[Federal Register: June 27, 2008 (Volume 73, Number 125)] [Proposed Rules] [Page 36695-36719] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr27jn08-28] [[Page 36695]] ----------------------------------------------------------------------- Part III Department of Health and Human Services ----------------------------------------------------------------------- Centers for Medicare & Medicaid Services ----------------------------------------------------------------------- 42 CFR Parts 405, 410 and 491 Medicare Program; Changes in Conditions of Participation Requirements and Payment Provisions for Rural Health Clinics and Federally Qualified Health Centers; Proposed Rule [[Page 36696]] ----------------------------------------------------------------------- DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 405, 410 and 491 [CMS-1910-P2] RIN 0938-AJ17 Medicare Program; Changes in Conditions of Participation Requirements and Payment Provisions for Rural Health Clinics and Federally Qualified Health Centers AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS. ACTION: Proposed rule. ----------------------------------------------------------------------- SUMMARY: This proposed rule would establish location requirements including exception criteria for rural health clinics (RHCs). It would also require RHCs to establish a quality assessment and performance improvement (QAPI) program. In addition, it would: Clarify our policies on ``commingling'' of an RHC with another entity; revise the RHC and Federally Qualified Health Centers (FQHC) payment methodology and exceptions to the per-visit payment limit to implement statutory requirements; revise RHC and FQHC payment requirements for services furnished to skilled nursing facility (SNF) patients; allow RHCs to contract with RHC nonphysician providers under certain circumstances; and update the regulations pertaining to waivers to the staffing requirements. This proposed rule would also add requirements for RHCs and FQHCs to maintain and document an infection control process and to post RHC or FQHC hours of clinical services. In addition, this proposed rule would update the requirements under the emergency services standard and patient health records condition for certification (CfC) to reflect advancements in technology and treatment. Finally, this proposed rule solicits comments on payment for high cost drugs and the appropriateness of a mental health specialty clinic as an exception to the location requirements. DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on August 26, 2008. ADDRESSES: In commenting, please refer to file code CMS-1910-P2. 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://www.regulations.gov. Follow the instructions for ``Comment or Submission'' and enter the CMS-1910-P2 to find the document accepting comments. 2. By regular mail. You may mail written comments (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1910-P2, P.O. Box 8010, Baltimore, MD 21244-8010. 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 (one original and two copies) to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-1910-P2, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850. 4. By hand or courier. If you prefer, you may deliver (by hand or courier) your written comments (one original and two copies) before the close of the comment period to either of the following addresses: a. Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 20201. (Because access to the interior of the HHH Building is not readily available to persons without Federal Government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.) b. 7500 Security Boulevard, Baltimore, MD 21244-1850. If you intend to deliver your comments to the Baltimore address, please call telephone number (410) 786-7195 in advance to schedule your arrival with one of our staff members. Comments mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period. Submission of comments on paperwork requirements. You may submit comments on this document's paperwork requirements by following the instructions at the end of the ``Collection of Information Requirements'' section in this document. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: Corinne Axelrod, (410) 786-5620. Rural health clinic location requirements and exceptions, staffing and payment. Mary Collins, (410) 786-3189 and Scott Cooper (410) 786-9465. Quality assessment and performance improvement and health and safety standards. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951. Abbreviations and Acronyms AED--Automated External Defibrillator BBA--Balanced Budget Act of 1997 BIPA--Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 CAH--Critical Access Hospital CDC--Centers for Disease Control and Prevention CfC--Condition for Certification CMS--Centers for Medicare & Medicaid Services CNM--Certified Nurse-Midwife CNS--Clinical Nurse Specialist CoP--Condition of Participation CP--Clinical Psychologist CSW--Clinical Social Worker DRA--Deficit Reduction Act DSMT--Diabetes Self-Management Training FI--Fiscal Intermediary FQHC--Federally Qualified Health Center GAO--Government Accountability Office GDSC--Governor-Designated and Secretary-Certified Shortage Areas HHS--Department of Health and Human Services HPSA--Health Professional Shortage Area HRSA--Health Resources and Services Administration MAC--Medicare Administrative Contractor [[Page 36697]] MMA--Medicare Prescription Drug, Improvement, and Modernization Act of 2003 MUA--Medically Underserved Area MUP--Medically Underserved Population NP--Nurse Practitioner OBRA--Omnibus Budget Reconciliation Act OIG--Office of the Inspector General OMB--Office of Management and Budget PA--Physician Assistant PHS--Public Health Service PPS--Prospective Payment System PRA--Paperwork Reduction Act QAPI--Quality Assessment and Performance Improvement RFA--Regulatory Flexibility Act RHC--Rural Health Clinic RO--Regional Office RUCA--Rural Urban Commuting Area SCHIP--State Children's Health Insurance Program SNF--Skilled Nursing Facility UA--Urbanized Area UIC--Urban Influence Code USDA--United States Department of Agriculture Table of Contents I. Background A. Publication and Suspension of the December 24, 2003 Final Rule B. Summary of Provisions of the December 24, 2003 Final Rule C. Origin of the RHC/FQHC Programs D. Growth of the RHC Program 1. Continuing Participation 2. Medically Underserved/Shortage Area Designations 3. Expansion of Eligible Designations for RHC Certification 4. Commingling E. Government Reports on RHCs II. Provisions of This Proposed Rule A. RHC Location Requirements and Exceptions 1. RHC Location Requirements 2. Essential Provider Requirements 3. Location Exception Criteria 4. Process for Essential Providers Status and Timeline B. Staffing Requirements, Waivers, and Contracts 1. Staffing Requirements 2. Temporary Staffing Waivers 3. Contractual Arrangements C. Payment Issues 1. Payment Methodology for RHC and FQHCs 2. Exceptions to the Per Visit Payment Limit 3. Commingling 4. Payment for Services to Hospital Patients 5. Payment for Services to Skilled Nursing Facility (SNF) Patients 6. Payment for Certain Physician Assistant Services 7. Screening Mammography 8. Payment for High Cost Drugs D. Health and Safety, and Quality 1. Quality Assessment & Performance Improvement Program (QAPI) 2. Infection Control 3. Hours of Operation a. Posting of Hours b. Use of the RHC Facility 4. Emergency Services and Training 5. Patient Health Records E. Other Proposed Changes 1. General 2. FQHCs III. Collection of Information Requirements IV. Regulatory Impact Analysis Regulation Text I. Background A. Publication and Suspension of the December 24, 2003 Final Rule On February 28, 2000, we published a proposed rule in the Federal Register (65 FR 10450) entitled ``Rural Health Clinics: Amendments to Participation Requirements and Payment Provisions; and Establishment of a Quality Assessment and Performance Improvement Program.'' This proposed rule revised certification and payment requirements for rural health clinics (RHCs) as required by the Balanced Budget Act of 1997 (BBA), Public Law 105-33, enacted on August 5, 1997. We issued the final RHC rule on December 24, 2003 (68 FR 74792). On December 8, 2003, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) (Pub. L. 108-173) was enacted. Section 902 of the MMA amended section 1871(a) of the Social Security Act (the Act) and requires the Secretary, in consultation with the Director of the Office of Management and Budget (OMB), to establish and publish timelines for the publication of Medicare final regulations based on the previous publication of a Medicare proposed or interim final regulation. Section 902 of the MMA also states that ``[s]uch timeline may vary among different regulations based on differences in the complexity of the regulation, the number and scope of comments received, and other relevant factors, but shall not be longer than 3 years except under exceptional circumstances.'' To comply with the MMA requirement to publish a final rule not more than 3 years after a proposed rule, we suspended the effectiveness of the December 24, 2003 final rule on September 22, 2006 (71 FR 55341). The Code of Federal Regulations currently reflects the regulations in effect before December 2003. While section 902 of the MMA did not explicitly prohibit the Secretary from finalizing all proposed rules that were published as an interim or proposed rule more than 3 years before December 8, 2003, we chose to take this opportunity to propose additional updates and clarifications of the provisions published in the previous rule, and provide the public with the opportunity to comment on these proposals. B. Summary of the Provisions of the December 24, 2003 Final Rule The December 24, 2003 final rule addressed comments received on the February 28, 2000 proposed rule, and finalized policies regarding RHC and federally qualified health center (FQHC) payment and participation in the Medicare program. It established: (1) Criteria and a process to decertify RHCs which no longer serve rural or medically underserved areas (MUAs), as required by the BBA; (2) a policy that would have prohibited the commingling of RHC resources with another entity's resources; and (3) a requirement that RHCs establish a quality assessment and performance improvement (QAPI) program. The December 24, 2003 final rule also updated payment policies and regulations to conform to statutory requirements of the Omnibus Budget Reconciliation Acts (OBRA) '86, '87, '89, and '90 and the MMA. For the reasons specified in section I.A. of this proposed rule, these provisions have been suspended. C. Origin of the RHC/FQHC Programs The Rural Health Clinic Services Act of 1977 (Pub. L. 95-210) enacted on December 13, 1977, amended the Act by adding section 1861(aa) of the Act to extend Medicare and Medicaid entitlement and payment for primary and emergency care services furnished at an RHC by physicians and certain ``nonphysician practitioners,'' and for services and supplies incidental to their services. ``Nonphysician practitioners'' included nurse practitioners (NPs) and physician assistants (PAs). (Subsequent legislation extended the definition of covered RHC services to include the services of clinical psychologists (CPs), clinical social workers (CSWs), and certified nurse-midwives (CNMs).) According to House Report No. 95-548(I), the purpose of the Rural Health Clinic Services Act was to address an inadequate supply of physicians serving Medicare beneficiaries and Medicaid recipients in rural areas. The legislation addressed this problem by authorizing CMS and States to pay qualifying clinics on a cost-related basis for providing Medicare beneficiaries and Medicaid recipients, respectively, with outpatient physician and certain nonphysician services. (The Medicare payment provisions for RHCs are in sections 1833(a)(3) and 1833(f) of the Act and in regulations at Sec. 405.2462 through Sec. 405.2468.) Payment to RHCs for services furnished to beneficiaries is [[Page 36698]] made on the basis of an all-inclusive payment methodology subject to a maximum payment per-visit and annual reconciliation. Qualifying clinics, among other criteria, must be located in an area that is determined to be nonurbanized by the U.S. Census Bureau. The clinic also must be located in an area designated as a shortage area either by the Health Resources and Services Administration (HRSA) or by the chief executive officer of the State and certified by the Secretary, Department of Health and Human Services (HHS). (See section 1861(aa)(2) of the Act, following subparagraph (K).) Qualifying clinics also must employ a PA or NP and, to meet requirements of the OBRA '89, must have a NP, a PA, or a CNM available to furnish patient care services at least 5.0 percent of the time the RHC operates. The FQHC Medicare coverage and payment benefit was provided for in OBRA '90, Public Law 101-508, enacted on November 5, 1990, and implemented in the Federal Register (57 FR 24961) on June 12, 1992. On April 3, 1996, we published a final regulation (61 FR 14640) that addressed the issues raised by commenters on the June 1992 rule. OBRA '90 defines an FQHC as an entity that is receiving a grant under section 329, section 330, or section 340 of the Public Health Service Act (PHS). The definition of an FQHC was expanded by section 13556(a)(3) of OBRA '93 (Pub. L. 103-66) enacted on August 10, 1993, effective as if included in OBRA '90 on October 1, 1991. The expanded definition included outpatient programs or facilities operated by a tribal organization under the Indian Self-Determination Act, or by an urban Indian organization receiving funds under Title V of the Indian Health Care Improvement Act. The FQHC scope of benefits for core services is similar to the RHC benefit, that is, physician, nonphysician practitioner, and mental health professional services. The FQHC benefit also includes a number of preventive services. Each FQHC is reimbursed its reasonable costs based on an all- inclusive per-visit methodology subject to tests of reasonableness, and is subject to an overall payment limit similar to RHCs. The national FQHC payment limit is based on the costs of providing primary care physician and prevention services. For FQHC services, there are two upper payment limits: One limit is for centers located in urban areas and the other is for centers located in rural areas. D. Growth of the RHC Program The RHC program has grown from less than 1,000 Medicare-approved RHCs in 1992 to more than 3,700 in 2008. However, since 2001, growth in the program has leveled off. While part of this increase has improved access to primary care services in rural areas for Medicare beneficiaries and Medicaid recipients, there are instances in which these additional RHCs have not expanded access. 1. Continuing Participation A significant factor in the growth of RHCs stems from the original (pre-BBA) RHC legislation, which included a ``grandfather clause'' to promote the development of RHCs. (See section 1(e) of the Health Clinic Services Act of 1977 (Pub. L. 95-210) enacted December 13, 1977, 42 U.S.C. 1395x note. Also see Sec. 491.5(b)(2) of the regulations.) Section 1861(aa)(2) of the Act stated that any RHC that subsequently failed to satisfy the requirements pertaining to the rural and underserved location requirement still would be deemed to have satisfied the requirement of that clause. These provisions protected the clinics' RHC status regardless of any changes to the rural or underserved status of the service areas. It allowed clinics to remain in the RHC program even though the service areas no longer were considered rural or medically underserved. The Congress established these protections to encourage clinics to attract needed health care professionals to underserved rural areas and to retain them without being concerned about losing the shortage area designation, which would make the clinics ineligible for RHC status and its reimbursement incentives. Once the clinic successfully attracted the needed health care professionals to the area, the Congress wanted to ensure that the service area did not return to its previous underserved status because we removed the clinic's RHC status and reimbursement incentives. Although the grandfather clause provision was an appropriate policy at the time, we now have RHC participation in some service areas with extensive health care delivery systems that provide adequate access to primary care for Medicare beneficiaries and Medicaid recipients. Both the Government Accountability Office (GAO) and the HHS Office of the Inspector General (OIG) recommended the establishment of a mechanism, under the survey and certification process for Medicare facilities, to discontinue RHC status and its payment incentives in those service areas where they are no longer justified. In section 4205(d)(3) of the BBA, the Congress responded to these recommendations by amending the grandfather clause provision to provide protection only to clinics essential to the delivery of primary care in the respective service area. 2. Medically Underserved/Shortage Area Designations Another reason for the continued growth of the RHC program was that two of the types of shortage area designations that are used for RHC certification, the medically underserved area (MUA) and the Governor- Designated Secretary-Certified Shortage Area (GDSC) designations, did not have a statutory requirement for regular review and were not reviewed systematically and updated after their initial designation. As a result, some RHCs are in areas that no longer would be designated as underserved if reviewed with current data. In response, the Congress amended the legislation in section 4205(d) of the BBA by requiring that only those clinics located in shortage areas that were designated or updated within the previous 3 years would qualify for purposes of the RHC program. 3. Expansion of Eligible Designations for RHC Certification Section 6213 of OBRA '89 amended section 1861(aa)(2) of the Act to expand the types of shortage areas eligible for RHC certification. Until then, the eligible areas included only those designated by the Secretary as areas having a shortage of personal health services under section 330(b)(3) of the PHS Act (medically underserved areas (MUAs)) and those designated as geographic health professional shortage areas (HPSAs) under section 332(a)(1)(A) of the PHS Act. The OBRA '89 amendment expanded the eligible areas to also include: high impact migrant areas designated under section 329(a)(5) of the PHS Act; areas containing a population group HPSA designated under section 332(a)(1)(B) of the PHS Act; and areas designated by the Governor of a State and certified by the Secretary as having a shortage of personal health services. However, later, the Health Centers Consolidation Act of 1996 (Pub. L. 104-299) renumbered section 329 of the PHS Act and repealed the requirement for designation of high impact migrant areas. 4. Commingling The growth of RHCs may have also been stimulated by the practice of [[Page 36699]] ``commingling.'' The term ``commingling'' is used to describe the sharing of RHC space, staff, supplies, records, or other resources with a private Medicare practice or other entity operated by the same physician and nonphysician practitioners working for the RHC, during RHC hours of operation. We recognize that providing care in rural areas that have limited infrastructure and providers requires the coordination of scarce resources, and permit the sharing of resources in certain situations. In some of these situations, however, it is believed that commingling has been used to maximize Medicare payment by obtaining RHC status for an integrated practice that submits both RHC and non-RHC Medicare claims. E. Government Reports on RHCs The GAO report, ``Rural Health Clinics: Rising Program Expenditures Not Focused on Improving Care in Isolated Areas'' (GAO/HHS-97-24, November 22, 1996), and the HHS/IG report ``Rural Health Clinics: Growth, Access and Payment'' (OEI-05-94-00040, July 1996), both concluded that the growth of RHCs is not proportional to community need and that many RHCs no longer require cost-based reimbursement as a payment incentive. They also concluded that the payment methodology for provider-based RHCs lacks sufficient cost controls and recommended establishing payment limits and screens on reasonable costs for these providers. (A provider-based RHC is an integral and subordinate part of a Medicare participating hospital, critical access hospital (CAH), skilled nursing facility (SNF), or home health agency (HHA), and is operated with other departments of the provider under common governance, professional supervision, and usually licensure. All other RHCs are considered to be independent.) In August 2005, the OIG issued a followup report, ``Status of the Rural Health Clinic Program'' (OEI-05-03-00170), which recommended that HRSA review shortage designations within the requisite 3-year period and publish regulations to revise its shortage designation criteria. The report also suggested that CMS issue regulations to: (1) Ensure that RHCs determined to be essential providers remain certified as RHCs; and (2) require prospective RHCs to document need on access to health care in rural underserved areas. II. Provisions of This Proposed Rule A. RHC Location Requirements and Exceptions 1. RHC Location Requirements In sections 4205(d)(1) and (2) of the BBA, the Congress amended section 1861(aa)(2) of the Act. As revised, the statute states that RHCs may include only a facility which is located in: (1) A nonurbanized area, as defined by the U.S. Census Bureau; (2) an area in which there are an insufficient number of needed health care practitioners as determined by the Secretary; and (3) an area that has been designated or certified by the Secretary within the previous 3 years as having an insufficient number of needed health care practitioners. Section 4205(d)(3)(A) of the BBA, which amended the third sentence of section 1861(aa)(2) of the Act, revised the ``grandfather clause'' that permitted an exception to the termination of RHC status for a clinic located in an area that is no longer a rural area or a shortage area. This revision specified that an exception was available only if the RHC was determined to be essential to the delivery of primary care services that would otherwise be unavailable in the geographic area served by the RHC. These amendments were made effective upon issuance of implementing regulations that the Congress directed CMS to issue by January 1, 1999. The BBA requirement that every RHC must have a current shortage area designation (made or updated within the previous 3-year period), has been implemented for new RHCs through administrative instructions. To determine if a facility is in a nonurbanized area, we propose that the most recently available U.S. Census Bureau list of Urbanized Areas (UA) be used. An area that is not in a UA would be considered a nonurbanized area. Information on whether an area is urbanized can be found at http://factfinder.census.gov or by contacting the appropriate CMS Regional Office (RO) at http://www.cms.hhs.gov/RegionalOffices. To determine if a facility is in an area that has a current designation as an underserved or shortage area, the most current HRSA list of these designations would be used. Information on designation status, including the date of the most recent designation or update, is available on the HRSA Web site at http://hpsafind.hrsa.gov/ and http:// muafind.hrsa.gov or by contacting the appropriate CMS RO. Health professional shortage area (HPSA) and MUA designations establish initial eligibility for Federal and State programs to improve access to health care services. They are based on established criteria (42 CFR part 5) to identify geographic areas or population groups with a shortage of primary health care services. HPSA designations are based primarily on the population to provider ratio in a defined service area. MUA designations utilize an Index of Medical Underserviced which calculates a score for each area based on a weighted combination of the ratio of primary medical care physicians per 1,000 population, infant mortality rate, percentage of the population with incomes below the poverty level, and percentage of the population age 65 or over. (Note: HRSA has proposed a revision of the methodology used for determining HPSA and MUA designations. If necessary, this description of the designations will be updated in the final rule. Any change that HRSA makes to the methodology used to determine designations will not alter the requirements for the RHC program.) Any of the following types of designations are acceptable for the purpose of RHC certification and compliance with this proposed requirement: Geographic Primary Care HPSAs (section 332(a)(1)(A) of the PHS Act) Population-group Primary Care HPSAs (section 332(a)(1)(B) of the PHS Act) MUAs (This does not include population group Medically Underserved Population designations) (Section 330(b)(3) of the PHS Act) Governor-designated and Secretary-certified shortage areas. (section 6213(c) of OBRA '89 (Pub. L. 101-239)) In section 302(a)(1)(A) of the Health Care Safety Amendments of 2002 (Pub. L. 107-251, October 26, 2002), the Congress amended section 332 of the PHS Act to create a new type of HPSA designation for FQHCs and RHCs referred to as an ``automatic'' HPSA designation. This type of designation is available to any RHC or FQHC irrespective of its physical location that utilizes sliding scale fees consistent with section 330 of the PHS Act for the purpose of National Health Service Corps eligibility. Facilities with these automatic HPSA designations are sometimes referred to as ``safety net facilities.'' However, we are proposing not to include the automatic HPSA designations as an eligible shortage area for purposes of Medicare qualifications as an RHC. Section 1861(aa)(2) of the Act specifically requires RHCs to be located in one of four specified designation types in which the Secretary has determined that there are [[Page 36700]] insufficient numbers of needed practitioners. Consequently, we would not recognize automatic HPSA designations for purposes of RHC certification or protecting a currently participating clinic from RHC decertification. New and existing RHCs would have to be in a rural area that is currently designated as one of the four types of shortage areas listed previously. A designation is considered current for not more than 3 years after the date of the original designation or the date of the most recent update to the designation. An existing RHC that no longer meets would not be decertified based on the loss of its shortage area designation if: (1) A complete designation application has been received by HRSA before the end of the 3-year period since the shortage area designation date or most recent update; or (2) we have determined that the RHC is an essential provider. If either of these conditions is not met, the clinic would be terminated from participation in the Medicare program as an RHC 180 days after the date that the RHC no longer meets the location requirements, effective the last day of the month. States are encouraged to submit designation applications and updates to HRSA in a timely manner and may apply or reapply for a designation at any time. 2. Essential Provider Requirements The RHC program was established for the purpose of improving and maintaining access to primary care for rural underserved communities. RHCs that apply to CMS for an exception to the location requirements must be able to show that they satisfy this program objective. In accordance with section 1861(aa)(2) of the Act, an existing RHC may be considered essential to the delivery of primary care (a so- called ``essential provider'') if the care otherwise would be unavailable in the geographic area served by the clinic. The Secretary is directed by the Act to set the criteria by which ``essential provider'' status is to be determined. The Secretary has determined that an RHC may be considered an essential provider and be granted an exception to the location requirements if the clinic is no longer in a nonurbanized area or it is no longer in a currently designated shortage area, and it meets the criteria of an essential provider. An RHC that is neither in a rural area nor a designated area would not be considered an essential provider. Proposed criteria for essential provider status were published in the February 2000 proposed rule and have been revised based on comments that were received and other relevant information. Under this authority, we are proposing the following requirements for essential provider status: If an RHC is located in an area that has been classified as a UA by the U.S. Census Bureau, it would have to be in a level 4 or higher Rural Urban Commuting Area (RUCA) to assure that it is in a rural area. Under section 330A of the PHS Act, HRSA's Office of Rural Health Policy determines eligibility for its rural grant programs through the use of the RUCA code methodology. Under this methodology, any census tract that is in a RUCA level 4 or higher is determined to be a rural census tract. For the purposes of an exception to the RHC nonurbanized area location requirement, we would use the RUCA level 4 as the minimum level of rurality to meet this requirement. Additionally, an RHC that is located in an area that has been classified as a UA by the U.S. Census Bureau would have to demonstrate that at least 51 percent of its patients reside in an adjacent nonurban area in order to be considered essential for the purposes of an exception to the location requirements. We prefer to give RHCs flexibility in establishing that at least 51 percent of their patients reside in an adjacent nonurban area; however, this could generally include the identification of the nonurban area(s) and a retrospective review of patient visits to determine residence, or other factors to support that the requirement has been met. 3. Location Exception Criteria We are proposing to revise Sec. 491.5 to specify that an RHC that meets the previously stated requirements may apply for an exception if it meets any one of the following criteria: Sole Community Provider (proposed Sec. 491.5(c)(1)): The RHC is the only participating primary care provider that meets either of the following requirements: ++ The RHC is at least 25 miles from the nearest participating primary care provider; or ++ The RHC is at least 15 miles but less than 25 miles from the nearest participating primary care provider and can demonstrate that it is more than 30 minutes from the nearest primary care provider based on local topography, predictable weather conditions, or posted speed limits. (These criteria are based on the criteria established for sole community hospitals in Sec. 412.92.) For purposes of this exception, a participating primary care provider would mean another RHC, FQHC, or primary care provider that is actively accepting and treating Medicare beneficiaries, Medicaid recipients, low-income patients, and the uninsured (regardless of their ability to pay). Major Community Provider (proposed Sec. 491.5 (c)(2)): The RHC meets the following requirements: ++ Has a Medicare, Medicaid, low-income, and uninsured patient utilization rate greater than or equal to 51 percent, or a low-income patient utilization rate greater than or equal to 31 percent; and ++ Is actively accepting and treating a major share of Medicare, Medicaid, low-income and uninsured patients (regardless of their ability to pay) compared to other participating primary care providers that are within 25 miles of the RHC. Specialty Clinic: Obstetrics/Gynecology (Ob/Gyn) or Pediatrics (proposed Sec. 491.5(c)(3)): The RHC meets the following requirements: ++ Exclusively provides ob/gyn or pediatric health services (as applicable). ++ Is the sole or major source of ob/gyn or pediatrics for Medicare (where applicable), Medicaid, and uninsured patients (regardless of their ability to pay) and is either of the following: --At least 25 miles from the nearest participating provider of ob/gyn or pediatric services. --At least 15 miles but less than 25 miles from the nearest participating provider of ob/gyn or pediatric services, and can demonstrate that it is more than 30 minutes from the nearest participating primary care provider providing these services based on local topography, predictable weather conditions, or posted speed limits. ++ Is actively accepting and treating Medicare, Medicaid, low- income, and uninsured patients. ++ Has a Medicare, Medicaid, low-income patient and uninsured utilization rate greater than or equal to 31 percent. ++ Provides ob/gyn (including prenatal care) or pediatric services onsite to clinic patients. Extremely Rural Community Provider (Proposed Sec. 491.5(c)(4)): The RHC meets the following requirements: ++ Is actively accepting and treating Medicare, Medicaid, low- income, and uninsured patients (regardless of their ability to pay). ++ Is located in a frontier county (a county with 6 or less persons per square mile) or in census tract or zip code with a RUCA code 10. In the December 2003 final rule, we included RHC's that are mental health [[Page 36701]] specialty clinics as an acceptable category for an exception to the location requirements. However, section 1861(aa)(2)(iv) of the Act prohibits RHC status from being applied to clinics which are ``primarily for the care and treatment of mental diseases.'' We interpret ``primarily'' to mean that mental health services provided by the RHC cannot constitute more than 50 percent of the total services provided by the RHC. In order to assure that the regulation and statue are consistent, we are asking for comments on--(1) whether it is appropriate to allow an exception to the location requirements for RHCs based on the provision of mental health services in light of the fact that RHC status cannot be granted to a facility providing more than 50 percent of its total services in mental health; and (2) if so, what should be the minimum level of mental health services provided in order to qualify for an exception. This would apply only to existing an RHC that no longer meet the location requirements, either because it is no longer in a non-urbanized area, or because it is no longer designated by HRSA as an underserved or shortage area. Existing RHCs that are in compliance with the location requirements may continue to provide mental health services as long as the mental health services provided do not exceed 50 percent of the total clinic services. 4. Process for Essential Provider Status and Timeline An RHC that is located in (a) an area that has not been designated or its designation was not been updated for more than 3 years, or (b) an urbanized area that is defined by the Census Bureau, would have 90 calendar days from the effective date of the final rule to apply to CMS RO for an exception to the location requirement. The RHC may continue to operate as an RHC for an additional 90 days, for a total of 180 calendar days after the end of the 3-year period. To assist with the cost reporting and payment reconciliation process, decertification would be effective on the last day of the month in which the 180-day limit was met. An RHC would have 180 days after the date that it does not meet the location requirements to continue operating as an RHC. We expect that most RHCs that do not meet the location requirements would want to know as soon as possible if they would receive an exception to the location requirements and would want as much time as possible to make other arrangement for the provision of services after the 180 days, so it is in the interest of the RHC to apply for an exception to the location requirements as soon as possible. An RHC which is located in an area which has been found by HRSA to no longer qualify for one of the 4 types of eligible designations would have 90 calendar days from the date HRSA determined that the area no longer qualified for one of the eligible designations to apply to CMS RO for an exception from decertification. This would include designations that are proposed for withdrawal, as well as areas whose designations type has changed to one that does not meet the RHC criteria. For example, if HRSA determines on April 1, 2009, that the area no longer qualifies for one of the designations required for RHC purposes, the RHC would have until June 30, 2009 to submit an application to the appropriate RO for a location exception, and would be protected until September 30, 2009 from decertification based on not meeting the location requirements. An RHC which is located in an area whose designation has not been updated in a timely manner and which does not apply for a location exception may continue to operate as an RHC for 180 calendar days after the 3 years from the date of the last designation, effective the last day of the month. An RHC may be decertified 180 days after the 3-year date of the area's designation if it does not provide a complete application for a location exception within 90 days from the date it no longer meets the location requirements, or if the application for a location exception is not approved. In rare circumstances, the RO may request an extension from the CMS Central Office if it has not been possible to process the location exception request before the RHC would be decertified. For example, (see accompanying sample timeline) if an area was designated (either a new designation or an update) on January 2, 2006 (1 on sample timeline), the designation would be considered valid for RHC purposes for 3 years, which would be January 2, 2009 (2). If an application to update the designation is submitted to HRSA by January 2, 2009 (3), the RHC would be protected from decertification while the HPSA application is under review (3.1). If the area qualifies as a HPSA and is updated (3.2), then no further action would be needed for purposes of the RHC designation for 3 years from the date of the designation update (3.3). If a HPSA application is submitted by January 2, 2009 (3), but is determined to not qualify as a HPSA (3.1.1), then the RHC would have 90 days from the date of that determination to submit an application for an exception (3.1.2). If an application to update the designation is not submitted to HRSA by January 2, 2009 (4), the RHC would have until April 3, 2009 (4.1), to submit an application for a location exception. If the RHC does not submit an application for a location exception to CMS by April 3, 2009 (4.2), it would be decertified on July 31, 2009 (4.3). (Decertification is effective the final day of the month.) An RHC that submits an application for a location exception would be protected from decertification while the application is under review (5). If the application is approved (5.1), then no further action would be needed for purposes of the RHC recertification for 3 years from the date of the exception (5.1.1). If the application is not approved (5.2), the RHC would be decertified 90 days from the date of notification that the application was not approved (5.2.1). The process to appeal a denial of certification is described in Sec. 498.3(b)(5). For the purpose of an appeal, RHCs and FQHCs are considered suppliers, not providers. In the December 24, 2003 final rule, we stated that an RHC would have 120 days from the date of notification that it was no longer in a designated area and therefore not compliant with the RHC requirements to submit an application to update its MUA or HPSA designation. Although HRSA regulations do not preclude RHCs from submitting a designation application, it is usually the State not the RHC that submits the designation application. The State should not wait until a designation is more than 3 years old to prepare and submit an update for RHC purposes. As noted previously, an existing RHC is protected from decertification based on its designation status as long as an application has been submitted for an updated designation. We encourage RHC to work with the applicable State Primary Care Office to assure that any necessary information is provided to HRSA in a timely manner. A list of the State Primary Care Offices is available online at http:// hrsa.gov/grants and then by selecting ``HRSA Grantees by Program or State'' and then by selecting ``State Primary Care Offices'', or by contacting the State's Department of Health. An RHC that chooses to apply for an exception to the location requirements would send its application with the necessary documentation to the appropriate RO. An RHC that applied for an exception would not be [[Page 36702]] disqualified as an RHC based on not meeting the location requirements while its application is under review. If approved, the exception would be for a period of 3 years. Every 3 years, an RHC may reapply for an exception to the location requirements to continue its RHC eligibility. Some provider-based RHCs that do not meet the location requirements and do not qualify for an exception may want to continue to operate as another type of Medicare provider. In some cases, these entities will need to go through the standard Medicare application process, which includes an application and, for entities wishing to enroll as a ``provider of services'' under 1861(u), a state survey. We have been informed that the waiting time for a state survey can be several months, so we are proposing that provider-based RHCs that do not meet the location requirements and do not qualify for an exception and have submitted an application to CMS to be another type of Medicare provider that requires a State survey for certification may receive an additional 120-day extension of their status as an RHCs while their application is being processed. We propose to revise Sec. 491.2 to redefine ``shortage areas'' as geographic and population group HPSAs, MUAs, and areas designated by the Governor of the State and certified by the Secretary. We propose to amend Sec. 491.3 as follows by adding paragraphs (a)(1) through (a)(3) to specify general certification requirements, and (b)(1) to specify permanent and mobile unit requirements. We propose to amend Sec. 491.5 as follows: Adding paragraphs (a)(1) through (a)(3) to specify the location requirements for RHCs and FQHCs. Adding paragraph (a)(4) to specify when a clinic would be terminated from the RHC program. Adding paragraphs (a)(5) and (a)(6) to specify the requirements for being considered an essential provider. Adding paragraph (a)(7) to specify the time period for a clinic's essential provider status. Adding paragraph (a)(8) to specify the time period that a decertified RHC may continue to operate. Adding paragraph (a)(9) to specify that conditions for an extension of RHC status when the location requirements are not met and the clinic does not qualify for an exception. Adding paragraphs (b)(1) through (b)(4) to specify the criteria for an exception from the location requirements. Adding paragraphs (c)(1) and (c)(2) to specify the conditions for termination. Adding paragraphs (d)(1) through (d)(8) to set forth the circumstances and timeline for submitting a request for an exception to the location requirements. BILLING CODE 4120-01-P [[Page 36703]] [GRAPHIC] [TIFF OMITTED] TP27JN08.006 BILLING CODE 41210-01-C [[Page 36704]] B. Staffing Requirements, Waivers, and Contracts 1. Staffing Requirements One of the goals of the RHC program is to encourage the use of nonphysician practitioners to provide quality health care in rural areas. We propose to amend Sec. 491.8(a)(6) to conform with section 6213(a)(3) of OBRA '89 (Pub. L. 101-239) which requires that an NP, PA, or CNM be available to furnish patient care at least 50 percent of the time the RHC operates. An RHC that opens its premises solely to address administrative matters or to allow patients shelter from inclement weather would not be considered to be in operation as an RHC during that period. 2. Temporary Staffing Waivers We propose to amend Sec. 491.8(d) to conform with section 1861(aa)(7) of the Act, which authorizes us to grant a 1-year waiver of staffing requirements for nonphysician primary care providers (NPs, PAs, or CNMs) upon request from the RHC. The requesting RHC would have to demonstrate that it made a good faith effort to recruit and retain an adequate number of nonphysician primary care providers, and that it has been unable in the 90-day period prior to the request to hire one of these providers to meet the staffing requirement. This could include activities such as advertising in a newspaper, advertising in a professional journal, conducting outreach to an NP, PA, or CNM school, or other activities that would demonstrate a good faith effort to recruit and retain a nonphysician primary care provider. In accordance with section 1861(aa)(7)(B) of the Act, this waiver would be available only to existing RHCs that meet the nonphysician primary care requirement before seeking the waiver. Section 1861(aa)(7) of the Act also specifies that an additional waiver cannot be granted until a minimum of 6 months has passed since the expiration of the previous waiver. We are proposing that an RHC that has not complied with staffing requirements for one or more nonphysician primary care providers and has not submitted a request for a waiver of this requirement would be decertified from the RHC program. The decertification would be mandatory, since the noncompliant facility would fail to meet the statutory definition of an RHC. An RHC that has submitted a waiver request would not be decertified based on this requirement while its request was under review. A waiver would be deemed granted after 60 days, unless written notification is provided that the request has been denied. An RHC that is decertified from the RHC program due to failure to meet the staffing requirements would no longer be eligible to operate as an RHC. However, the RHC could apply to become a physician- directed clinic, group practice, or a group of individual practitioners who would then bill Medicare using the Part B fee-for-service system. 3. Contractual Arrangements Due to the difficulty in recruiting and retaining physicians in rural areas, RHCs have had the option of hiring physicians either as RHC employees or as contractors. However, in order to promote stability and continuity of care, the Rural Health Clinic Services Act of 1977 required RHCs to ``employ a physician assistant or nurse practitioner'' (section 1861(aa)(2)(iii) of the Act). We note that the term ``employee'' is defined in section 3121(d)(2) of the Internal Revenue Code of 1986 and is usually evidence by the employer's provision of a W-2 form to the employee. Our current regulations at Sec. 405.2468(b)(1) state that `` * * * (RHCs are not paid for services furnished by contracted individuals other than physicians).'' In the more than 30 years since this legislation was enacted, the health care environment has changed dramatically, and RHCs have requested that they be allowed to enter into contractual agreements with PAs and NPs as well as physicians. To provide RHCs with greater flexibility in meeting their staffing requirements, we propose to revise Sec. 405.2468(b)(1) by removing the parenthetical ``RHCs are not paid for services furnished by contracted individuals other than physicians.'' Also, we propose to revise Sec. 491.8(a)(3) to state that nonphysician practitioners may furnish services under contract to an RHC within the statutory limits. RHCs would still be required, under section 1861(aa)(2)(iii) of the Act, to employ a PA or NP. However, as long as there is at least one PA or NP employed at all times (subject to the waiver provision set forth at section 1861(aa)(7) of the Act), an RHC would be free to enter into employment contracts with other PAs, NPs, or other nonphysician staff. FQHCs already have the option to contract with PAs and NPs. Authority to allow contracting for clinical services is provided for in the PHS Act. The authority to allow Medicare participating FQHCs to contract with any necessary health professional for the purpose of treating their patients is further clarified by section 5114 of the Deficit Reduction Act of 2005 (DRA) (Pub. L. 109-171) which amended section 1842(b)(6) of the Act to require consolidated billing of contracted professional services by adding new subsection (H) with the following language: ``in the case of services described in section 1861(aa)(3) of the Act that are furnished by a health care professional under contract with a Federally qualified health center, payment shall be made to the center.'' Similar language regarding contracted medical professionals was also added to section 1861(aa)(3) of the Act. FQHCs and RHCs also have authority to claim the costs of such contracted practitioners' services on the Medicare cost report to receive Medicare payment. A practitioner providing services under contract to the RHC or FQHC should have a signed contract that includes his or her responsibilities and requirements. All practitioners should be familiar with the clinic or center's policies and procedures, and comply with the staffing requirements in Sec. 491.8. Practitioners should be employed or contracted to the RHC in a manner that enhances continuity and quality of care. We propose to remove the parenthetical statement at Sec. 405.2468(b)(1) which states that RHCs are not paid for services furnished by contracted individuals other than physicians. We also propose to revise Sec. 491.8(a)(3) to state that nonphysician practitioners may furnish services under contract to an RHC. C. Payment Issues 1. Payment Methodology for RHCs and FQHCs Payment to RHCs and FQHCs for covered services furnished to Medicare beneficiaries is made on the basis of an all-inclusive rate per visit, subject to a payment limit. The Medicare Administrative Contractor (MAC) or FI determines the all-inclusive rate in accordance with this subpart and instructions issued by CMS. With the exception of services provided under Medicare Advantage plans to RHCs and FQHCs, the statutory payment requirements for RHC and FQHC services are set forth at section 1833(a)(3) of the Act, (as amended by the MMA), which states that RHCs and FQHCs are paid reasonable costs ``* * * less the amount a provider may charge as described in clause of section 1866(a)(2)(A), but in no case may the payment exceed 80 percent of such costs[.]'' The beneficiary is responsible for the Medicare Part B deductible [[Page 36705]] (except for services provided in FQHCs, where there is no Part B deductible) and coinsurance amounts. Section 1866(a)(2)(A)(ii) of the Act and implementing regulations at Sec. 405.2410(b) establish beneficiary coinsurance at an amount not to exceed 20 percent of the clinic's reasonable charges for covered services. Section 237(c) of the MMA which pertains to cost sharing permitted under MA organizations, revised section 1857(e) of the Act. These changes were addressed in Sec. 405.2469 as part of the CY 2006 Physician Fee Schedule final rule with comment period (70 FR 70116). In general, the statutory payment methodology requires that except for services provided under MA plans to FQHCs in accordance with section 1833(a)(3)(B) of the Act, RHCs and FQHCs subtract beneficiary coinsurance and deductible amounts, as applicable (based on reasonable charges) from reasonable costs to determine the Medicare payment. The statute further stipulates that Medicare reimbursement may not exceed 80 percent of reasonable costs. Until now, Medicare has been paying RHCs and FQHCs 80 percent of the facility's reasonable costs, regardless of deductible and coinsurance amounts billed to Medicare beneficiaries. This allowed RHCs and FQHCs to receive, in some instances, payment in excess of 100 percent of reasonable costs. Therefore, to conform existing regulations to the statutory payment methodology described above, we propose to revise Sec. 405.2410 and Sec. 405.2466(b)(1)(iii) by stipulating that, except for services provided under MA plans to FQHCs, Medicare payment is equal to reasonable costs less aggregate coinsurance and deductible amounts billed, but in no case may total Medicare payment exceed 80 percent of reasonable costs. Note: Payment for the outpatient treatment of mental, psychoneurotic, or personality disorders is subject to the limitations on payment in Sec. 410.155 ).2. Exceptions to the Per Visit Payment Limit Prior to the BBA, the payment methodology for an RHC depended on whether it was ``provider-based'' or ``independent.'' Payment to provider-based RHCs for services furnished to Medicare beneficiaries was made on a reasonable cost basis by the provider's FI in accordance with our regulations at 42 CFR part 413. Payment to independent RHCs for services furnished to Medicare beneficiaries was made on the basis of a uniform all-inclusive rate payment methodology in accordance with 42 CFR part 405, subpart X. Payment to independent RHCs also was subject to a maximum payment per visit as set forth in section 1833(f) of the Act. Section 4205(a) of the BBA amended section 1833(f) of the Act. Under the BBA, the independent RHC all-inclusive payment methodology and payment limit were applied to provider-based RHCs. This BBA provision also provided an exception to the RHC payment limit for those RHCs based in small, rural hospitals to help them remain financially viable. Section 224 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554) enacted on December 21, 2000, expanded to RHCs based in small, urban hospitals the eligibility criteria for receiving an exception to the RHC payment limit, effective July 1, 2001. This was implemented through a program memorandum on December 6, 2001. If an RHC is an integral and subordinate part of a hospital, it can receive an exception to the per visit payment limit if the hospital has fewer than 50 beds as determined by using one of the following methods: The determination of the number of beds at Sec. 412.105(b); or The hospital's average daily patient census count of those beds described in Sec. 412.105(b), and the hospital meets all of the following conditions: ++ It is a sole community hospital as determined in accordance with Sec. 412.92 or Sec. 412.109(a). ++ It is located in a level 9 or 10 RUCA. ++ It has an average daily patient census that does not exceed 40. The December 24, 2003 final RHC rule used the 1993 Urban Influence Codes (UICs), then a 9-category measure developed by the U.S. Department of Agriculture (USDA), to identify hospitals which are located in sparsely populated rural areas. Hospitals with a level 8 or 9-level UIC and which have an average daily census of less than 50 patients would qualify for an exception to the RHC per visit payment limit. The USDA has since changed the UICs to a 12-category measure, with levels 9 through 12 comparable to the 1993 levels 8 and 9. The UICs are a county-level measurement. Since many counties encompass large geographical areas with significant variations in population density, demographics, economics, and health care services, the UICs do not always provide an accurate assessment of a local area's degree of rurality. The RUCA system is another method for identifying rural areas. RUCA codes classify U.S. census tracts using measures of population density, urbanization, and daily commuting. This classification uses 10 numbers with subdivisions to reflect commuting flows. RUCAs are used by CMS for purposes of determining rurality in the hospital and ambulance payment systems. To target the needs of rural populations more accurately and to be consistent with other CMS programs, we propose to utilize the RUCA methodology instead of the UIC methodology. We also propose that RUCA codes 9 and 10 be used for the purpose of approving an exception to the per visit payment limit. We propose to amend Sec. 405.2462 to provide payment to all RHCs and FQHCs on the basis of an all-inclusive rate per visit, subject to the per-visit payment limit. For a hospital-based RHC that is the primary source of health care in its rural community as defined at Sec. 412.92(a) or Sec. 412.109(a), we propose to utilize the hospital's average daily census rather than bed count in determining whether RHC services are subject to the per-visit payment limit. We also propose to utilize RUCAs 9 and 10 to determine eligibility for an exception to the per visit payment limit. 3. Commingling Commingling refers to the sharing of RHC space, staff (employees or contractors), supplies, records, and other resources with an onsite Medicare Part B or Medicaid fee-for-service practice operated by the same RHC physician(s) or nonphysician practitioner(s) or both. Commingling is prohibited when it results in duplicate Medicare or Medicaid reimbursement, either due to the inability of the RHC to distinguish its actual costs from those that are reimbursed on a fee- for-service basis, or due to other reasons. An RHC and a Medicare fee-for-service practice may not operate simultaneously in order to prohibit these shared practices from selecting patient encounters for enhanced Medicare Part B billing. However, an RHC that is part of a multipurpose clinic may house other entities (such as private medical practices, x-ray and lab clinics, dental clinics, emergency room) in the non-RHC space. The entities occupying the non-RHC space may bill the assigned Medicare Administrative Contractor (MAC), Fiscal Intermediary (FI), or carrier as appropriate; authority is delegated to the MAC, FI, or carrier to [[Page 36706]] determine acceptable accounting methods for allocation of staff costs between the RHC and other entities to be used in documenting allocation of costs. Since in a multipurpose clinic the RHC may share some resources in common with the non-RHC entity (for example, waiting room or receptionist), the RHC must maintain accurate records to assure that the RHC costs that it claims for Medicare reimbursement are only for the staff, space, or other resources that are used for RHC purposes. Any shared staff, space, or other resources must be allocated appropriately between the RHC and non-RHC usage to avoid duplicate reimbursement. This commingling policy does not prohibit a hospital-based RHC from sharing its health care practitioners with the hospital emergency department in an emergency, or prohibit an RHC physician from providing on-call services for an emergency room, as long as the RHC continues to meet the RHC conditions for certification (CfCs) in the absence of the practitioner(s) and the RHC is able to allocate appropriately the practitioner's salary between RHC and non-RHC time. Facilities are encouraged to work with their MAC, FI, or carrier and RO in determining permissible resource-sharing situations and proper cost reporting methods. 4. Payment for Services to Hospital Patients The hospital inpatient bundling provision was enacted on April 20, 1983 in section 602(e)(3) of the Social Security Act Amendments of 1983 (Pub. L. 98-21), by adding paragraph (a)(14) to section 1862 of the Act. The hospital outpatient bundling provision was enacted in section 9343(c) of OBRA '86, Public Law 99-509. Taken together, these two provisions require bundling of the costs for all nonprofessional services furnished to hospital patients. Consequently, section 1862(a)(14) of the Act now requires hospitals and CAHs to bundle all costs, other than those for the professional services specified in the statute. Only professionals exempt from the hospital bundling provisions are permitted to bill for services furnished to hospital patients. RHCs and FQHCs cannot bill for services furnished by RHC practitioners to hospital patients because RHC and FQHC services are not exempt from the hospital bundling provisions. Accordingly, any costs incurred by an RHC or FQHC associated with the provision of services to hospital patients must be excluded from RHC or FQHC allowable costs on their Medicare cost report. However, a practitioner who provides services in an RHC or FQHC may, in some cases, also have a private practice and be enrolled and qualified to bill Medicare under that practice as a Part B practitioner. In these situations, the practitioner may be able to bill Medicare Part B under their private practice for covered services provided to hospital patients. Section 1862(a)(14) of the Act places restrictions on the payment for services furnished to hospital and CAH patients. We propose to revise Sec. 405.2411(b) and (c) to specify that RHC services are covered when furnished in an RHC setting or other outpatient setting, but are not covered when furnished in a hospital or CAH. 5. Payment for Services to Skilled Nursing Facility (SNF) Patients Section 4432(b) of the BBA amended the statute to add a consolidated billing provision for SNFs in section 1862(a)(18) of the Act. Similar to the hospital bundling provision in section 1862(a)(14) of the Act, this provision bundled all Part B services furnished to SNF residents during a covered Part A stay into the SNF Prospective Payment System (PPS) rates, except those services specifically excluded under statute. RHC services were not among the excluded services. Although the Congress excluded physician services and several other services from the SNF bundle of services, RHC and FQHC services were not among the services on the excluded under section 1888(e)(2)(A)(ii) of the Act. Consequently, through program instructions to Medicare contractors (PM A-99-8, March 1999), we announced that under the statute, RHC and FQHC services furnished to SNF residents were subject to the SNF consolidated billing provision and could not be billed to Medicare by the RHC or FQHC. However, section 410 of the MMA amended section 1888(e)(2)(A) of the Act by adding a new paragraph (iv) to exclude RHC and FQHC services from the SNF consolidated billing provision. This MMA change was effective for services furnished on or after January 1, 2005. In accordance with this section of the MMA, services included within the scope of RHC and FQHC services described at section 1888(e)(2)(A)(ii) of the Act are excluded from the SNF consolidated billing provision. These services are limited to physician, PA, NP, CP, and CNM services. Only this subset of RHC and FQHC services may be covered and paid through the RHC and FQHC benefit when furnished to RHC and FQHC patients in a Medicare Part A covered SNF stay. Payment for this subset of services is made in the usual manner under the RHC and FQHC all- inclusive payment methodology. All services other than physician, PA, NP, CP, and CNM services that an RHC or an FQHC may furnish to a patient in a Medicare covered Part A SNF stay are subject to the SNF consolidated billing provision. This means any costs associated with these other services are excluded from coverage and payment under the RHC and FQHC benefit when furnished to a Part A SNF pa