consistent with the standards, criteria, or plans described in § 100.104(a) (2) then, for such period as he deems necessary to effectuate the purpose of section 1122 of the Act, he shall, in determining the Federal payments to be made under titles V, XVIII, and XIX of the Act to such health care facility or health maintenance organization, exclude expenses related to such capital expenditure.

(b) Notwithstanding the provisions of paragraph (a) of this section, if the Secretary, after submitting the matters involved to the National Advisory Health Council on Comprehensive Health Planning Programs (established pursuant to section 316 of the Public Health Service Act, 42 U.S.C. 247a) and after taking into consideration the recommendations of the designated planning agency and the other agencies described in $100.105 with respect to such expenditure, determines that an exclusion of expenses related to any capital expenditure of any health care facility or health maintenance organization would discourage the operation or expansion of such facility or organization, or of any facility of such organization, which has demonstrated to his satisfaction proof of capability to provide comprehensive health care services efficiently, effectively, and economically, or would otherwise be inconsistent with the effective organization and delivery of health services or the effective administration of titles V, XVIII, or XIX of the Act, he shall include such expenses in Federal payments under such titles.

(c) Upon making a determination under this section the Secretary will promptly notify the person proposing such capital expenditure, the designated planning agency, and the other agencies described in § 100.105 with which the designated planning agency has consulted, of such determination and the basis for such determination.

(d) Any person dissatisfied with a determination by the Secretary under section 1122 of the Act or this subpart with respect to a particular capital expenditure may, within six months following the date of such determination, request the Secretary to reconsider such determination.

(1) Such request for reconsideration shall be in writing, addressed to the Secretary of Health, Education, and Welfare or to any officer or employee of the Department of Health, Education, and Welfare to whom the Secretary has dele

gated responsibility to receive such requests, and shall set forth the grounds based upon the record of the proceedings and any issues of law, upon which such reconsideration is requested.

(2) Reconsideration will be based upon the record of the proceedings, which shall consist of the findings, recommendations and supporting materials submitted to the Secretary by the designated planning agency (including the findings and recommendations of other agencies) which relate to the findings and recommendations involved, the record of the hearing provided by the designated planning agency, if any, and of any judicial proceedings, the materials submitted in connection with such request, and such comments as the Secretary may request from the designated planning agency.

(3) Notice of any reconsidered determination under this paragraph shall be sent to the designated planning agency and the person requesting such reconsideration.

(e) A determination by the Secretary is, under section 1122 of the Act, not subject to administrative or judicial review. § 100.109 Continuing effect of determinations.

(a) Except in the case of a long-term construction plan of the type described in paragraph (b) of this section, where the designated planning agency has found that a proposed capital expenditure is in conformity with the standards, criteria, and plans described in § 100.104(a) (2), the obligation for such capital expenditure shall be incurred not more than one year following the date of such finding, or such shorter period as may be required by applicable State law: Provided, That in the absence of any State law to the contrary, the designated planning agency may, pursuant to a showing of good cause by the person proposing such expenditure, extend the period during which such obligation must be incurred for up to an additional six months. If no such obligation is incurred within such period, the designated planning agency's approval shall, for purposes of this subpart, be deemed to be terminated upon the expiration of such period.

(b) In the case of any plan for capital expenditures proposed by or on behalf of a health care facility or health maintenance organization under which a series of obligations for capital expenditures for discrete components of the plan

is to be incurred over a period longer than one year, the designated planning agency may review and approve or disapprove, for purposes of this subpart, those of such capital expenditures which it estimates will be incurred within three years following the date of such approval or disapproval.

(c) (1) In any case in which the Secretary has determined pursuant to a finding by the designated planning agency that a proposed capital expenditure is not in conformity with the standards, criteria, or plans described in § 100.104 (a) (2), that expenses related to such capital expenditure shall not be included in determining Federal payments under titles V, XVIII, and XIX of the Act the health care facility or health maintenance organization to whom such payments are made shall be entitled, upon its request to the designated planning agency in such form and manner and supported by such information as such agency may require, to a reconsideration by the designated planning agency of such finding:

(i) Whenever there is a substantial change in existing or proposed health facilities or services, of the type proposed, in the area served by such facility or organization; or

(ii) Upon a substantial change in the need for facilities or services, of the type proposed, in the area served by such facility or organization, as reflected in the standards, criteria or plans referred to in § 100.104(a) (2); or

(iii) At any time following the expiration of three years from the date of the finding of the designated planning agency or of its last reconsideration of such finding pursuant to this paragraph, whichever is later.

(2) (i) If, upon reconsideration of its finding pursuant to this paragraph, and after consulting with and taking into consideration the findings and recommendations of the other agencies described in § 100.105, the designated planning agency finds that the facilities or services provided by such capital expenditure are in conformity with the standards, criteria, and plans described in § 100.104 (a) (2) it shall promptly so notify the Secretary and the person submitting such request.

(ii) If the designated planning agency, upon such reconsideration, reaffirms its previous finding, the procedure set forth in § 100.106 following an initial determination shall be followed.

(3) Upon notification by a designated planning agency of a revised finding in accordance with paragraph (c) (2) of this section, the Secretary will include, in determining future payments under titles V, XVIII, and XIX of the Act, expenses related to such capital expenditure. Such expenses will be included for periods following the date of such notification only, and amounts previously excluded shall not be taken into account in determining Federal payments under titles V, XVIII, and XIX of the Act. § 100.110 Payment by Secretary of costs of agency review.

(a) In accordance with section 1122 (c) of the Act, the Secretary will pay to each designated planning agency, from the Federal Hospital Insurance Trust Fund, an amount for each fiscal year beginning with the fiscal year ending June 30, 1974, to be determined as follows:

(1) The Secretary will determine, on the basis of information furnished to him by the designated planning agency and such other information as may be available to him, (i) the amount of funds, both Federal and non-Federal, which were expended in such State during the fiscal year ending June 30, 1974, to carry out sections 314 (a) and (b) of the Public Health Service Act, and (ii) the amount of such funds which were expended for the purpose of cost containment.

(2) The amount to be paid to each designated planning agency under this paragraph will be computed by multiplying the lesser of (i) the amount determined pursuant to clause (ii) of paragraph (a)(1) of this section or (ii) 50 percent of the amount determined pursuant to clause (i) of paragraph (a)(1), of this section, by the percentage obtained by dividing the total amount of Federal expenditures for hospital and nursing home services under Titles V, XVIII and XIX of the Act in such State by the total amount of all expenditures for hospital and nursing home services, from whatever source in such State. This computation shall utilize data from the latest fiscal year for which all necessary data are available, as determined by the Secretary.

(3) The percentage for each State obtained by dividing the total amount of Federal expenditures for hospital and nursing home services under Titles V, XVIII and XIX of the Act in such State by the total amount of all expenditures

for hospital and nursing home services from whatever source in such State for each fiscal year will be published in the FEDERAL REGISTER as soon as practicable following the beginning of such fiscal year.

(b) Each designated planning agency shall be responsible for making payments from funds paid to it by the Secretary pursuant to paragraph (a) of this section to the other agencies described in § 100.105 in such State. The method for computing such payments shall be described in the Agreement entered into pursuant to § 100.104.

(c) The Secretary shall from time to time make payments to a designated planning agency of all or a portion of the amount determined pursuant to paragraph (a) of this section, in advance or by way of reimbursement as provided in the Agreement, to the extent he determines such payments necessary to promote the carrying out of the purposes of section 1122 of the Act in such State. Such payments shall be subject to adjustments, on account of overpayments or underpayments previously made, in accordance with the Agreement.

(d) The designated planning agency shall keep such records and accounts, and furnish such reports to the Secretary, as may be required pursuant to the Agreement.

[38 FR 31381, Nov. 13, 1973, as amended at 39 FR 32030, Sept. 4, 1974]

PART 101-PROFESSIONAL STANDARDS

REVIEW

Subpart A-Area Designations

101.104

Sec.

101.105

Action by the Secretary pursuant to objections.

Polling of doctors.

Action by the Secretary following poll.

Subpart C-Subpart M [Reserved]

Subpart N Hearings and Appeals of Professional Standards Review Organization Determinations Interim Regulations

101.106

101.107

(a) "Act" means the Social Security Act, as amended, (42 U.S. Chap. 7).

(b) "Area" means the geographical area within the boundaries of a State or within the boundaries of one or more counties or other political subdivisions in a State designated as constituting an area with respect to which a Professional Standards Review Organization may be designated, pursuant to section 1152(a) of the Act.

(c) "PSRO" means Professional Standards Review Organization.

(d) "Secretary" means the Secretary of Health, Education, and Welfare and any other officer or employee of the Department of Health, Education, and Welfare to whom the authority involved may be delegated.

(e) "State" means a State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa and the Trust Territory of the Pacific Islands.

(f) "Physician" means a licensed doctor of medicine or osteopathy.

populations, it may be necessary and ap-. propriate to divide a county.

(c) Existing boundaries of local medical review organizations and local health planning areas should be considered.

(d) An area should, to the extent possible, coincide with a medical service area and assure broad, diverse representation of all medical specialties. Consideration should also be given to the location of existing medical centers and to natural geographic barriers.

(e) An area should generally include a minimum of approximately 300 practicing physicians. While the maximum can be expected to vary with local circumstances, generally it should not exceed 2500 practicing physicians.

(f) The designation of an area should take into account the need for effective coordination with Medicare and Medicaid fiscal agents.

§ 101.2a Special Procedures for Statewide Designation.

(a) Policy and Applicability. (1) Section 1152 (g) of the Act reads as follows:

(g) (1) In any case in which the Secretary has established, within a State, two or more appropriate areas with respect to which PSROS may be designated, he shall, prior to designating a PSRO for any such area, conduct in each such area a poll in which the doctors of medicine and osteopathy engaged in active practice therein will be asked: 'Do you support a change from the present local and regional PSRO area designation to a single statewide area designation?' If, in each such area, more than 50 per centum of the doctors responding to such question respond in the affirmative, then the Secretary shall establish the entire State as a single PSRO area.

(2) The provisions of paragraph (1) shall not be applicable with respect to the designation of PSRO areas in any State, if, prior to the date of enactment of this subsection,1 the Secretary has entered into an agreement (on a conditional basis or otherwise) with an organization designating it as the PSRO for any area in the State.

(2) This section is applicable to the special procedures for statewide designation pursuant to Section 1152(g) of the Act.

(b) Determination of Number of Doctors in each PSRO Area in the State. In each State identified by the Secretary under paragraph (a) as requiring a poll on the change to statewide designation,

1 Section 1152(g) was added by section 105 of P.L. 94-182, enacted December 31, 1975.

the Secretary will determine, on the basis of the latest available information which he deems appropriate for such purposes, the names, current mailing addresses, and total number of doctors of medicine or osteopathy engaged in active practice in each PSRO area in such State, as designated in this Subpart. The information on the basis of which the total number of doctors in each such area is determined by the Secretary will be available for public inspection in accordance with 5 U.S.C. § 552 and 45 CFR 5.1 et seq.

(c) Notice of Poll. The Secretary will publish a Notice in the FEDERAL REGISTER and in at least one newspaper of general circulation serving each of the areas in the State, and will notify by letter appropriate State and county medical societies, that he will conduct a poll in each such area in the State to determine whether the doctors engaged in actual practice in each area support a change from the present local PSRO area designation to a statewide area designation, pursuant to Section 1152 (g) of the Act. The Notice will set forth the dates on which such poll will be initiated and completed and will state that doctors in such area who have not received a ballot within five (5) days after initiation of the poll may request a ballot prior to the expiration of the polling period from the Secretary at the address specified in the Notice.

(d) Mailing of Ballots. The Secretary will mail, by regular mail, to each individual doctor of medicine or osteopathy whom the Secretary determines, pursuant to paragraph (b), to be engaged in the active practice of medicine or osteopathy in each PSRO area in the State, the following:

(1) a ballot in which the doctor is requested to check one of two boxes indicating an affirmative or negative response to the question: "Do you support a change from the present local and regional Professional Standards Review Organization area designation to a single statewide area designation?";

(2) a preaddressed, franked and coded envelope; and

(3) a cover letter describing the purpose of the poll, and specifically including:

(i) The date of initiation of the poll, which will be not more than two days prior to the date on which the polling material is mailed;

(ii) A request that the doctor complete the ballot and mail it by regular mail in the enclosed envelope;

(iii) A statement that if, in each PSRO area in the State, more than 50 per centum of the doctors responding to the poll indicate that they support a change from the present local area designations to a statewide area designation, the Secretary will establish the entire State as a single PSRO area;

(iv) A statement that all completed ballots which are mailed in the enclosed self-addressed envelope, and postmarked within 30 days of the date of initiation of the poll and received by the Department of Health, Education, and Welfare officer, whose address appears on the enclosed envelope, will be counted in determining the result of the poll; and

(v) A statement that doctors who are identified by the Secretary as being in active practice in more than one area may vote with respect to each of the areas in which they practice.

(e) Tabulation of Ballots. After the expiration of 30 days following the date of initiation of the poll, as described in paragraph (d) (3) (i), the Secretary will tabulate the completed ballots which have been received in the self-addressed envelopes provided and which are postmarked prior to the end of such 30-day period.

(1) The ballots will be tabulated separately for each area in the State, to determine whether or not, in each PSRO area in the State, more than 50 percent of the doctors responding to the poll indicate that they support a change from the present local area designations to a Statewide area designation.

(2) The ballots will be tabulated in such a fashion as to assure that the vote of each individual doctor responding to the poll will not be disclosed.

(3) The tabulation proceeding will be publicly announced and will be open to the public in a central location in the State.

(f) Retention of Ballots. All ballots received by the Secretary will be retained for such period as may be necessary to assure their availability for a recount in accordance with paragraph (h), and will be available for public inspection during such period at a place announced in the Notice published pursuant to paragraph (g).

(g) Notice of Poll Results. After tabulating the ballots received for each area