See Sec. 124.505(a).
e. No or Nominal Charge Policies
This section has likewise been revised by the addition of the
language discussed in the preceding paragraph. One comment questioned
the criterion set out in the proposed rules pertaining to making ``all
services of the facility available to all persons at no or a nominal
charge.'' It expressed the concern that a hospital could qualify for
the compliance alternative under this criterion simply by designating
some narrow group of services, then making them available for free or
at a nominal charge, while continuing to charge everyone fully for the
facility's other services. We do not share the commenter's concern, as
the rule below expressly states that, in order to come within this
criterion, the facility must ``make[ ] all services of the facility
available to all persons * * *'' See Sec. 124.516(b)(2)(ii)(B) below.
f. Other Eligibility Criteria
Other proposals for eligibility criteria were received. Several
commenters suggested that a facility's Medicaid census be a basis for
eligibility; these commenters suggested that facilities with a 70
percent or greater Medicaid census be eligible for the compliance
alternative. One commenter suggested that long-term care facilities
with characteristics ``similar'' to the proposed eligibility criteria
likewise be considered to be eligible for the compliance alternative.
The Department is not persuaded that it should create a special
eligibility criterion based on a facility's Medicaid/Medicare census.
Clearly, those facilities that serve large numbers of Medicaid or
Medicare recipients are not precluded from qualifying under one of the
criteria below, if they in fact meet those criteria. Indeed, we do not
think it would be consistent with the theory underlying the compliance
alternative to craft such an eligibility criterion. The theory of the
compliance alternative is that the facilities who come within it need
the alternative because compliance with the general compliance
standards is difficult, if not impossible, for them because of their
operational characteristics, even though they are clearly providing
free or below cost services to ``persons unable to pay.'' However,
compliance with the general compliance standards is not impossible for
a facility with a 70 percent Medicaid/Medicare census which charges the
remaining 30 percent of its patient population. After all, if none of
the remaining 30 percent of the facility's patient population meets the
eligibility criteria of Sec. 124.505, the facility will qualify for the
compliance alternative under Sec. 124.516(b)(1) below. Thus, it must be
assumed that the intent of the proposed revision would be to permit
facilities to qualify for the compliance alternative even though they
charge patients who meet the Hill-Burton eligibility criteria and who
thus could be provided uncompensated services.
With respect to the comment regarding long-term care facilities,
the Department has not created a special criterion for such facilities.
If such facilities meet the eligibility criteria below, they may be
certified under the new compliance alternative. We note, moreover, that
the proposed change in eligibility criteria for nursing homes may well
relieve some of the particular difficulties of nursing homes in
complying with the general compliance standards.
2. Documentation
A number of comments expressed support for minimizing the reporting
and recordkeeping required of qualifying facilities under the proposed
compliance alternative. One hospital, however, opposed the proposed
rules on the grounds that they simply created an additional layer of
reporting and recordkeeping requirements, stating that the existing
requirements work well. It should be emphasized that the compliance
alternative is not meant to create an additional set of requirements
for facilities already complying with the general compliance
requirements at Secs. 124.501-124.512; rather, the compliance
alternative below is designed to relieve facilities which qualify for
it from the burden of complying with the general compliance
requirements. Consistent with this approach, the reporting and
recordkeeping required for qualifying facilities is different from that
required of most facilities and should generally be considerably less
than that under the general compliance standards. In any event, a
facility that is not certified under the compliance alternative does
not have to comply with the reporting and recordkeeping requirements
applicable to those facilities which are certified; concommitantly, a
facility that is certified under the compliance alternative is not
required to comply with reporting and recordkeeping requirements other
than those that apply to certified facilities. A facility always has
the option of continuing to comply with the general compliance
requirements; it can thus ignore the compliance alternative completely
if it decides that compliance with the general compliance requirements
makes more sense for it. Thus, we do not think that this particular
concern is justified.
A couple of commenters pointed out that the proposed means of
demonstrating that a facility meets the eligibility criteria--through
audited financial statements--would not necessarily suffice, depending
on the criterion involved. They pointed out that, for example, audited
financial statements do not necessarily set forth philanthropic sources
in the level of detail required, or establish a facility's charging
policies. They suggested that the rule be amended to require facilities
to contract for such information as part of their audits. The
Department agrees with the observation made about the limitations of
audited financial statements, but does not agree with the remedy
proposed. Rather, it is our view that documentation sufficient to
establish sources of philanthropy, charging practices and so on can be
provided by other means, and we are reluctant to put facilities to the
added expense of contracting for audit services that they would not
otherwise need. Thus, Sec. 124.516(c)(1) below has been revised to add
a requirement for ``other documents'' to cover the concern raised by
the commenters. The Department will issue program instructions
clarifying what other documents may be required in specific instances.
3. Deficits
One commenter suggested that the proposed rules be revised to
permit facilities to treat deficits resulting from Medicaid
underpayments as justifiable deficits. However, we are not accepting
this comment, as it is not pertinent to the compliance alternative. The
rules below do not distinguish between types of deficits for purposes
of deficit make-up under the alternative, unlike the general compliance
requirements, which do draw such a distinction. Compare
Sec. 124.516(d)(2) below with Sec. 124.503(b). Thus, under the
compliance alternative, a certified facility with a noncompliance
deficit may make up the deficit in precisely the same manner as a
certified facility with a justifiable deficit.
4. Other Comments
Several comments questioned whether vocational services could be
counted as uncompensated services under the compliance alternative; the
facilities concerned stated that they have difficulty meeting the ACL
since they do not receive credit for vocational services they provide.
The compliance alternative below should relieve this problem for
facilities that are certified, however. Certified facilities will not
have to provide a set amount of uncompensated services, unlike
facilities operating under the general compliance requirements. Thus,
so long as certified facilities provide some medical services and
otherwise remain in compliance with the requirements for certification,
they will be considered to be in compliance with their uncompensated
services assurance.
In view of the fact that the rules below relieve restrictions on
facilities that apply and are certified for the compliance alternative
and impose no additional duties or obligations on other facilities,
delay in the effective date of these rules is not required under 5
U.S.C. 553. For the same reasons, the Secretary hereby finds that good
cause exists for not delaying the effective date of the rules below.
The rules are accordingly effective upon publication.
Regulatory Flexibility Act and Executive Order 12866
The rule below would generally maintain the existing procedural and
reporting requirements for the majority of obligated facilities, but
significantly lessen them for certain private, nonprofit or public
facilities. The Department has determined that the impact would not
approach the annual $100 million threshold for major economic
consequences as defined in Executive Order 12866. Therefore, a
regulatory impact analysis is not required.
Consistent with the provisions of the Regulatory Flexibility Act (5
U.S.C. 605(b)), the Secretary certifies that this rule will not have a
significant economic impact on a substantial number of small entities.
Paperwork Reduction Act of 1980
This final rule contains information collections which have been
approved by the Office of Management and Budget (OMB) under the
Paperwork Reduction Act of 1980, and assigned control #0915-0171.
The underlying purpose of this rule is to decrease recordkeeping,
reporting, and notification burden for the charitable facilities.
Facilities certified under the charitable facility compliance
alternative will no longer be required to maintain extensive records on
uncompensated services (124.510(a)), but instead will have to maintain
only records which document its eligibility for the compliance
alternative (124.510(b)). We believe this recordkeeping requirement
imposes no additional burden because these documents are ordinarily
retained by facilities. This change is expected to reduce the
recordkeeping burden by 75 hours per facility per year.
Similarly, reporting burden will be reduced. Charitable facilities
will be required to apply once for the certification (124.516(c)), and
thereafter will need only to certify their continued eligibility
annually (124.509(b)). Currently, facilities in deficit status, which
include most of the charitable facilities, must file a report each year
which documents the amount of uncompensated care provided (124.509(a)).
This change in reporting requirements is expected to reduce the
reporting burden by 6 hours per facility in the first year, and by 13.5
hours per facility in subsequent years.
Finally, notification/disclosure burden will be eliminated, because
the facilities will no longer be required to: (1) Publish a notice each
year of the availability of uncompensated services (124.504(a)); (2)
provide individual written notices to each person seeking service in
the facility (124.504(c)); or (3) provide a determination of
eligibility to each person applying for uncompensated services
(124.507). These changes are expected to reduce the notification burden
by 380 hours per facility per year.
All sections of the regulations that contain reporting,
recordkeeping, or notification/disclosure requirements have been
approved by OMB under the Paperwork Reduction Act (OMB) #0915-0077 and
#0915-0171. The title, description, and respondent description of the
information collections are shown below with an estimate of the annual
reporting and recordkeeping burden. Included in the estimate is the
time for reviewing instructions, searching existing data sources,
gathering and maintaining the data needed, and completing and reviewing
the collection of information.
The addition of the requirement for ``other documents'' in
Sec. 124.516(c)(1) will not affect the burden because the other
documents are expected to be readily available materials.
The estimate of 150 applicants was based on a review, prior to
development of the NPRM, of data on the kinds of facilities expected to
qualify for the alternative. A recent re-review of the list of
facilities indicated that 30 of the facilities have completed their
obligations. With the addition of public facilities in the qualifying
criteria, we expect approximately 30 additional facilities to apply for
certification.
Title: Charitable Facility Compliance Alternative (42 CFR part 124
subpart F).
Description: Information will be collected from facilities
requesting certification under the compliance alternative for the
purpose of determining whether the required criteria for qualification
have been met.
Description of Respondents: Public and private non-profit
institutions.
Estimated Annual Reporting and Recordkeeping Burden
----------------------------------------------------------------------------------------------------------------
Annual Average Annual
Section Activity number of Annual burden per burden
respondents frequency response hours
----------------------------------------------------------------------------------------------------------------
124.516(c)................... Procedures for 150 1 6.0 900
certification\1\
----------------------------------------------------------------------------------------------------------------
\1\Approximately 150 facilities are expected to be certified under the proposed charitable facility compliance
alternative in the first year. We expect no new applications in subsequent years; therefore, there will be no
burden beginning in year 2.
We received no public comments on the estimated public reporting
burden and it remains the same as that contained in the proposed rule.
List of Subjects in 42 CFR Part 124
Grant programs--Health, Health facilities, Loan programs--Health,
Low income persons, Reporting and recordkeeping requirements.
Dated: July 1, 1994.
Philp R. Lee,
Assistant Secretary for Health.
Approved: August 11, 1994.
Donna E. Shalala,
Secretary.
For reasons set out in the preamble, part 124, subpart F, of title
42 of the Code of Federal Regulations is amended to read as follows:
PART 124--[AMENDED]
Subpart F--Reasonable Volume of Uncompensated Services to Persons
Unable to Pay
1. The authority citation for 42 CFR part 124, subpart F, continues
to read as follows:
Authority: 42 U.S.C. 216; 42 U.S.C. 300s(3).
2. Section 124.502 is amended by revising the first sentence of
paragraph (m)(1) and revising paragraph (m)(2) to read as follows:
Sec. 124.502 Definitions.
* * * * *
(m) * * *
(1) For facilities other than those certified under Sec. 124.513,
Sec. 124.514, Sec. 124.515, or Sec. 124.516, health services that are
made available to persons unable to pay for them without charge or at a
charge which is less than the allowable credit for those services. * *
*
(2) For facilities certified under Sec. 124.513, Sec. 124.514,
Sec. 124.515, or Sec. 124.516, services as defined in paragraph (m)(1)
of this section and services that are made available to persons unable
to pay for them under programs described by the documentation provided
under Sec. 124.513(c)(2), Sec. 124.514(c)(2), or Sec. 124.516(c)(2), as
applicable, or pursuant to the terms of the applicable grant or
agreement as provided in Sec. 124.515. Except as provided in
Sec. 124.516, excluded are services reimbursed by Medicare, Medicaid,
or other third party programs, including services for which
reimbursement was provided as payment in full, and services provided
more than 96 hours following notification to the facility by a peer
review organization that it disapproved the services under section
1155(a)(1) or section 1154(a)(1) of the Social Security Act.
3. Section 124.508 is amended by revising the heading and
introductory text of paragraph (a) to read as follows:
Sec. 124.508 Cessation of uncompensated services.
(a) Facilities not certified under Sec. 124.513, Sec. 124.514,
Sec. 124.515 or Sec. 124.516. Where a facility, other than a facility
certified under Sec. 124.513, Sec. 124.514, Sec. 124.515, or
Sec. 124.516, has maintained the records required by Sec. 124.510(a)
and determines based thereon that it has met its annual compliance
level for the fiscal year or the appropriate level for the period
specified in its allocation plan, it may, for the remainder of that
year or period:
* * * * *
4. Section 124.509 is amended by revising the heading of paragraph
(a) and by revising the heading and introductory text of paragraph (b)
to read as follows:
Sec. 124.509 Reporting requirements.
(a) Facilities not certified under Sec. 124.513, Sec. 124.514,
Sec. 124.515, or Sec. 124.516. * * *
* * * * *
(b) Facilities certified under Sec. 124.513 or Sec. 124.516. A
facility certified under Sec. 124.513 or Sec. 124.516 shall comply with
paragraph (a)(3) of this section and shall submit within 90 days after
the close of its fiscal year, as appropriate:
* * * * *
5. Section 124.510 is amended by revising the heading of paragraph
(a) and by revising the heading and the first sentence of paragraph (b)
to read as follows:
Sec. 124.510 Record maintenance requirements.
(a) Facilities not certified under Sec. 124.513, Sec. 124.514,
Sec. 124.515, or Sec. 124.516. * * *
* * * * *
(b) Facilities certified under Sec. 124.513, Sec. 124.514, or
Sec. 124.516. A facility certified under Sec. 124.513, Sec. 124.514, or
Sec. 124.516 shall maintain, make available for public inspection
consistent with personal privacy, and provide to the Secretary on
request, any records necessary to document its compliance with the
applicable requirements of this subpart in any fiscal year, including
those documents submitted to the Secretary under Sec. 124.513(c),
Sec. 124.514(c), or Sec. 124.516(c). * * *
* * * * *
6. Section 124.511 is amended by revising the first sentence of
paragraph (a)(3) and by revising paragraph (b)(1)(iii)(C) to read as
follows:
Sec. 124.511 Investigation and determination of compliance.
(a) * * *
(3) When the Secretary investigates a facility, the facility,
including a facility certified under Sec. 124.513, Sec. 124.514,
Sec. 124.515, or Sec. 124.516, shall provide to the Secretary on
request any documents, records and other information concerning its
operation that relate to the requirements of this subpart. * * *
* * * * *
(b) * * *
(1) * * *
(iii) * * *
(C) The facility had procedures in place that complied with the
requirements of Secs. 124.504(c), 124.505, 124.507, 124.509, 124.510,
124.513(b)(2), 124.514(b)(2), 124.515, and 124.516 (b)(1) or (b)(2), as
applicable, and systematically correctly followed such procedures.
* * * * *
7. Section 124.512 is amended by revising the introductory text of
paragraph (b) and by revising paragraph (c)(1) to read as follows:
Sec. 124.512 Enforcement.
* * * * *
(b) A facility, including a facility certified under Sec. 124.513,
Sec. 124.514, or Sec. 124.516, that has denied uncompensated services
to any person because it failed to comply with the requirements of this
subpart will not be in compliance with its assurance until it takes
whatever steps are necessary to remedy fully the noncompliance,
including:
* * * * *
(c) * * *
(1) Have a system for providing notice to eligible persons as
required by Sec. 124.504(c), Sec. 124.513(b)(2), Sec. 124.514(b)(2), or
Sec. 124.516(b)(2)(ii)(A), as applicable;
* * * * *
8. In subpart F, Sec. 124.516 is redesignated as Sec. 124.517.
9. A new Sec. 124.516 is added to subpart F, to read as follows:
Sec. 124.516 Charitable facility compliance alternative.
(a) Effect of certification. The Secretary may certify a facility
which meets the requirements of paragraphs (b) and (c) of this section
as a ``charitable facility.'' A facility which is so certified is not
required to comply with this subpart except as otherwise herein
provided.
(b) Criteria for qualification. A facility may qualify for
certification under this section if it meets the criteria of either
paragraph (b)(1) or paragraph (b)(2) of this section:
(1) It received, for the three most recent fiscal years, no monies
directly from patients with incomes up to double the current poverty
line issued by the Secretary pursuant to 42 U.S.C. 9902, exclusive of
amounts charged or received for purposes of claiming reimbursement
under third party insurance or governmental programs, such as Medicaid
or Medicare deductible or coinsurance amounts; or
(2)(i) It received, for the three most recent fiscal years, at
least 10 percent of its total operating revenue (net patient revenue
plus other operating revenue, exclusive of any amounts received, or if
not received, claimed, as reimbursement under titles XVIII and XIX of
the Social Security Act) from philanthropic sources to cover operating
deficits attributable to the provision of discounted services.
Philanthropic sources include private trusts, foundations, churches,
charitable organizations, state and/or local funding, and individual
donors; and either--
(ii) (A) Provides health services without charge or at a
substantially reduced rate (exclusive of amounts charged or received
for purposes of claiming reimbursement under third party insurance or
governmental programs, such as Medicaid or Medicare deductible or
coinsurance amounts) to persons who are determined by the facility to
qualify therefor under a program of discounted health services. A
``program of discounted health services'' must provide for financial
and other objective eligibility criteria and procedures, including
notice prior to nonemergency service, that assure effective opportunity
for all persons to apply for and obtain a determination of eligibility
for such services including a determination prior to service where
requested; or
(B) Makes all services of the facility available to all persons at
no more than a nominal charge, exclusive of amounts charged or received
for purposes of claiming reimbursement under third party insurance or
governmental programs, such as Medicaid or Medicare deductible or
coinsurance amounts.
(c) Procedures for certification. To be certified under this
section, a facility must submit to the Secretary, in addition to other
materials that the Secretary may from time to time require, copies of
the following:
(1) Audited financial statements for the three most recent fiscal
years or other documents prescribed by the Secretary, sufficient to
show that the facility meets the criteria of paragraph (b)(1) or (b)(2)
of this section.
(2)(i) Where the facility claims qualification under paragraph
(b)(2)(ii)(A) of this section, a complete description, and
documentation where requested, of its program of discounted health
services, including charging and collection policies of the facility,
and eligibility criteria and notice and determination procedures used
under its program(s) of discounted health services.
(ii) Where the facility claims qualification under paragraph (b)(1)
or paragraph (b)(2)(ii)(B) of this section, a complete description, and
documentation where requested, of its admission, charging, and
collection policies.
(d) Period of effectiveness. (1) A certification by the Secretary
under this section remains in effect until withdrawn. The Secretary may
disallow credit under this subpart when the Secretary determines that
there has been a material change in any factor upon which certification
was based or substantial noncompliance with this subpart. The Secretary
may withdraw certification where the change or noncompliance has not
been in the Secretary's judgment adequately remedied or otherwise
continues.
(2) Deficits.--(1) Title VI-assisted facilities with assessed
deficits. Where a facility assisted under title VI of the Act has been
assessed as having a deficit under Sec. 124.503(b) that has not been
made up prior to certification under this section, the facility may
make up that deficit by either--
(A) Demonstrating to the Secretary's satisfaction that it met the
applicable requirements of paragraph (b) of this section for each year
in which a deficit was assessed; or
(B) Providing an additional period of service under this section on
the basis of one year (or portion of a year) of certification for each
year (or portion of a year) of deficit assessed. The period of
obligation applicable to the facility under Sec. 124.501(b) shall be
extended until the deficit is made up in accordance with the preceding
sentence.
(ii) Where any period of compliance under this subpart of a
facility assisted under title VI of the Act has not been assessed, the
facility will be presumed to have no allowable credit for such period.
The facility may either--
(A) Make up such deficit in accordance with paragraph (d)(2)(i) of
this section; or
(B) Submit an independent certified audit, conducted in accordance
with procedures specified by the Secretary, of the facility's records
maintained pursuant to Sec. 124.510. If the audit establishes to the
Secretary's satisfaction that no, or a lesser, deficit exists for the
period in question, the facility will receive credit for the period so
justified. Any deficit which the Secretary determines still remains
must be made up in accordance with paragraph (d)(2)(i) of this section.
(iii) Title XVI-assisted facilities. (A) A facility assisted under
title XVI of the Act which has an assessed deficit which was not made
up prior to certification under this section shall make up that deficit
in accordance with paragraph (d)(2)(i)(A) of this section. If it cannot
make the showing required by that paragraph, it shall make up the
deficit when its certification under this section is withdrawn.
(B) A facility assisted under title XVI of the Act whose compliance
with this subpart has not been completely assessed will be presumed to
have no allowable credit for the unassessed period. The facility may
make up the deficit by--
(1) Following the procedure of paragraph (d)(2)(iii)(A) of this
section; or
(2) Submitting an independent certified audit, conducted in
accordance with procedures specified by the Secretary, of the
facility's records maintained pursuant to Sec. 124.510. If the audit
establishes that no, or a lesser, deficit exists for the period in
question, the facility will receive credit for the period so justified.
Any deficit which the Secretary determines still remains must be made
up in accordance with paragraph (d)(2)(iii)(A) of this section.
[FR Doc. 94-21354 Filed 8-29-94; 8:45 am]
BILLING CODE 4160-15-M
