May 2000

Informational Bulletin 00-9
Hosp-14

Utilization Review (UR) Condition of Participation (COP) for Hospitals

Purpose:

The purpose of this informational bulletin is to notify providers that information received from Electronic Regional Program Letter #2000-1, from Health Care Financing Administration (HCFA) regarding Utilization Review Condition of Participation for Hospitals is now available.

The Electronic Regional Program Letter #2000-1 follows in its entirety. 

If you have any questions regarding this bulletin, please contact in writing:

Minnesota Department of Health
Health Regulation Division
Licensing and Certification Program
85 East Seventh Place
Suite 300
PO Box 64900
St. Paul, MN 55164-0900

HEALTH CARE FINANCING ADMINISTRATION

Chicago Regional Office, Midwest Consortium

Electronic Regional Program Letter #2000-1

It has come to our attention that many of the state survey agencies (SAs) and Health Care Financing Administration regional offices (ROs) have had questions about the UR CoP for hospitals and whether Peer Review Organization (PRO) review activities still fulfill the hospitals' UR requirements. In addition, we understand that there have been concerns about hospitals failing to provide Medicare inpatients with the required notice of non-coverage.

The hospital CoP at 42 CFR 482.30(a) states that the provisions of the UR CoP apply, except in either of two circumstances: (1) a PRO has assumed binding review for the hospital, or (2) HCFA has determined that the UR procedures established by the State under title XIX of the Social Security Act are superior to the procedures in 42 CFR 482.30 and has required hospitals in the State to meet the UR plan requirements under 42 CFR §§456.50 through 456.245. It should be noted that the Medicare statute prohibits deeming of the UR CoP.

With the inception of the PRO program, the PRO statute eliminated the review function to a hospital. Regulations at 42 CFR 466.86 permit the PRO review activities to fulfill the hospitals' UR requirements. Additionally, the intermediaries and carriers are prohibited from conducting such review and payment determinations (42 CFR 466.86(a)(2). Pros still have binding review for hospitals. Under the sixth scope of work, PROs are to review hospital admissions (paid under the Medicare perspective payment system) under a new program initiative referred to as the Payment Error Prevention Program (PEPP). The purpose of PEPP is to reduce the occurrence of errors which may result in incorrect payment to hospitals.

Resulting the notice of non-coverage, hospitals are responsible for issuing appropriate notices of non-coverage to their Medicare inpatients. The hospitals' UR committees are responsible for monitoring Medicare admissions for appropriateness in order to determine at what point a notice of non-coverage should be issued to the Medicare patients. PROs monitor the appropriateness of the notices given by the fee-for-service hospitals. Hospitals are required to send a copy of the notice to the PRO within three days of issuance. Using this notice and claims data, the PRO will review as needed. This type of review does not apply to notices issued by Medicare + Choice organizations. In addition, this review is different from the review triggered by the a beneficiary who disagrees with a notice of non-coverage. The PRO is required to review all beneficiary immediate review requests based on notices given by fee-for-service hospitals and Medicare + Choice organizations.

In summary, SAs and ROs are not required to review the UR CoP on routine nonaccredited hospital surveys, validation surveys or complaint surveys. The only exception to this is if the State has applied and been approved for UR procedures superior to those of 42 CFR 482.30. In those cases, the State should perform the review according to the State procedures.

We hope that this information clarifies the concerns of State Agencies. Please share this memo with the hospital surveyors in your State. If you have any questions regarding this information as it pertains to the hospital survey and certification procedures, you may contact me or your Principal Program Representative.

Charles Bennett
Branch Manager
Survey and Certification Program
Coordination and Improvement