Establishment of Revisit User Fee Program for Medicare Survey and Certification Activities, 35673-35683 [07-3196]

Agencies

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

[Federal Register Volume 72, Number 125 (Friday, June 29, 2007)]
[Proposed Rules]
[Pages 35673-35683]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 07-3196]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 424, 488, and 489

[CMS-2268-P]
RIN 0938-AO96


Establishment of Revisit User Fee Program for Medicare Survey and 
Certification Activities

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

ACTION: Proposed rule.

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SUMMARY: This proposed rule would allow CMS to charge revisit user fees 
to health care facilities cited for deficiencies during initial 
certification, recertification, or substantiated complaint surveys. 
Consistent with the President's long-term goal to promote quality of 
health care and to cut the deficit in half by fiscal year (FY) 2009, 
the FY 2007 Department of Health and Human Services' (HHS) budget 
request included both new mandatory savings proposals and a requirement 
that user fees be applied to health care providers that have failed to 
comply with Federal quality of care requirements. The ``Revisit User 
Fees'' would affect only those providers or suppliers for which CMS has 
identified deficient practices and requires a revisit to assure that 
corrections have been made. The fees are estimated at $37.3 million 
annually and would recover the costs associated with the Medicare 
Survey and Certification program's revisit surveys. The fees would take 
effect on the date of publication of the final rule, and would be 
available to CMS until expended.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on August 27, 2007.

ADDRESSES: In commenting, please refer to file code CMS-2268-P. 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-2268-P, 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-2268-P, 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 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: Carla McGregor, (410) 786-0663, 
(Policy). Kathryn Linstromberg, (410) 786-8279 (Policy). Edward F. 
Mortimore, (410) 786-3509 (Data). David Escobedo, (410) 786-5401 
(Budget).

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-2268-P 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.

SUPPLEMENTARY INFORMATION:

I. Background

A. Survey & Certification Compliance Process

    The Centers for Medicare & Medicaid Services (CMS) has in place an 
outcome-oriented survey process that is designed to determine whether 
existing Medicare-certified providers and suppliers or providers and 
suppliers seeking initial Medicare certification are actually meeting 
statutory and regulatory requirements, conditions of participation, or 
conditions for coverage. These health and safety requirements apply to 
the environments of care and the delivery of services to residents or 
patients served by these facilities and agencies. The Secretary of

[[Page 35674]]

the Department of Health and Human Services (``HHS'') has designated 
CMS to enforce the conditions of participation/coverage and other 
requirements with these programs.
    Medicare is a Federal insurance program that provides a wide range 
of benefits for specific periods of time to Medicare beneficiaries 
through providers and suppliers participating in the program. The 
Social Security Act (``Act'') designates those providers and suppliers 
that are subject to Federal health care quality standards. The Federal 
Government makes payment for services through designated fiscal 
intermediaries, carriers, and Medicare administrative contractors to 
the providers and suppliers.
     Providers, in Medicare terminology, include patient care 
institutions such as hospitals, critical access hospitals, hospices, 
nursing homes, and home health agencies.
     Suppliers, in Medicare terminology, include entities for 
diagnosis and therapy rather than sustained patient care, such as 
laboratories, clinics, and qualified health centers.
    Medicaid is a State program that provides medical services to 
clients of the State public assistance program and, at the State's 
option, other needy individuals. When services are furnished through 
institutions that must be certified for Medicare, the institutional 
standards must be met for Medicaid as well. State survey agencies, 
under agreements between the State and the Secretary, carry out the 
Medicare certification process. Section 1864(a) of the Act directs the 
Secretary to use the State health agencies or ``other appropriate 
agencies,'' also known in this context as State survey agencies, to 
determine whether health care institutions meet Federal standards.

B. Authority To Assess Revisit User Fees

    The President's HHS budget for FY 2007 included $35 million in new 
user fees to finance the costs associated with CMS' Medicare survey and 
certification program's activities. The President's HHS budget for FY 
2007 included projections based on FY 2005 numbers. CMS has updated 
that information based on FY 2006 actual data and thus all other 
references to the amount projected reference $37.3 million instead of 
$35 million. We have included these calculations in section IV 
Regulatory Impact Analysis below. The Continuing Appropriations 
Resolution (``Continuing Resolution'') budget bill passed by the 
Congress and signed by the President directed HHS to implement the fees 
for FY 2007, as follows:

    The Secretary of Health and Human Services shall charge fees 
necessary to cover the costs incurred under ``Department of Health 
and Human Services, Centers for Medicare and Medicaid Services, 
Program Management'' for conducting revisit surveys on health care 
facilities cited for deficiencies during initial certification, 
recertification, or substantiated complaints surveys. Not 
withstanding section 3302 of title 31, United States Code, receipts 
from such fees shall be credited to such account as offsetting 
collections, to remain available until expended for conducting such 
surveys.

(Pub. L. 110-5, H.J. Res. 20, Sec.  20615(b)(2007)).

Revisit surveys are conducted pursuant to the citing of deficiencies 
that were found during initial certification, recertification, or 
substantiated complaint surveys and are conducted for the purpose of 
verifying the fact that the deficiencies previously cited have been 
corrected.
    A crucial component to survey activities are the agreements 
established under section 1864 of the Act between the Secretary and the 
State survey agencies to determine that an institution meets the 
statutory definition for the provider type and that it satisfies all 
conditions of participation or regulatory requirements, as well as, any 
additional requirements as determined by the Secretary. Section 1864(e) 
of the Act, in relevant part regarding the imposition of fees involving 
survey activities, states:

    Notwithstanding any other provision of law, the Secretary may 
not impose, or require a State to impose, any fee on any facility or 
entity subject to a determination under subsection (a), or any renal 
dialysis facility subject to the requirements of section 1881(b)(1), 
for any such determination or any survey relating to determining the 
compliance of such facility or entity with any requirement of this 
title (other than any fee relating to section 353 of the Public 
Health Service Act).

    The Congress enacted section 20615(b) of the Continuing Resolution 
with the knowledge of section 1864(e) of the Act and took specific 
action to carve out fees for revisits as a result of cited deficiencies 
while being careful not to specify fees for initial surveys conducted 
for those newly entering the Medicare/Medicaid Program or for 
conducting statutorily based recertification surveys. The Secretary 
believes it was the Congress' intent to harmonize the Continuing 
Resolution with section 1864(e) of the Act by limiting the fees to 
those quality assurance functions, that is, revisits, necessary to 
confirm the correction of previously-identified deficiencies. This 
belief is consistent with the rule of statutory interpretation that 
provides that, ``[w]here there are two acts upon the same subject, 
effect should be given to both, if possible. See Posadas v. National 
City Bank of New York, 296 U.S. 497, 503 (1936).
    Although the Secretary believes that the Continuing Resolution 
language should be read to coexist with the language of the Act, to the 
extent that section 20615(b) of the Continuing Resolution and section 
1864(e) of the Act are perceived to be irreconcilable, the Secretary 
must give effect to the more recent Continuing Resolution for the 
period of availability of the appropriations. It is well established 
that it is in Congress' power to abrogate or modify a treaty or earlier 
legislation that it created. See Fund for Animals, Inc. v. Kempthorne, 
472 F.3d 872, 876 (D.C. Cir. 2006) (citing Fund for Animals v. Norton, 
374 F.Supp.2d 91, 103 (D.D.C. 2005)) (``Congress clearly has the power 
to abrogate or modify a treaty or earlier legislation, and when it does 
so, that is the final word''). In resolving similar conflicts, the 
Federal courts have applied the principle of lex posterior derogate 
legi priori also known as ``lex posterior'' or the ``last-in-time'' 
rule; that is to say, where two statutory provisions appear to 
conflict, the later in time prevails. See Fund for Animals, 472 F.3d at 
878 (``[T]he Supreme Court has long recognized that a later enacted 
statute trumps an earlier-enacted treaty to the extent the two 
conflict.''). The rule is premised on the idea that the interpretation 
and application of statutes should reflect the most recent expression 
of the Congress' intent. Therefore, application of the last-in-time 
rule would result in section 20615(b) of the Continuing Resolution 
superseding section 1864(e) of the Act to the extent that the two 
provisions conflict.
    The Secretary believes the intended section 20615(b) of the 
Continuing Resolution to apply only during this current fiscal year (FY 
2007) and that a decision on making a permanent change to the statute 
will be deferred until a later time. See B-303268 Op. GAO-Legal (2005), 
https://www.gao.gov/decisions/appro/303268.htm (concluding that a 
nonpermanent provision in an appropriations resolution, which conflicts 
with a prior enacted appropriations act, is effective under the ``last-
in-time'' rule, but will expire at the end of the fiscal year). Since 
the Congress did not expressly state otherwise, and the authority under 
section 1864(e) of the Act is permanent, the authority under section 
20615(b) of the Continuing Resolution extends only through FY 2007.

[[Page 35675]]

    Accordingly, section 20615(b) of the Continuing Resolution would 
only constitute a variation to the general prohibition of fees under 
section 1864(e) of the Act through September 30, 2007. These 
considerations lend further credence to the Secretary's belief that it 
was the Congress' intent to harmonize the two provisions.
    Based on the Congress' knowledge of section 1864(e) of the Act, the 
unambiguous nature of section 20615(b) of the Continuing Resolution, 
and the principles of lex posterior, the Secretary has the authority to 
propose and implement this revisit user fee rule.

II. Provisions of the Proposed Regulations

Part 424--Subpart P--Requirements for Establishing and Maintaining 
Medicare Billing Privileges

Section 424.535 Revocation of Enrollment and Billing Privileges in the 
Medicare Program
    [If you wish to comment on issues in this section, please include 
the caption ``424.535(a)(1)--REVOCATION OF ENROLLMENT AND BILLING 
PRIVILEGES IN THE MEDICARE PROGRAM--USER FEE ADDITION'' at the 
beginning of your comments.]
    We propose to amend Sec.  424.535(a)(1) by adding a new sentence to 
the criteria for which a provider or supplier may be determined not in 
compliance and for which we may revoke enrollment and billing 
privileges in the Medicare program. We propose to add that the provider 
or supplier may also be determined not to be in compliance if it has 
failed to pay any user fees as assessed under part 488 of this chapter. 
The beginning of the paragraph will continue to read the same and the 
ending of the paragraph will continue to read that all providers and 
suppliers are granted an opportunity to correct the deficient 
compliance requirement before a final determination to revoke billing 
privileges. The addition of this sentence does not provide an 
opportunity for additional comments on any other component of part 424 
or Sec.  424.535.

Part 488--Survey, Certification, and Enforcement: Subpart A--General 
Provisions.

Section 488.30 Revisit User Fee for Revisit Surveys
    We propose a new Sec.  488.30 which sets forth proposed regulations 
that would identify the circumstances under which providers or 
suppliers would be assessed a user fee for revisit surveys connected 
with deficiencies identified during surveys for initial certification, 
recertification, or substantiated complaints. This proposed paragraph 
identifies the assessment of fees, criteria for which the proposed fee 
schedule will be based, and collection of fees.
Section 488.30(a)--DEFINITIONS
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(a) ``DEFINITIONS'' at the 
beginning of your comments]
    We propose in Sec.  488.30(a) to define terms associated with this 
paragraph. Those terms include: ``certification,'' ``complaint 
surveys,'' ``substantiated complaint survey,'' ``provider of 
services,'' ``provider,'' ``supplier,'' and ``revisit survey.''
``Certification (Initial or Recertification)''
    We propose that ``certification'' (both initial and 
recertification) would include those activities as defined in Sec.  
488.1. ``Certification'' as currently defined in Sec.  488.1 is a 
``recommendation made by the State survey agency on the compliance of 
providers and suppliers with the conditions of participation, 
requirements (SNFs and NFs), and conditions for coverage.'' Conditions 
of participation apply to providers of Medicare services, other than 
skilled nursing facilities, while conditions for coverage apply to 
suppliers of Medicare services.
    We propose that a user fee under this proposed rule will be 
assessed for revisit surveys conducted to evaluate the extent to which 
deficiencies identified during initial certification or recertification 
surveys have been corrected.
``Complaint Surveys''
    We propose that complaint surveys are those surveys conducted on 
the basis of a ``substantial allegation of noncompliance,'' as defined 
in Sec.  488.1. The term ``substantial allegation of noncompliance'' 
means:

    A complaint from any of a variety of sources (including 
complaints submitted in person, by telephone, through written 
correspondence, or in newspaper or magazine articles) that if 
substantiated, would affect the health and safety of patients and 
raises doubts as to a provider's or supplier's noncompliance with 
any Medicare condition. (42 CFR 488.1)

    CMS through its authority under the certification and survey 
process provisions of sections 1819(g), 1864, and 1891(c) of the Act 
has identified in the State Operations Manual (SOM) the procedures by 
which complaints/incidents will be handled by CMS and the State survey 
agencies. CMS identifies a complaint as ``an allegation of 
noncompliance with Federal and/or State requirements.'' An allegation 
is further identified as ``an assertion of improper care or treatment 
that could result in the citation of a Federal deficiency.'' See U.S. 
Centers for Medicare & Medicaid Services. State Operations Manual, 
``Complaint Procedures.'' Online. 2006. CMS. Available: https://
www.cms.hhs.gov/manuals/downloads/som107c05.pdf (``SOM-Complaint'').
``Substantiated Complaints Surveys''
    The Continuing Resolution includes the term ``substantiated 
complaints surveys.'' We propose that ``substantiated complaint 
survey'' means a complaint survey that results in the proof or finding 
of noncompliance at the time of the survey, a finding that 
noncompliance was proven to exist, but was corrected prior to the 
survey, and includes any deficiency that is cited during a complaint 
survey, whether or not the deficiency was the original subject of the 
substantial allegation of noncompliance. The Secretary believes its 
term ``substantial allegation of noncompliance'' identified in Sec.  
488.1 is the direct correlation for this term in the HHS budget. Thus, 
this proposed regulation would consider ``substantiated complaints 
surveys'' to be surveys conducted based on CMS or the State survey 
agency receiving a ``substantial allegation of noncompliance'' where 
the non-compliance has been confirmed through a complaint survey.
    We propose that a user fee under this proposed rule will be 
assessed for revisit surveys conducted to evaluate the extent to which 
deficiencies identified during a substantiated complaint survey have 
been corrected.
``Provider of Services, Provider, or Supplier''
    The terms ``provider of services,'' ``provider,'' or ``supplier'' 
are already defined in Sec.  488.1. We propose that all ``provider of 
services,'' ``providers,'' or ``suppliers,'' as defined in Sec.  488.1, 
will be subject to user fees, unless otherwise exempted through the 
final rule. We propose that a ``provider of services'' or ``provider'' 
subject to user fees, as it applies in this proposed rule, includes a 
hospital, critical access hospital, skilled nursing facility, dually-
participating nursing facility (``SNF/NF''), home health agency 
(``HHA''), and hospice. Transplant centers will also be subject to user 
fees and have been newly defined in Sec.  482.70 of this chapter. See 
Medicare Program; Hospital Conditions of Participation: Requirements 
for

[[Page 35676]]

Approval and Re-approval of Transplant Centers to Perform Organ 
Transplants, published March 30, 2007 (72 FR 15198) (codified at 42 CFR 
part 482). We propose that, for FY 2007, ``providers of services'' or 
``providers'' that will not be assessed a revisit user fee as defined 
in this proposed rule to be comprehensive outpatient rehabilitation 
facilities and providers of outpatient physical therapy or speech 
pathology services. We have excluded these providers because the time 
and cost involved in conducting revisits to these providers are minimal 
or the nature in which oversight is conducted is not the same as for 
those providers included. Medicaid-only ``providers of services'' or 
``providers'' will not be assessed a user fee.
    We also propose a ``supplier'' subject to user fees, as it applies 
in this proposed rule includes an end-stage renal disease center, a 
rural health clinic (``RHC''), and an ambulatory surgical center 
(``ASC''). ASCs must have an agreement with CMS to participate in 
Medicare and must meet conditions for coverage as defined in part 416 
of this chapter.
    ``Suppliers'' that would not be subject to user fees under this 
proposed rule are independent laboratories, portable x-ray centers, 
physical therapists in independent practice, Federally Qualified Health 
Centers (FQHCs), and chiropractors. We have excluded these suppliers 
because the time and cost involved in conducting revisits to these 
suppliers are minimal or the nature in which oversight is conducted is 
not the same as for those suppliers included. Medicaid-only 
``suppliers'' will not be assessed a user fee.
    This proposed rule would not interfere with user fees associated 
with clinical laboratories as established by the Congress, which passed 
the Clinical Laboratory Improvement Amendments (CLIA) in 1988 and 
established that outpatient clinical laboratory services are paid based 
on a fee schedule in accordance with section 1833(h) of the Act.
``Revisit Survey''
    We propose to define the term ``revisit survey'' to mean a survey 
performed with respect to a provider or supplier cited for deficiencies 
during an initial certification, recertification, or substantiated 
complaint survey and which is designed to evaluate the extent to which 
previously cited deficiencies have been corrected. We further propose 
that for purpose of this rule, revisit surveys include both offsite and 
onsite. The fees associated with offsite (``desk'') surveys will be 
less than the fees assessed for onsite surveys. Most revisit surveys 
include both onsite and offsite time, but a number of revisit surveys 
may be accomplished through desk review only. Oftentimes an onsite 
revisit survey will require offsite preparation; in these cases only 
one user fee will be assessed for an onsite revisit survey.
    Section 488.26 provides direction as to how compliance with the 
conditions of participation, conditions for coverage, or other 
regulatory requirements is determined. Specifically, section 488.26 
provides that the compliance determination is made by the State survey 
agency and includes a survey process that assesses compliance with 
Federal health, safety, and quality standards. While the conditions of 
participation, conditions for coverage, and requirements for 
determining compliance are unique to each provider and supplier, the 
Secretary has created common terms for purposes of survey and 
certification.
    Revisit policies have been established based on provider/supplier 
type.
    Skilled Nursing Facilities/Dually-participating Nursing Facilities. 
The current policy for skilled nursing facilities and dually-
participating nursing facilities permits two onsite revisits, performed 
at the discretion of CMS or the State. This revisit policy indicates 
circumstances for which onsite revisits must occur for certifying 
compliance and circumstances when onsite revisits are discretionary. 
Second revisits may be required if the deficiencies are not fully 
corrected, if there continue to be negative outcomes from the 
originally-cited noncompliance, or if new and serious deficiencies are 
present during the revisit. Further, if the State determines that a 
third revisit is necessary, due to continuing noncompliance, it must be 
approved at the discretion of the CMS Regional Office. CMS does not 
permit a third revisit except in unusual circumstances. See U.S. 
Centers for Medicare & Medicaid Services. State Operations Manual, `` 
Survey and Enforcement Process for Skilled Nursing Facilities and 
Nursing Facilities.'' Online. 2004. CMS. Available: https://
www.cms.hhs.gov/manuals/downloads/som107c07.pdf (``SOM-SNF/NF 
Enforcement Process'').
    Hospitals/Home Health Agencies/Hospices/Ambulatory Surgical 
Centers/Rural Health Clinics/End-Stage Renal Disease Centers. CMS 
generally permits only two revisits for hospitals, home health 
agencies, hospices, ambulatory surgical centers, rural health clinics, 
and end-stage renal disease centers. Of these two revisits permitted by 
CMS, one revisit within 45 calendar days of the initial certification, 
recertification, or substantiated complaint survey, and one revisit 
subject to CMS approval, between the 46th and 90th calendar days. A 
revisit is conducted if a State survey agency and/or CMS receives from 
the provider or supplier a credible allegation that it is in 
compliance, following a determination that the provider or supplier had 
failed to substantially meet Federal requirements. If a provider or 
supplier fails to make a credible allegation of compliance, a revisit 
is not necessary, since the provider agreement is then subject to 
termination.
    Revisits Related to Immediate Jeopardy. Revisits are also 
conducted, if possible, before a termination results in response to an 
immediate jeopardy situation. An immediate jeopardy situation is one in 
which the provider or supplier's noncompliance with one or more 
requirements of participation has caused, or is likely to cause, severe 
temporary or permanent injury, disability or death to an individual. A 
provider or supplier in this situation will be terminated from the 
Medicare/Medicaid program within 23 calendar days from the day the 
deficiency was cited if no corrective action steps are taken and 
completed. A revisit is conducted if there is a credible allegation 
from the provider or supplier that it has corrected the threat or the 
deficiency cited as immediate jeopardy. If CMS and the State survey 
agency disagree as to whether an immediate jeopardy exists, it may be 
necessary for CMS and the State survey agency to conduct a revisit 
together. See U.S. Centers for Medicare & Medicaid Services. State 
Operations Manual, ``Additional Program Activities.'' Online. 2007. 
CMS. Available: https://www.cms.hhs.gov/manuals/downloads/som107c03.pdf.
We welcome public comment regarding all definitions proposed in Sec.  
488.30(a).
Section 488.30(b)--Criteria for Determining the Fee
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(b) CRITERIA FOR DETERMINING THE 
FEE'' at the beginning of your comments]
    We propose in Sec.  488.30(b) to provide the criteria for 
determining the user fee. We propose that for initial implementation of 
revisit user fees in FY 2007, we will use the criteria in proposed 
Sec.  488.30(b)(1)(i) and (ii): That a provider or supplier will be 
assessed a revisit user fee based on the average cost per revisit 
survey per provider or supplier type and the type of the revisit--
onsite review or offsite review.

[[Page 35677]]

    We welcome public comment regarding the criteria we propose to use 
in FY 2007 to establish the revisit user fee: That of average cost per 
revisit survey and the provider or supplier type and the type of the 
revisit survey.
    We also propose that exceptions to the assessment of a user fee 
will be identified based on the type of visit conducted. For example, 
we propose that neither a provider nor a supplier will be assessed a 
fee if the visit is considered a ``State monitoring visit'' unless the 
visit also meets the definition of a revisit. A ``State monitoring 
visit'' refers to visits by the State survey agency to oversee a 
provider/supplier's compliance status during bankruptcy, after a change 
of ownership, during or shortly after the removal of immediate jeopardy 
when the purpose of the visit is to ensure the welfare of the 
residents/clients/patients by providing an oversight presence, and in 
other circumstances as authorized by the CMS regional office where the 
provider/supplier is located. See SOM-Complaint, Sec.  5077; see also 
SOM-SNF/NF Enforcement Process, Sec.  7504.
    Likewise, we also propose that neither a provider nor a supplier 
will be assessed a fee if the visit is associated with Medicare 
provider or supplier compliance with Life Safety Code (LSC) 
requirements. The LSC is a set of fire protection requirements, that 
covers construction, protection, and operational features designed to 
provide a reasonable degree of safety from fire, smoke, and panic. The 
LSC, which is revised periodically, is a publication of the National 
Fire Protection Association. The basic requirement for facilities 
participating in the Medicare and Medicaid programs is compliance with 
the 2000 edition of the LSC. The State survey agency determines whether 
the LSC survey is to occur before, after, or simultaneously with the 
health survey. Most States require an initial LSC survey before 
admitting patients prior to becoming operational. See U.S. Centers for 
Medicare & Medicaid Services. ``Life Safety Code Requirements.'' 
Online. 2007. CMS. Available: https://www.cms.hhs.gov/
CertificationandComplianc/11_LSC.asp#TopOfPage. In addition, we also 
propose that neither a provider nor a supplier will be assessed a fee 
if the visit is associated with a Federal Monitoring Survey, such as a 
Federal look-behind survey.
    We also propose in Sec.  488.30(b)(1)(iii) through (b)(1)(iv) that 
CMS may adjust revisit user fees to account for the provider or 
supplier's size, typically determined by capacity (such as the number 
of beds), the number of follow-up revisits resulting from uncorrected 
deficiencies, and/or the seriousness and number of deficiencies (such 
as the scope and severity of cited deficiencies and the number of 
deficiencies cited at each scope and severity level), as these criteria 
pertain to particular provider types. These factors impact cost in that 
the variance in provider/supplier size, the number of follow-up 
revisits, and the type and number of deficiencies cited may have an 
impact on the survey hours needed for a revisit. We also propose in 
Sec.  488.30(b)(2) that CMS may adjust the fees to account for any 
regional differences in cost.
    We welcome public comment regarding the criteria for determining 
the revisit user fee.
Section 488.30(c)--Fee Schedule
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(c) ``FEE SCHEDULE'' at the 
beginning of your comments]
    We propose in Sec.  488.30(c) that CMS will publish in the Federal 
Register the proposed and final notices of a uniform fee schedule 
before it adopts this schedule. The proposed and final notices would 
set forth the amounts of the assessed fees based on the criteria as 
identified in paragraph (b) of this subpart. In future notices, any 
changes to the amounts of the assessed fees would include for example, 
adjustments based on increases to cost of living, labor and overhead 
costs. This proposed rule also constitutes publication of the proposed 
fee schedule for this fiscal year.
    For FY 2007, we based user fee calculations on the type of revisit 
(onsite vs. offsite); the type of provider or supplier; the average 
number of hours that a revisit requires; and the average per hour cost 
of a revisit. We have proposed the user fee costs below under section 
IV, Regulatory Impact Analysis.
Section 488.30(d)--Collection of Fees
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(d) COLLECTION OF FEES'' at the 
beginning of your comments]
    We propose in Sec.  488.30(d)(1) that fees for revisit surveys 
under this paragraph may be deducted from amounts otherwise payable to 
the provider or supplier. We also propose that fees will be deposited 
as an offset collection to be used exclusively for survey and 
certification activities conducted by State survey agencies pursuant to 
section 1864 of the Act or by CMS, and will be available for CMS until 
expended. We also propose that CMS may devise other collection methods 
as it deems appropriate. In determining these methods, CMS will 
consider efficiency, effectiveness, and convenience for the providers, 
suppliers, and CMS. Methods may include: Credit card; electronic fund 
transfer; check; money order; and offset of collections from claims 
submitted.
    We welcome public comment on the forms of payment CMS proposes it 
will accept from providers and suppliers for the assessed revisit user 
fee.
    We propose in Sec.  488.30(d)(2) that fees for revisit surveys 
under this section are not allowable items on a cost report, as 
identified in part 413, subpart B of this chapter, under title XVIII of 
the Act. Part 413 identifies CMS' formulating methods for making fair 
and equitable reimbursement for services rendered to beneficiaries of 
the program. Payment is to be made on the basis of current costs of the 
individual provider, rather than costs of a past period or a fixed 
negotiated rate. This cost report also designs this reimbursement 
formulation so that at no time is the individual provider's costs borne 
by other patients. CMS believes that the assessed revisit user fee is 
not an allowable item for a cost report, as it should not be figured 
into the services provided to beneficiaries, nor should it be a cost 
shared amongst non-Medicare patients. CMS employs several checks and 
balances to deter this from occurring. CMS believes that this proposed 
language in 488.30(d)(2) would prevent the inclusion of the revisit 
user fee costs in any future cost reports. This section will only apply 
to a small group of providers who receive cost-based reimbursement. A 
significant amount of providers and suppliers are reimbursed through 
the prospective payment system (PPS).
    We welcome public comment regarding the prohibition of the assessed 
revisit user fee being an item on a provider or supplier cost report.
Section 488.30(e)--Reconsideration Process for Revisit User Fees.
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(e) RECONSIDERATION PROCESS FOR 
REVISIT USER FEES'' at the beginning of your comments]
    We propose in Sec.  488.30(e) that a reconsideration process shall 
be available to providers or suppliers that have been assessed a 
revisit user fee if a provider or supplier believes an error of fact, 
such as a clerical error, has been made. We also propose that a request 
for reconsideration must be received by CMS within seven calendar days 
from

[[Page 35678]]

the date identified on the revisit user fee assessment notice.
    Once CMS has determined that a revisit user fee should be put into 
effect, CMS shall notify the provider or supplier of its intention to 
charge a revisit user fee and the reasons for charging the fee, and 
shall give the provider or supplier an opportunity to request a 
reconsideration due to an error of fact. If a provider or supplier 
believes that a revisit user fee should be reconsidered, due to an 
error of fact, it should submit to CMS a written statement, and any 
supporting evidence, to that effect within seven calendar days, either 
through its authorized officials or through its legal representative.
    If, upon reconsideration, it was found that a revisit fee was 
assessed due to error of fact, and the provider or supplier has made a 
payment of the assessed revisit user fee, then CMS shall credit the 
initial revisit payment against any future assessments of revisit fees. 
CMS believes this situation will be rare. CMS believes given the 
proposed time frame for which providers/suppliers have to submit this 
reconsideration request (seven calendar days) and based on the proposed 
regulatory obligation of payment (within 30 calendar days, as discussed 
below), there would be a limited possibility that payment would be sent 
without CMS providing a response to the reconsideration. In the case 
that this does occur and CMS credits the initial revisit payment 
against any future revisit fees, CMS will provide a refund following 
its reconciliation period.
    We welcome public comment on the proposed section on the 
reconsideration of revisit user fees, including discussion regarding 
crediting against future assessments and the provision of refunds.
Section 488.30(f)--Enforcement
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 488.30(f) ``ENFORCEMENT'' at the 
beginning of your comments]
    We propose in Sec.  488.30(f) that if the full revisit user fee 
payment is not received within 30 calendar days or a request for 
reconsideration is not received within seven calendar days from the 
date the provider or supplier receives written notice of assessment, 
CMS may terminate the facility's provider agreement and enrollment in 
the Medicare program or the supplier's enrollment and participation in 
the Medicare program, and the provider or supplier may not seek 
Medicare payment, nor be considered a Medicare participating provider 
or supplier. CMS will adhere to the termination process as identified 
in Sec.  489, subpart E, of this chapter.
    We welcome public comment on the proposed 30 calendar provision for 
receipt of full payment, and the seven calendar provision for the 
receipt of request for reconsideration.

Part 489--Provider Agreements and Supplier Approval

Subpart B--Essentials of Provider Agreements

Section 489.20 Basic Commitments
Section 489.20(u)
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 489.20(u)--BASIC COMMITMENTS'' at the 
beginning of your comments]
    We propose to add to Sec.  489.20 an additional paragraph that 
would require a provider to agree to pay revisit user fees when and if 
assessed.

Subpart E--Termination of Agreement and Reinstatement After Termination

Section 489.53 Termination by CMS
Section 489.53(a)(16)
    [If you choose to comment on issues in this next section, please 
include the caption ``Section 489.53(a)(16)--TERMINATION BY CMS'' at 
the beginning of your comments]
    We propose to add a new paragraph (16) to Sec.  489.53(a) that 
would create an additional basis for termination if a provider has 
failed to pay a revisit user fee when and if assessed.

III. 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.

IV. Regulatory Impact Analysis

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

A. Overall Impact

    We have examined the impacts 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 (as amended by Executive Order 13258, which 
merely reassigns responsibility of duties) 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 proposed rule would not be considered a major rule. The aggregate 
costs would total approximately $37.3 million in any one year.
    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 small governmental 
jurisdictions. Individuals and States are not included in the 
definition of a small entity. Small businesses are small entities, 
either by nonprofit status or by having revenues of $6.5 million to 
$31.9 million or less in any one year for purposes of the RFA. CMS 
currently has limited information to separate and identify specific 
providers and suppliers that may be subject to a revisit user fee by 
the requirements described for purposes of the RFA. The percentage by 
type of providers and suppliers that may be assessed a revisit user fee 
is identified in Table A below, which discusses the overall percentage 
of providers and suppliers impacted. CMS also has limited information 
on the total revenues collected by provider or supplier type. CMS does 
collect information regarding Medicare and Medicaid claims submitted, 
however this would not provide the requisite requirements for the RFA 
regarding total revenues. Based on available information in 2006 CMS 
Statistics, at the time of publication, CMS does collect National level 
information which includes personal health care expenditures and 
payments. Personal health care includes hospital care, professional 
services, nursing and home health care, all of which cover those 
services provided by the provider and suppliers who may be assessed a 
revisit user fee. Personal health care expenditures amounted to 
$1,560.2 billion dollars in calendar year 2004 for which we have the 
latest information. See U.S. Department of Health and Human Services, 
Centers for Medicare & Medicaid Services. ``2006 CMS

[[Page 35679]]

Statistics.'' Online. 2006. CMS, Office of Research, Development, and 
Information. Available: https://www.cms.hhs.gov/CapMarketUpdates/
downloads/2006CMSStat.pdf. (Published July 2006). Table 36, pg. 31 
[``2006 CMS Statistics'']. The providers and suppliers that may be 
assessed a revisit user fee would fall into the category of revenues 
collected under personal health care funds. CMS notes it must compare 
different year data sources, calendar year 2004 for personal health 
care funds, and FY 2006 actual data to project costs for FY 2007, we 
roughly estimate that the $37.3 million that would be assessed for 
revisit user fees would only amount to 2.3% of the $1,560.2 million 
personal health care revenues collected and only 1.9% of all national 
health care expenditures of which personal health care expenditures are 
included. See ``2006 CMS Statistics,'' Table 36, Pg. 31. We have 
determined, and the Secretary certifies, that this proposed rule would 
not have a significant impact on small entities based on the overall 
effect on revenues. This is a proposed rule and we are soliciting 
public comments regarding any available information that may affect the 
percentage of revenues estimated with the implementation of this rule.
    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 603 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 (superseded by Core Based Statistical Areas) and has 
fewer than 100 beds. This proposed rule affects those small rural 
hospitals that have been cited for a deficiency based on noncompliance 
with required conditions of participation and for which a revisit is 
needed to make sure that the deficiency has been corrected. Based on FY 
2006 actual data from CMS's Online Survey, Certification and Reporting 
(OSCAR) database of the 7,139 hospitals identified 2,776 or 3.8% were 
classified as rural hospitals. Of all hospitals identified 285 revisits 
or 3.9% were conducted in rural hospitals to ensure that deficiencies 
identified were corrected. Based on the effective time period of this 
proposed rule, less than 3% of all hospitals may in fact be assessed a 
revisit user fee in this current fiscal year (FY 2007), we estimate 
that less than 1% of rural hospitals will be impacted by this proposed 
rule. Currently CMS has limited data at this time to identify how many 
of those revisits that will be conducted may be onsite versus offsite 
which will determine the amount of the revisit user fee that may be 
assessed. We have determined, and the Secretary certifies, that this 
proposed rule would not have a significant impact on small rural 
hospitals. This is a proposed rule and we are soliciting public 
comments regarding any available information that may affect rural 
hospitals as identified.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits before 
issuing any rule whose mandates require spending in any 1 year of $100 
million in 1995 dollars, updated annually for inflation. That threshold 
level is currently approximately $120 million. This rule would have no 
mandated effect on State, local, or tribal governments and the impact 
on the private sector is estimated to be less than $120 million and 
would only effect those Medicare providers or suppliers for which a 
revisit user fee is assessed based on the need to conduct a revisit 
survey to ensure deficient practices that were cited have been 
corrected.
    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. This rule would not substantially affect State or local 
governments. This proposed rule establishes user fees for providers and 
suppliers for which CMS has identified deficient practices and requires 
a revisit to assure that corrections have been made. Therefore we have 
determined that this proposed rule will not have a significant affect 
on the rights, roles, and responsibilities of State or local 
governments.

B. Impact on Providers/Suppliers

    The source of the data used to estimate the number and cost of 
revisit surveys is CMS's Online Survey, Certification and Reporting 
(OSCAR) database. OSCAR is the repository of information about CMS and 
State survey agency survey actions. Data collected include the dates of 
surveys, survey findings, and the length of time that surveyors spent 
conducting the survey. State survey agencies record survey time on the 
CMS-670 form. Data from the CMS-670 form are entered into OSCAR by the 
State survey agency. CMS analyzed average survey time length using 
actual data from FY 2006.
    Based on information entered into OSCAR, we propose user fees in 
accordance with the type of revisit survey (onsite vs. offsite); the 
type of provider or supplier; the average number of hours that a 
revisit survey requires; and the average per hour cost of a revisit 
survey.
Overall Effect on Providers and Suppliers
    We estimate that there are 47,804 providers and suppliers. We based 
this estimate on FY 2006 actual data. Of those providers and suppliers, 
as identified in Table A below, based on FY 2006 actual data 34.8% 
required a revisit survey, this included both onsite and offsite 
revisits. Of this 34.8%, skilled nursing facilities (``SNFs'')/nursing 
facilities (``NFs'') made up 87.9% whereas ambulatory surgical centers 
made up a low of 2.8% of providers/suppliers that required a revisit 
survey. We did not include transplant centers in FY 2006 and 2007 
calculations due to lack of available cost and revisit data at this 
time. Transplant centers will be newly surveyed providers starting in 
FY 2008.

                  Table A.--Percentage of Providers/Suppliers That Had a Revisit Survey FY 2006
----------------------------------------------------------------------------------------------------------------
                                                                                     Number of      Percent of
                                                                                    providers/       provider/
                                                       Total       Total revisit  suppliers that  suppliers that
                                                    providers/     survey for FY     required        required
                                                   suppliers \1\  2006 (onsite &  revisit survey  revisit survey
                                                                     offsite)        (onsite &       (onsite &
                                                                                     offsite)        offsite)
----------------------------------------------------------------------------------------------------------------
SNF/NF \2\......................................          15,172          29,426          13,350            87.9
Hospitals \3\...................................           7,139             853             594             8.3
HHAs............................................           8,901           1,585           1,320            14.8
Hospices........................................           3,077             307             246             7.9

[[Page 35680]]

 
ASC.............................................           4,735             188             133             2.8
RHC.............................................           3,828             216             204             5.3
ESRD............................................           4,952             929             781            15.7
                                                 ---------------------------------------------------------------
    Total.......................................          47,804          33,504          16,662           34.8
----------------------------------------------------------------------------------------------------------------
\1\ Providing Data Quickly (PDQ) system, Provider Summary Table, includes providers considered active at any
  time in the fiscal year.
\2\ Total number does not include Medicaid-only Nursing Facilities.
\3\ Total includes accredited and non-accredited hospitals, as well as psychiatric hospitals, and critical
  access hospitals.

Frequency and Duration of Revisit Surveys
    There are numerous differences across providers and suppliers in 
the frequency and duration of revisit surveys. Skilled nursing 
facilities/nursing facilities accounted for 83 percent of total onsite 
revisit surveys conducted in FY 2006 following the identification of 
deficiencies from standard surveys. Home health agencies accounted for 
6 percent of onsite revisit surveys in FY 2006, while ESRDs and 
hospitals accounted for 8 percent, 4 percent each. Hospice facilities, 
ambulatory surgical centers, and rural health clinics combined 
comprised the remaining 3 percent of revisits. The average length of a 
standard onsite revisit survey varied from 7.6 hours for rural health 
clinics to 22.8 hours for hospitals. In comparison, offsite revisit 
surveys conducted averaged one and a half hours (1.5) across all 
providers and suppliers.
Proposed Fee Schedule for Onsite Revisit Surveys
    We propose to base the fee schedule on the average length of time 
required for revisit surveys by provider or supplier type in FY 2006. 
Averages were calculated separately by type of provider or supplier, 
and the hours for revisit surveys were separated by either standard 
health surveys, complaint surveys, or offsite surveys. A cost of $100 
per hour was incurred in FY 2005, which was the basis of the costs 
estimates in the Continuing Resolution. We project that the actual cost 
in FY 2007 based on inflation factors and processing expenses is $112 
per hour and we would use this projected cost in setting the fee 
schedule. In order to obtain this inflation factor, CMS utilized FY 
2005 annual expenditures derived from CMS-435 form that captures a 
State's cumulative expenditures and divided this by information 
obtained from CMS-670 form that identifies State's workload hours or 
survey hours, as discussed above. The product of this calculation 
resulted in dollars per hour or cost incurred for conducting surveys. 
CMS then took this number and multiplied this by a composite rate of 
inflation that was obtained from percentage change calculations 
identified in annual and semi-annual indexes prepared by the U.S. 
Department of Labor's Consumer Price Index for Wage Earners and 
Clerical Workers (CPI-W). See U.S. Department of Labor, Bureau of Labor 
Statistics. Summary of Annual and Semi-Annual Indexes. Online. 2007. 
Bureau of Labor Statistics. Available: https://www.bls.gov/ro3/fax_
9125.htm [22 Feb 2007]. In our proposed fee schedule, the $112 average 
cost per hour is then multiplied by the average hours for the revisit 
surveys to achieve the average fee cost per onsite revisit survey as 
identified in Table B below. For Fiscal Year 2007, we will not adjust 
fees based on the length of individual revisit surveys, but will assess 
a flat fee per revisit survey, based on provider or supplier type. We 
expect these costs to increase annually to incorporate economic 
changes, cost of living increases, labor and overhead costs expenses.
    All revisit user fees will be assessed in the last quarter of FY 
2007. Revisit user fees will be assessed if a revisit survey is 
determined necessary.

  Table B.--Revisit User Fee Assessed Based on Average Length of Onsite
                            Revisit Surveys *
------------------------------------------------------------------------
                                          Average length   Fee assessed
                                             of onsite      per revisit
                Facility                  revisit survey  survey  (hrs x
                                               (hrs)           $112)
------------------------------------------------------------------------
SNF/NF..................................            18.5          $2,072
Hospitals...............................            22.8           2,554
HHA.....................................            14.4           1,613
Hospice.................................            15.5           1,736
ASC.....................................            14.9           1,669
RHC.....................................             7.6             851
ESRD....................................            13.3          1,490
------------------------------------------------------------------------
* This includes onsite revisit surveys according to both Standard Health
  Surveys and Complaint Surveys.

Proposed Fee Schedule for Offsite Revisit Surveys
    For offsite revisit surveys, we expect a revisit user fee of $168 
assessed despite provider or supplier type. Based again on recorded 
survey time on the CMS-670 form, it was assessed that offsite revisit 
surveys on average take one and a half hours (1.5) across all providers 
and suppliers. We calculated the base hourly fee of $112 multiplied by 
an average of one and a half hours

[[Page 35681]]

to arrive at the $168 fee assessed per offsite revisit survey.
    All revisit user fees will be assessed in the last quarter of FY 
2007. Revisit user fees will be assessed if a revisit survey is 
determined necessary.
Costs for all Revisit User Fees Assessed
    We expect the combined costs for all providers and suppliers for 
all revisit surveys for FY 2007 to be a little under $37.3 million. 
Onsite revisit surveys will total a little under $34.6 million and 
offsite revisit surveys will total approximately $2.7 million. The rule 
would take effect the date of publication of the final rule. We provide 
below an explanation for quarterly costs listed in Tables C and D.
    In Table C below, we provide the projected quarterly costs for the 
final quarter of FY 2007. We expect the combined costs for all 
providers and suppliers for all onsite revisit surveys for one quarter 
to total approximately $8.6 million. We first utilized the total number 
of onsite revisit surveys for FY 2006, took the expected revisit user 
fees assessed per revisits as calculated in Table B above estimated by 
provider or supplier and multiplied this number by the number of onsite 
revisit surveys expected for one quarter. We then totaled all providers 
and suppliers to achieve the total quarterly costs for all onsite 
revisit surveys.

                         Table C.--Estimated Quarterly Costs for Onsite Revisit Surveys
----------------------------------------------------------------------------------------------------------------
                                                                   Fee assessed
                                                     Number of      per onsite       Number of      Total costs
                                                  onsite revisit      revisit     onsite revisit    for onsite
                    Facility                       surveys  (FY   surveys (hrs x    surveys est.      revisit
                                                       2006)        $112) (see     for quarter*     surveys for
                                                                     Table B)                         quarter
----------------------------------------------------------------------------------------------------------------
SNF & NF........................................          14,288          $2,072           3,572      $7,401,184
Hospitals.......................................             575           2,554             144         367,776
HHA.............................................           1,068           1,613             267         430,671
Hospice.........................................             256           1,736              64         111,104
ASC.............................................              95           1,669              24          40,056
RHC.............................................             149             851              37          31,487
ESRD............................................             698           1,490             175         260,750
                                                 ---------------------------------------------------------------
    Total.......................................          17,129  ..............           4,283      8,643,028
----------------------------------------------------------------------------------------------------------------
* Total number of onsite revisit surveys divided by 4 and rounded up based on FY 2006 actual data.

    We expect the combined costs for all providers and suppliers for 
all offsite revisit surveys to total $687,960. In Table D below, we 
first estimated by provider or supplier the number of offsite revisit 
surveys expected for one quarter and multiplied this number by the 
expected revisit user fee of $168 per offsite revisit survey as 
discussed above. We then totaled all providers and suppliers to achieve 
the total costs for all offsite revisit surveys for one quarter.

                         Table D.--Estimated Quarterly Costs for Offsite Revisit Surveys
----------------------------------------------------------------------------------------------------------------
                                                     Number of     Fee assessed      Number of      Total costs
                                                      offsite       per offsite       offsite       for offsite
                    Facility                          revisit         revisit         revisit         revisit
                                                   surveys  (FY    surveys ($112   surveys est.     surveys for
                                                       2006)        x 1.5 hrs.)    for quarter *      quarter
----------------------------------------------------------------------------------------------------------------
SNF & NF........................................          15,138            $168           3,785        $635,880
Hospitals.......................................             278             168              70          11,760
HHA.............................................             517             168             129          21,672
Hospice.........................................              51             168              13           2,184
ASC.............................................              93             168              23           3,864
RHC.............................................              67             168              17           2,856
ESRD............................................             231             168               8           9,744
                                                 ---------------------------------------------------------------
    Total.......................................          16,375  ..............           4,095        687,960
----------------------------------------------------------------------------------------------------------------
* Total number of offsite revisit surveys divided by 4 and rounded up based on FY 2006 actual data.

    As shown in Table E below, we provide the total costs expected for 
FY 2007, as well as the costs we expect to offset in the final quarter 
of this fiscal year by assessing Revisit User Fees for revisit surveys 
conducted.

 Table E.--Total Costs Combined for All Revisits Surveys per Fiscal Year
                                & Quarter
------------------------------------------------------------------------
                                                           Last quarter
                                              FY 2007        FY 2007 *
------------------------------------------------------------------------
Onsite Revisit Surveys..................     $34,565,760      $8,643,028
Offsite Revisit Surveys.................       2,751,000         687,960
                                         -------------------------------
    Total Costs All Revisits............      37,316,760      9,330,988
---------------------------------------------------------