Medicare Program; Rural Health Clinics: Amendments to Participation Requirements and Payment Provisions; and Establishment of a Quality Assessment and Performance Improvement Program; Suspension of Effectiveness, 55341-55347 [06-7886]

Agencies

• Centers for Medicare & Medicaid Services
• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 71, Number 184 (Friday, September 22, 2006)]
[Rules and Regulations]
[Pages 55341-55347]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7886]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405 and 491

[CMS-1910-IFC]
RIN 0938-AJ17


Medicare Program; Rural Health Clinics: Amendments to 
Participation Requirements and Payment Provisions; and Establishment of 
a Quality Assessment and Performance Improvement Program; Suspension of 
Effectiveness

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment period; partial suspension of 
effectiveness.

-----------------------------------------------------------------------

SUMMARY: This interim final rule with comment period revises the rural 
health clinic (RHC) regulations to revert to those provisions set forth 
in regulations before publication of the December 24, 2003 RHC final 
rule. That final rule implemented certain provisions of the Balanced 
Budget Act (BBA) of 1997 to establish a process and criteria for 
disqualifying from the RHC program clinics that no longer meet basic 
location requirements (rural and medically underserved), and to require 
RHCs to establish quality assessment and performance improvement 
programs. That rule also prohibited ``commingling'' (the use of the 
space, professional staff, equipment, and other resources) of an RHC 
with another entity. [In addition, it addressed comments on the 
February 28, 2000 proposed rule. Since the publication of the RHC final 
rule exceeded the 3-year timeline for finalizing proposed rules set by 
the Medicare Prescription Drug, Improvement, and Modernization Act of 
2003, we are suspending the effectiveness of the current provisions by 
removing the RHC provisions set forth in the December 2003 final rule 
and reverting to those RHC provisions previously in effect.] We intend 
to reissue new proposed and final RHC rules to reinstate the current 
provisions. However, these revisions do not impact the effectiveness of 
the self-implementing provisions of the BBA or any provisions we had 
previously implemented or enforced through program memoranda.

DATES: Effective date: These regulations are effective on September 22, 
2006.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on November 21, 2006.

ADDRESSES: In commenting, please refer to file code CMS-1910-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (no duplicates, 
please):
    1. Electronically. You may submit electronic comments on specific 
issues in this regulation to https://www.cms.hhs.gov/eRulemaking. Click 
on the link ``Submit electronic comments on CMS regulations with an 
open comment period.'' (Attachments should be in Microsoft Word, 
WordPerfect, or Excel; however, we prefer Microsoft Word.)
    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-IFC, P.O. Box 8016, Baltimore, MD 21244-8016.
    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-IFC, 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 one of the following addresses. 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. Room 445-G, Hubert H. Humphrey Building, 
200 Independence Avenue, SW., Washington, DC 20201; or 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    (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.)
    Comments mailed to the addresses indicated as appropriate for hand 
or

[[Page 55342]]

courier delivery may be delayed and received after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: John Warren, (410) 786-3633.

SUPPLEMENTARY INFORMATION: 
    Submitting Comments: We welcome comments from the public on all 
issues set forth in this rule to assist us in fully considering issues 
and developing policies. You can assist us by referencing the file code 
CMS-1910-IFC and the specific ``issue identifier'' that precedes the 
section on which you choose to comment.
    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: https://
www.cms.hhs.gov/eRulemaking. Click on the link ``Electronic Comments on 
CMS Regulations'' 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.

I. Background

    [If you choose to comment on issues in this section, please include 
the caption ``BACKGROUND'' at the beginning of your comments.]

A. Changes Based on Legislation

    The Medicare Prescription Drug, Improvement, and Modernization Act 
of 2003 (MMA, Pub. L. 108-173) was enacted on December 8, 2003. Section 
902 of MMA of 2003 amended section 1871(a) of the Act and requires the 
Secretary, in consultation with the Director of the Office of 
Management and Budget, 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 the timelines for these regulations may 
vary but shall not exceed 3 years after publication of the preceding 
proposed or interim final regulation except under exceptional 
circumstances. A notice implementing this provision was published in 
the Federal Register on December 30, 2004 (69 FR 78442).
    On February 28, 2000, we published a proposed rule in the Federal 
Register (65 FR 10450) to revise certification and payment requirements 
for RHCs, as required by section 4205 of the Balanced Budget Act of 
1997 (BBA) (Pub. L. 105-33, enacted on August 5, 1997). On December 24, 
2003, we published a final rule in the Federal Register (68 FR 74792) 
to finalize that proposed rule. Because we published the proposed rule 
on February 2000 and the final rule on December 2003 (more than 3 years 
following the publication of the proposed rule), we will be issuing, 
through separate rulemaking, a new proposed rule and subsequently, a 
new final rule. However, before we publish those two rules, we are 
publishing this interim final rule to suspend the implementation of the 
current provisions by revising our regulations to remove those 
provisions and to reinstate the provisions previously in effect before 
the December 2003 final rule was published. The changes are necessary 
to avoid any confusion regarding the effectiveness of the provisions of 
the RHC final rule. We intend to publish a new proposed rule, which 
would propose to re-adopt many of the provisions set forth under the 
December 2003 final rule, followed by a new final rule informed by 
public comment.

B. State Survey Agency Directors Letter

    To provide clarification regarding provisions set forth in the 
December 2003 final rule (effective date of rule: February 23, 2004), 
we issued a letter to State Survey Agency Directors in August 2004. We 
specified in the letter that we have not yet implemented certain 
changes to the RHC provisions set forth in the December 2003 final 
rule. We instructed State Agencies, until further notice, not to take 
any action to disqualify currently approved Medicare participating RHCs 
that no longer meet basic location requirements. We added that initial 
RHC applicants must meet existing rural and shortage area location 
requirements.
    In addition, we stated that the Quality Assessment and Performance 
Improvement (QAPI) program requirements were not yet mandatory. 
However, we added that because a QAPI program as specified in the 
December 2003 final rule will exceed the current program evaluation 
requirement, any RHC that has implemented the QAPI program as specified 
should be considered to be in compliance with the existing Program 
Evaluation requirements.

II. Provisions of the Interim Final Rule

    [If you choose to comment on issues in this section, please include 
the caption ``Suspension of Regulatory Provisions'' at the beginning of 
your comments.]
    This interim final rule with comment period makes changes to the 
RHC-related provisions under parts 405 and 491 of our regulations. This 
interim final rule revises those provisions set forth in the December 
2003 final rule to remove the current RHC provisions and to reinstate 
policy previously in effect. This rule will not affect the provisions 
that are self-implementing under the BBA or any provisions that we have 
already enforced through program memoranda. We intend to publish a new 
proposed rule, which would propose to re-adopt many of the provisions 
set forth under the December 2003 final rule, followed by a new final 
rule informed by public comment.
    The suspension of the December 2003 final RHC rule will remain in 
effect until we set forth provisions under the new RHC final rule. The 
new proposed and final rules will identify any changes to the RHC 
provisions set forth in the December 2003 final rule. The suspension 
clarifies that we will not implement several of the RHC provisions 
until we publish a new proposed and final RHC rule.

Regulatory Revisions

    Below we describe the revisions that we are making to our current 
regulations. Unless otherwise noted, we are removing the current RHC 
provisions as set forth under the December 2003 rule and replacing them 
with those in effect before the provisions of the December 2003 final 
rule became effective. As we describe under section III of this interim 
final rule, specific provisions will remain in effect and will not be 
affected by regulatory revisions set forth by this rule.
     Section 405.2401 Scope and Definitions.
    Under paragraph (b) of this section, we revised the definition of 
RHCs. We are removing the provisions that prohibit the sharing of 
professional staff, space, supplies, records, and other resources with 
another Medicare and Medicaid entity and provisions discussing how to 
handle related costs.
     Section 405.2410 Application of Part B Deductible and 
Coinsurance.
    Paragraphs (a) and (b) of this section describe the 
responsibilities regarding

[[Page 55343]]

payment of the deductible and coinsurance under Part B.
    We are revising paragraph (a) of this section to describe how we 
apply the Medicare Part B deductible. We are revising paragraph (b) of 
this section to revert to the language that was codified in the CFR 
before publication of the December 2003 final rule.
     Section 405.2462 Payment for Rural Health Clinic Services 
and Federally Qualified Health Clinic Services. Hospital-Based RHCs 
Payment Limit. These provisions are BBA provisions relating to the 
payment limit for hospital-based RHCs. We are revising this section to 
revert to previous policy regarding payment to provider-based RHCs and 
FQHCs.
     Section 491.2 Definitions.
    We are revising this section to revert to the ``Definitions'' 
section that was codified in the CFR before publication of the December 
2003 final rule. In the definition of ``nurse practitioner,'' we note 
that the effective date referenced in paragraph (3) of the definition 
would revert to the original effective date of the subpart (July 1, 
1978), not the effective date of this interim final rule. In addition, 
we are temporarily correcting the two incorrect cross-references in 
this section. In the definition of ``Nurse practitioner,'' we are 
correcting the cross reference in paragraph (3) of that definition to 
read ``paragraph (2) of this definition.'' In the definition of 
``Physician assistant,'' we are correcting the cross reference in 
paragraph (3) of that definition to read ``paragraph (2) of this 
definition.''
     Section 491.3 RHC Procedures.
    Provisions under paragraph (a) of this section describe our general 
procedures for approving or disapproving an RHC's request to 
participate in Medicare.
    We are removing the provisions under paragraph (b)(1) of this 
section that describe the current shortage area requirements for 
participating RHCs and applicants; paragraphs (b)(2) and (b)(3) of this 
section describe the procedures that RHCs must follow that have 
outdated shortage area designations; and paragraph (c) under this 
section describes procedures that the RHC may follow to request an 
exception from disqualification when failing to meet the rural or 
shortage area definition. We are not currently enforcing the policies 
described under these paragraphs but we may reinstate the policy in a 
future final rule.
     Section 491.5 Location of Clinic.
    We are revising paragraph (b) of this section that describes the 
exceptions to disqualification of an approved RHC located in an area 
that no longer meets the definition of a shortage or rural area.
    We are also revising paragraph (d), which sets forth the criteria 
for designation of shortage areas, to revert to the paragraph (d) that 
was codified before publication of the December 2003 final rule.
    We are re-inserting paragraph (e), which describes a medically 
underserved population, to revert to the paragraph (e) that was 
codified before publication of the December 2003 final rule.
    We are re-inserting paragraph (f), which sets forth requirements 
specific to FQHCs, to revert to the paragraph (f) that was codified 
before publication of the December 2003 final rule.
     Section 491.8 Staffing and Staff Responsibilities.
    Set forth under the December 2003 final rule, at paragraph (a)(6) 
of this section, we made an update to reflect a previous legislative 
change to the amount of time non-physicians must be available to 
furnish services at the clinic and a technical correction to add 
``certified nurse midwife'' (CNM) to the list of health care providers 
that are available to furnish patient care at least 50 percent of the 
time that the RHC operates. We clarified through manual instructions 
that the list of qualified RHC non-physician practitioners includes 
certified nurse midwives, but this clarification had not been codified 
in regulations.
    We are revising paragraph (a)(6) to reinstate our previous 
requirement, which does not include ``CNM'' in the list of nonphysician 
providers and requires that providers be available at least ``60 
percent'' of the time that the RHC operates.
    We are removing the requirements under paragraph (d) of this 
section that relate to waivers of RHC staffing requirements. Although 
we are changing the nonphysician staffing requirement and removing the 
RHC staffing waiver provision from our regulations, we are enforcing 
these statutory requirements through program manuals and memoranda. In 
other words, we will continue to require nonphysicians to be available 
50 percent of the time and issue waivers only to currently 
participating RHCs.
     Section 491.11 Quality assessment and performance 
improvement (QAPI).
    We are revising this section to replace the current QAPI conditions 
for certification for RHCs with our previous program evaluation 
condition for certification.

III. Provisions That Will Remain in Effect (Refer to Provisions Under 
December 2003 Final Rule)

    [If you choose to comment on issues in this section, please include 
the caption ``Provisions that Will Remain in Effect'' at the beginning 
of your comments.]
    Specific requirements under the BBA are either considered self-
implementing or have been implemented and enforced through our program 
memoranda. These provisions will not be affected by this interim final 
rule with comment period and will remain in effect. These provisions 
are described below:
     Section 405.2462 Payment for Rural Health Clinic Services 
and Federally Qualified Health Clinic Services. Hospital-Based RHCs 
Payment Limit. The BBA provisions relating to the payment limit for 
hospital-based RHCs (section 4205(a) of the BBA, amending section 
1833(f) of the Act) are not self-implementing but were implemented and 
enforced through a program memorandum in 1998.
     Section 491.3 RHC Procedures.
    The provisions under paragraph (b)(1) of this section state that 
both ``participating'' RHCs and ``applicants'' must be located in a 
current shortage area, which is based on section 4205(d)(1) of the BBA, 
amending section 1861(aa)(2)(A) of the Act. Although the revision 
relating to RHC applicants was implemented in a memorandum to our 
regional offices on February 6, 1998, the enforcement of the 3-year 
provision on ``participating'' RHCs would have been implemented through 
the RHC final rule. This provision could not be properly enforced until 
the process and criteria for granting exceptions from RHC 
disqualification are in place. Consequently, the 3-year provision as it 
pertains to ``participating'' RHCs will not be enforced, and the public 
will have another opportunity to comment on this provision and the new 
regulatory policies established under the December 2003 final RHC rule. 
The provision relating to applicants will remain in effect.
     Section 491.8 Staffing and Staff Responsibilities.
    At paragraph (a)(6) of this section, we made an update to reflect a 
previous legislative change (section 6213(a) of OBRA 1989 amended the 
staffing requirements for an RHC) to the amount of time non-physicians 
must be available to furnish services at the clinic and a technical 
correction to add ``certified nurse midwife'' to the list of health 
care providers that are available to furnish patient care at least 50 
percent of the time that the RHC

[[Page 55344]]

operates. We clarified through manual instructions that the list of 
qualified RHC non-physician practitioners includes certified nurse 
midwives, but this clarification was never codified in regulations. The 
requirements under paragraph (d) of this section regarding waivers of 
RHC staffing requirements (BBA-related), which we consider self-
implementing, were enforced through program memoranda.

IV. Response to Comments

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

V. Waiver of Proposed Rulemaking and Delayed Effective Date

    [If you choose to comment on issues in this section, please include 
the caption ``Waiver'' at the beginning of your comments.]
    We ordinarily publish a notice of proposed rulemaking in the 
Federal Register and invite public comment on the proposed rule. The 
notice of proposed rulemaking includes a reference to the legal 
authority under which the rule is proposed, and the terms and 
substances of the proposed rule or a description of the subjects and 
issues involved. This procedure can be waived, however, if an agency 
finds good cause that a notice-and-comment procedure is impracticable, 
unnecessary, or contrary to the public interest and incorporates a 
statement of the finding and its reasons in the rule issued.
    We find it unnecessary to undertake proposed rulemaking because 
this interim final rule with comment period does not make new policy 
but simply reinstates policy previously in effect relating to RHCs. 
This policy was in effect before the December 2003 rule became 
effective and has been subjected to public comments. Moreover, because 
the 2003 rule was rendered ineffective by operation of law, we can 
exercise no discretion regarding this matter and must reinstate the 
regulation exactly as it existed before December 24, 2003. We intend to 
publish a new proposed rule for RHCs that will be subject to proposed 
rulemaking followed by a new final rule to reinstate our current RHC 
policy with any necessary changes.
    Further, we believe a delayed effective date is unnecessary because 
this interim final rule with comment period provides additional 
clarification to the RHC industry. This rule clarifies that any RHC 
provisions that have already been implemented or enforced will remain 
in effect and will not be impacted by the regulatory provisions that we 
are revising in this interim final rule. Allowing this rule to take 
effect immediately provides needed guidance and avoids any additional 
confusion experienced following the publication of the December 2003 
final rule. Therefore, we find good cause to waive notice-and-comment 
procedures, as well as the 30-day delay in effective date.

VI. Collection of Information Requirements

    This document does not impose information collection and 
recordkeeping requirements. Consequently, it need not be reviewed by 
the Office of Management and Budget under the authority of the 
Paperwork Reduction Act of 1995.

VII. Regulatory Impact Statement

    [If you choose to comment on issues in this section, please include 
the caption ``Regulatory Impact Statement'' at the beginning of your 
comments.]
    We have examined the impact of this rule as required by Executive 
Order 12866 (September 1993, Regulatory Planning and Review), the 
Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), 
section 1102(b) of the Social Security Act, the Unfunded Mandates 
Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132.
    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). A regulatory impact 
analysis (RIA) must be prepared for major rules with economically 
significant effects ($100 million or more in any 1 year). This rule 
does not reach the economic threshold and thus is not considered a 
major rule because it suspends enforcement of RHC participation 
requirements.
    The RFA requires agencies to analyze options for regulatory relief 
of small businesses. For purposes of the RFA, small entities include 
small businesses, nonprofit organizations, and government agencies. 
Most hospitals and most other providers and suppliers are small 
entities, either by nonprofit status or by having revenues of $6 
million to $29 million in any 1 year. Individuals and States are not 
included in the definition of a small entity. We are not preparing an 
analysis for the RFA because we have determined that this rule will not 
have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Act requires us to prepare a 
regulatory impact analysis if a rule may have a significant impact on 
the operations of a substantial number of small rural hospitals. This 
analysis must conform to the provisions of section 604 of the RFA. For 
purposes of section 1102(b) of the Act, we define a small rural 
hospital as a hospital that is located outside of a Metropolitan 
Statistical Area and has fewer than 100 beds. We are not preparing an 
analysis for section 1102(b) of the Act because we have determined that 
this rule will not have a significant impact on the operations of a 
substantial number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule that may result in expenditure in any 1 year by State, 
local, or tribal governments, in the aggregate, or by the private 
sector, of $120 million. This rule will have no consequential effect on 
the governments mentioned or on the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates a proposed rule (and subsequent 
final rule) that imposes substantial direct requirement costs on State 
and local governments, preempts State law, or otherwise has Federalism 
implications. Since this regulation does not impose any costs on State 
or local governments, the requirements of E.O. 13132 are not 
applicable.
    In accordance with the provisions of Executive Order 12866, this 
regulation was reviewed by the Office of Management and Budget.

List of Subjects

42 CFR Part 405

    Administrative practice and procedure, Health facilities, Health 
professions, Kidney diseases, Medical devices, Medicare, Reporting and 
recordkeeping requirements, Rural areas, and X-rays.

42 CFR Part 491

    Grant programs--Health, Health facilities, Medicaid, Medicare, 
Reporting and recordkeeping requirements, and Rural areas.

0
For the reasons set forth in the preamble, the Centers for Medicare &

[[Page 55345]]

Medicaid services amends 42 CFR chapter IV as set forth below:

PART 405--FEDERAL HEALTH INSURANCE FOR THE AGED AND DISABLED

Subpart X--Rural Health Clinic and Federally Qualified Health 
Center Services

0
1. The authority citation for part 405, continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh).


0
2. In Sec.  405.2401, in paragraph (b), revise the definition of 
``rural health clinic'' to read as follows:


Sec.  405.2401  Scope and definitions.

* * * * *
    (b) Definitions.
* * * * *
    Rural health clinic means a facility that:
    (1) Has been determined by the Secretary to meet the requirements 
of section 1861(aa)(2) of the Act and part 491 of this chapter; and
    (2) Has filed an agreement with the Secretary in order to provide 
rural health clinic services under Medicare. (See Sec.  405.2402.)
* * * * *

0
3. Revise Sec.  405.2410 to read as follows:


Sec.  405.2410  Application of Part B deductible and coinsurance.

    (a) Application of deductible. (1) Medicare payment for rural 
health clinic services begins only after the beneficiary has incurred 
the deductible.
    (2) Medicare payment for services covered under the Federally 
qualified health center benefit is not subject to the usual Part B 
deductible.
    (b) Application of coinsurance. (1) The beneficiary is responsible 
for a coinsurance amount which cannot exceed 20 percent of the clinic's 
reasonable customary charge for the covered service; and
    (2)(i) The beneficiary's deductible and coinsurance liability, with 
respect to any one item or service furnished by the rural health 
clinic, may not exceed a reasonable amount customarily charged by the 
clinic for that particular item or service.
    (ii) For any one item or service furnished by a Federally qualified 
health center, the coinsurance liability may not exceed 20 percent of a 
reasonable amount customarily charged by the center for that particular 
item or service.


0
4. Revise Sec.  405.2462 to read as follows:


Sec.  405.2462  Payment for rural health clinic and Federally qualified 
health center services.

    (a) Payment to provider-based rural health clinics and Federally 
qualified health centers. A rural health clinic or Federally qualified 
health center is paid in accordance with parts 405 and 413 of this 
subchapter, as applicable, if--
    (1) The clinic or center is an integral and subordinate part of a 
hospital, skilled nursing facility or home health agency participating 
in Medicare (that is, a provider of services); and
    (2) The clinic or center is operated with other departments of the 
provider under common licensure, governance and professional 
supervision.
    (b) Payment to independent rural health clinics and freestanding 
Federally qualified health centers. (1) All other clinics and centers 
will be paid on the basis of an all-inclusive rate for each beneficiary 
visit for covered services. This rate will be determined by the 
intermediary, in accordance with this subpart and general instructions 
issued by CMS.
    (2) The amount payable by the intermediary for a visit will be 
determined in accordance with paragraphs (b)(3) and (4) of this 
section.
    (3) Federally qualified health centers. For Federally qualified 
health center visits, Medicare will pay 80 percent of the all-inclusive 
rate since no deductible is applicable to Federally qualified health 
center services.
    (4) Rural health clinics. (i) If the deductible has been fully met 
by the beneficiary prior to the rural health clinic visit, Medicare 
pays 80 percent of the all-inclusive rate.
    (ii) If the deductible has not been fully met by the beneficiary 
before the visit, and the amount of the clinic's reasonable customary 
charge for the services that is applied to the deductible is--
    (A) Less than the all-inclusive rate, the amount applied to the 
deductible will be subtracted from the all-inclusive rate and 80 
percent of the remainder, if any, will be paid to the clinic;
    (B) Equal to or exceeds the all-inclusive rate, no payment will be 
made to the clinic.
    (5) To receive payment, the clinic or center must follow the 
payment procedures specified in Sec.  410.165 of this chapter.
    (6) Payment for treatment of mental psychoneurotic or personality 
disorders is subject to the limitations on payment in Sec.  410.155(c).

PART 491--CERTIFICATION OF CERTAIN HEALTH FACILITIES

0
1. The authority citation for part 491 continues to read as follows:

    Authority: Sec. 1102 of the Social Security Act (42 U.S.C. 
1302); and sec. 353 of the Public Health Service Act (42 U.S.C. 
263a).


0
2. Revise Sec.  491.2 to read as follows:


Sec.  491.2  Definitions.

    As used in this subpart, unless the context indicates otherwise:
    Direct services means services provided by the clinic's staff.
    FQHC means an entity as defined in Sec.  405.2401(b).
    Nurse practitioner means a registered professional nurse who is 
currently licensed to practice in the State, who meets the State's 
requirements governing the qualifications of nurse practitioners, and 
who meets one of the following conditions:
    (1) Is currently certified as a primary care nurse practitioner by 
the American Nurses' Association or by the National Board of Pediatric 
Nurse Practitioners and Associates; or
    (2) Has satisfactorily completed a formal 1 academic year 
educational program that:
    (i) Prepares registered nurses to perform an expanded role in the 
delivery of primary care;
    (ii) Includes at least 4 months (in the aggregate) of classroom 
instruction and a component of supervised clinical practice; and
    (iii) Awards a degree, diploma, or certificate to persons who 
successfully complete the program; or
    (3) Has successfully completed a formal educational program (for 
preparing registered nurses to perform an expanded role in the delivery 
of primary care) that does not meet the requirements of paragraph (2) 
of this definition, and has been performing an expanded role in the 
delivery of primary care for a total of 12 months during the 18-month 
period immediately preceding the effective date of this subpart.
    Physician means a doctor of medicine or osteopathy legally 
authorized to practice medicine or surgery in the State.
    Physician assistant means a person who meets the applicable State 
requirements governing the qualifications for assistants to primary 
care physicians, and who meets at least one of the following 
conditions:
    (1) Is currently certified by the National Commission on 
Certification of Physician Assistants to assist primary care 
physicians; or

[[Page 55346]]

    (2) Has satisfactorily completed a program for preparing 
physician's assistants that:
    (i) Was at least 1 academic year in length;
    (ii) Consisted of supervised clinical practice and at least 4 
months (in the aggregate) of classroom instruction directed toward 
preparing students to deliver health care; and
    (iii) Was accredited by the American Medical Association's 
Committee on Allied Health Education and Accreditation; or
    (3) Has satisfactorily completed a formal educational program (for 
preparing physician assistants) that does not meet the requirements of 
paragraph (2) of this definition and assisted primary care physicians 
for a total of 12 months during the 18-month period that ended on 
December 31, 1986.
    Rural area means an area that is not delineated as an urbanized 
area by the Bureau of the Census.
    Rural health clinic or clinic means a clinic that is located in a 
rural area designated as a shortage area, is not a rehabilitation 
agency or a facility primarily for the care and treatment of mental 
diseases, and meets all other requirements of this subpart.
    Shortage area means a defined geographic area designated by the 
Department as having either a shortage of personal health services 
(under section 1302(7) of the Public Health Service Act) or a shortage 
of primary medical care manpower (under section 332 of that Act).
    Secretary means the Secretary of Health and Human Services, or any 
official to whom he has delegated the pertinent authority.


0
3. Revise Sec.  491.3 as follows:


Sec.  491.3  Certification procedures.

    A rural health clinic will be certified for participation in 
Medicare in accordance with subpart S of 42 CFR part 405. The Secretary 
will notify the State Medicaid agency whenever he has certified or 
denied certification under Medicare for a prospective rural health 
clinic in that State. A clinic certified under Medicare will be deemed 
to meet the standards for certification under Medicaid.


0
4. In Sec.  491.5, revise paragraphs (b) and (d) and add paragraphs (e) 
and (f) to read as follows:


Sec.  491.5  Location of clinic.

* * * * *
    (b) Exceptions. (1) CMS does not disqualify an RHC approved under 
this subpart if the area in which it is located subsequently fails to 
meet the definition of a rural, shortage area.
    (2) A private, nonprofit facility that meets all other conditions 
of this subpart except for location in a shortage area will be 
certified if, on July 1, 1977, it was operating in a rural area that is 
determined by the Secretary (on the basis of the ratio of primary care 
physicians to the general population) to have an insufficient supply of 
physicians to meet the needs of the area served.
    (3) Determinations on these exceptions will be made by the 
Secretary upon application by the facility.
* * * * *
    (d) Criteria for designation of shortage areas. (1) The criteria 
for determination of shortage of personal health services (under 
section 1302(7) of the Public Health Services Act), are:
    (i) The ratio of primary care physicians practicing within the area 
to the resident population;
    (ii) The infant mortality rate;
    (iii) The percent of the population 65 years of age or older; and
    (iv) The percent of the population with a family income below the 
poverty level.
    (2) The criteria for determination of shortage of primary medical 
care manpower (under section 332(a)(1)(A) of the Public Health Services 
Act) are:
    (i) The area served is a rational area for the delivery of primary 
medical care services;
    (ii) The ratio of primary care physicians practicing within the 
area to the resident population; and
    (iii) The primary medical care manpower in contiguous areas is 
overutilized, excessively distant, or inaccessible to the population in 
this area.
    (e) Medically underserved population. A medically underserved 
population includes the following:
    (1) A population of an urban or rural area that is designated by 
PHS as having a shortage of personal health services.
    (2) A population group that is designated by PHS as having a 
shortage of personal health services.
    (f) Requirements specific to FQHCs. An FQHC approved for 
participation in Medicare must meet one of the following criteria:
    (1) Furnish services to a medically underserved population.
    (2) Be located in a medically underserved area, as demonstrated by 
an application approved by PHS.

0
5. Amend Sec.  491.8 by--
0
A. Revising paragraph (a).
0
B. Removing paragraph (d).
    The revisions read as follows:


Sec.  491.8  Staffing and staff responsibilities.

    (a) Staffing. (1) The clinic or center has a health care staff that 
includes one or more physicians. Rural health clinic staffs must also 
include one or more physician's assistants or nurse practitioners.
    (2) The physician member of the staff may be the owner of the rural 
health clinic, an employee of the clinic or center, or under agreement 
with the clinic or center to carry out the responsibilities required 
under this section.
    (3) The physician assistant, nurse practitioner, nurse-midwife, 
clinical social worker, or clinical psychologist member of the staff 
may be the owner or an employee of the clinic or center, or may furnish 
services under contract to the center.
    (4) The staff may also include ancillary personnel who are 
supervised by the professional staff.
    (5) The staff is sufficient to provide the services essential to 
the operation of the clinic or center.
    (6) A physician, nurse practitioner, physician assistant, nurse-
midwife, clinical social worker, or clinical psychologist is available 
to furnish patient care services at all times the clinic or center 
operates. In addition, for rural health clinics, a nurse practitioner 
or a physician assistant is available to furnish patient care services 
at least 60 percent of the time the clinic operates.
* * * * *

0
6. Revise Sec.  491.11 to read as follows:


Sec.  491.11  Program evaluation.

    (a) The clinic or center carries out, or arranges for, an annual 
evaluation of its total program.
    (b) The evaluation includes review of:
    (1) The utilization of clinic or center services, including at 
least the number of patients served and the volume of services;
    (2) A representative sample of both active and closed clinical 
records; and
    (3) The clinic's or center's health care policies.
    (c) The purpose of the evaluation is to determine whether:
    (1) The utilization of services was appropriate;
    (2) The established policies were followed; and
    (3) Any changes are needed.
    (d) The clinic or center staff considers the findings of the 
evaluation and takes corrective action if necessary.

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


[[Page 55347]]


    Dated: March 30, 2006.
Mark B. McClellan,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: June 12, 2006.
Michael O. Leavitt,
Secretary.
[FR Doc. 06-7886 Filed 9-21-06; 8:45 am]
BILLING CODE 4120-01-P