(4) A description of the proposed use of norms, criteria, and standards in review;

(5) The methods by which review findings will lead to continuing education activities and administrative change; and

(6) The activities the hospital review committee expects the PSRO to perform for those review functions not delegated;

(c) A description of the coordination procedures developed with Medicare, Medicaid, and Title V claims payment agencies, including the mechanisms for notifying these agencies of delegated review determinations that impact on claims payment;

(d) The methods of providing data collection, data flow, and information release to satisfy PSRO profile and reporting requirements, including a description of the current and proposed relationships of the hospital with processors of hospital discharge abstract data;

(e) The number of physicians on the hospital's medical staff who are eligible for PSRO membership, as defined in applicable regulations regarding grants to PSROs, and the number who actually are members;

(f) Specific information about the hospital's existing review system, if any, including narrative material concerning operating procedures, results, and follow-up; and

(g) Hospital characteristics data on: (1) Number of beds;

(2) Total admissions each year; (3) Federal program patient admissions each year;

(4) Type of ownership;

(5) Teaching affiliations; and

(6) Size and specializations of medical staff.

§ 466.33 Determination and notice of hospital capability.

(a) Timeframes for determination. A PSRO must make a determination of hospital capability to perform review activities within 90 days from the date of receipt of the delegated review plan.

(b) Basis for determination. In making a determination of capability, the PSRO must use written evaluation factors which have been approved by HCFA. These evaluation factors must

measure the capability of the hospital review committee to perform review activities effectively and efficiently. They must include at least:

(1) The degree to which the proposed organization for review and review mechanisms provides the capability to meet the objectives of the PSRO's approved formal plan;

(2) The adequacy of the hospital's performance in Medicare and Medicaid utilization review activities. In evaluating this factor the PSRO shall consider information;

(i) Obtained from the Medicare State survey agency, the appropriate Medicare intermediaries, and the Medicaid State agency; and

(ii) Obtained through site visits to the hospital;

(3) The degree to which the delegation of one or more functions to the hospital would increase the effectiveness and efficiency of review throughout the PSRO area;

(4) Membership in the PSRO of at least 25 percent of those physicians with active staff privileges who are eligible to be PSRO members; and

(5) The capacity to provide the PSRO with the data it requires for monitoring the hospital review activities and for generation of profiles and reports.

(c) Evaluation committee. (1) The determination must be made by an evaluation committee, designated by the governing body of the PSRO, and composed of two or more PSRO members.

(2) A PSRO member may not participate in the determination of capability of a hospital in which:

(i) He or a member of his family (spouse, child, grandchild, parent, or grandparent) has an ownership interest of 5 percent or more; or

(ii) He has active staff privileges, as defined in § 466.2, unless there are no alternate physicians to serve on the evaluation committee.

(d) Notice of determination. A PSRO must promptly provide to the hospital a written notice that includes: (1) The reasons for the determination; and

(2) An explanation of the hospital's right to obtain a reconsideration by the PSRO.

(e) Record of determination. A PSRO must maintain a record of each decision and the information which formed the basis for the determination on capability.

(f) Reconsideration of determination. Any hospital dissatisfied with a PSRO determination of capability may request a PSRO reconsideration of that determination. (See § 466.37).

§ 466.34 Delegation of review activities.

If a PSRO has determined that a hospital is capable of performing review activities, the PSRO may:

(a) Delegate reponsibility for any one, or all, of the following review activities: Preadmission review; concurrent review; alternative review activities (when HCFA has approved those activities); and MCE studies; and

(b) Authorize the hospital to perform modified review.

§ 466.35 Agreement with delegated hospitals.

(a) Basic requirement. If the PSRO has made a determination to delegate the performance of review functions to a hospital, the two parties shall enter into a written agreement:

(1) Based upon the PSRO's model agreement; and

(2) Incorporating jointly developed administrative and review procedures. (See § 463.6 of this subchapter.)

(b) Content of agreement. The agreement must set forth:

(1) The specific review functions to be performed by the hospital under delegation;

(2) The specific review functions that will not be delegated and will be performed by the PSRO;

(3) The hospital's commitment to perform the delegated functions in accordance with:

(i) The requirements placed upon PSROS under the Act;

(ii) The PSRO's formal plan; and (iii) The review plan submitted by the hospital;

(4) A schedule for phasing in each function;

(5) The norms, criteria, and standards the hospital will use;

(6) Methods of involving the hospital in the PSRO plan for reconsiderations and appeals;

(12) The methods for involving health care practitioners other than physicians in review functions; and

(13) Provisions for modification of the agreement with the approval of both parties.

(c) Signatures. The agreement shall be signed by:

(1) The chief administrative official of the PSRO;

(2) An authorized representative of the hospital's medical staff;

(3) The chief administrative official of the hospital; and

(4) The Chairman of the Board of Trustees (or other governing body) of the hospital.

(d) Public inspection. Each signed agreement shall be retained at the principal office of the PSRO for public inspection during regular business hours.

§ 466.36 PSRO monitoring and reassessment of hospital capability.

(a) A PSRO must monitor and reassess each hospital review committee's performance of review function through:

(1) Analysis of profiles; (2) Information provided by the hospital; and

(3) On-site inspections.

(b) The purpose of monitoring and reassessment shall be to determine whether:

(1) The review committee is complying with the agreement;

(a) Request for reconsideration. A hospital dissatisfied with a PSRO determination of capability may request a reconsideration, in writing, within 60 days from the date on the PSRO's notice of determination. For good cause shown by the hospital, the PSRO may extend the filing time.

(b) Reconsideration committee. The governing body of the PSRO shall designate a committee of two or more PSRO members to conduct the reconsideration. The committee may not include any PSRO member who would be disqualified under § 466.33(c).

(c) Reconsideration procedures. The reconsideration committee must promptly give the hospital an opportunity to submit additional written or oral information. Reconsideration proceedings may be informal and need not be conducted in accordance with formal rules of evidence.

(d) PSRO determination. The PSRO may affirm, modify, or reverse the initial determination of capability, based on the information reviewed during the reconsideration proceedings. It must give the hospital prompt written notice of its decision, including a statement of the reasons for the decision.

(e) PSRO records. The PSRO must maintain a record of:

(1) The decision;

(2) The information which formed the basis for it; and

(3) A summary of the reconsideration proceedings.

§ 466.38 Monitoring by HCFA.

(a) PSRO reports. PSROS must periodically submit to HCFA reports indicating:

(1) Those hospitals that have been delegated the performance of review functions and the manner in which they are performing; and

(2) Those hospitals that have been denied delegated review.

(b) HCFA review. PSRO decisions on delegations of review functions may be reviewed by HCFA.

(c) Disapproval by HCFA. HCFA may disapprove a delegation for good cause, after taking into consideration any comments submitted by Medicare fiscal agents or State Medicaid or Title V agencies regarding:

(1) The appropriateness of delegation of review to a hospital; or

(2) The effectiveness of performance of delegated review functions by that hospital.

(d) "Good cause. For purposes of this section, "good cause" for disapproval of delegation must include:

(1) A PSRO determination of capability which does not comply substantially with the procedures of this part;

(2) The hospital's substantial noncompliance with the agreement specified in § 466.35, or the provisions of this part; and

(3) The hospital's failure to perform delegated review functions effectively and efficiently.

(e) Notification. If HCFA disapproves a delegation of review functions in accordance with paragraphs (c) and (d) of this section, it will give written notice to the PSRO and the hospital at least 30 days before the effective date of disapproval, specifying the reasons for disapproval.

(f) Opportunity for hospital to respond. The PSRO and the hospital will have opportunity, prior to the effective date, to file a written statement with HCFA, explaining why the disapproval should not become effective.

(g) Final decision. (1) If HCFA determines, from additional information submitted under paragraph (f) of this section, that "good cause" for disapproval does not exist, it will withdraw the notice of disapproval.

(2) If no statements are submitted (or if the statements are not persuasive) the disapproval will become final on the effective date specified in the notice.

(3) When a disapproval becomes final, the PSRO shall resume review activities in accordance with § 466.39.

§ 466.39 PSRO responsibilities when delegation is denied, withdrawn, or disapproved.

(a) A PSRO shall, within a reasonable time, initiate or resume review activities in any hospital:

(1) That did not request a delegation;

(2) Whose request for delegation was denied;

(3) Whose delegation is withdrawn by the PSRO; or

(4) Whose delegation is disapproved or withdrawn by HCFA.

(b) If a hospital whose delegation was denied, withdrawn, or disapproved submits a new letter of interest and delegated review plan, the PSRO must make a determination of capability within one year from date of receipt of the plan.

Subpart D-Norms, Criteria, and Standards for Review

§ 466.50 Basic requirement for PSRO area norms, criteria, and standards.

As a condition for designation as a PSRO, a PSRO must include in its formal written plan, in accordance

rent review to be applicable to certain locations and hospitals in the PSRO area if the PSRO determines that:

(1) The patterns of practice in those locations and hospitals are substantially different from patterns in the remainder of the PSRO area; and

(2) There is a reasonable basis for the difference which makes the variation appropriate.

(c) Technical assistance. A PSRO can request technical assistance from the National Council and HCFA in using applicable regional norms, criteria, and standards in establishing norms, criteria, and standards for its area.

§ 466.52 Dissemination of norms, criteria, and standards.

(a) Provision to hospitals. A PSRO must provide to each hospital in its area a copy of the norms, criteria, and standards to be used in preadmission and concurrent review, or in an alternative review method.

(b) Notice to public. A PSRO must publish in local medical periodicals and in one newspaper of general circulation in its area a notice stating that the norms, criteria, and standards currently used are available for public inspection at the PSRO's principal office.

ards.

§ 466.51 Establishment of norms, criteria, and standards.

(a) Area norms, criteria, and standards. For the conduct of review a PSRO must:

(1) Establish written norms, criteria, and standards which are required for preadmission and concurrent review, alternative concurrent review methods, and profile analysis; and

(2) Establish written criteria and standards to be used as principal points of reference in conducting MCE studies.

(b) Variant norms, criteria, and standards. A PSRO may establish different norms, criteria, and standards for use in preadmission and concur

(a) Norms and criteria applied in preadmission and concurrent_review. In assessing the need for, and appropriateness of, inpatient hospital care, a PSRO must, as principal points of reference:

(1) Apply criteria specifying clinical indications of:

(i) The necessity for hospital admission and continued stay;

(ii) The necessity for surgery and other major diagnostic and therapeutic procedures;

(iii) The appropriate nature of a preadmission work-up; or

(iv) The types of services which are most effectively, economically, and appropriately provided at a hospital level of care;

(2) Apply length-of-stay projections or norms in assigning initial and extended certified length-of-stay periods;

(3) Identify diagnoses, conditions, clinical areas or procedures which, on the basis of past experience and data, justify automatic certification of admission;

(4) Identify diagnoses, problems, and conditions of such nature that their presence, or suspicion of their presence, justifies automatic certification of admission; and

(5) Apply length-of-stay norms to specify the time when attending physician or other health care practitioner certications are required.

(b) Norms and criteria applied in alternative review methods. If HCFA has approved an alternative review method, a PSRO must apply, as principal point of reference, norms and criteria specified in the approved alternative review plan.

(c) Application of norms and criteria by delegated hospitals. All delegated hospitals must apply the norms, criteria, and standards established by the PSRO in the same manner as required of the PSRO under this subpart.

§ 466.54 Revisions.

The PSRO must periodically reassess, revise and update the norms, criteria, and standards currently applied in preadmission and concurrent review, or in an alternative review method.

§ 466.55 Regional norms, criteria, and

standards.

(a) National Council role. The National Council must provide for the appropriate distribution of regional norms, criteria, and standards to the PSROS to be used by those PSROS as principal points of reference in their establishment of area norms, criteria, and standards.

(b) Notice of distribution and availability. HCFA will, within 30 days from the date of each such distribution, publish a notice in the FEDERAL REGISTER stating:

(1) That the distribution has been made by the National Council; and

(2) That the material will be open to inspection and copying by members of the public.

§ 466.56 Review of PSRO norms, criteria, and standards.

(a) Review of significant differences from regional norms, criteria, and standards-(1) Submission by the PSRO. (i) As soon as a PSRO has established norms, criteria, and standards for use in preadmission or concurrent review, or in an alternative concurrent review method, it must forward them to HCFA.

(ii) As revisions are made, a PSRO must forward them to HCFA.

(2) HCFA review. (i) HCFA will review the norms, criteria, and standards and identify any significant variations from the regional norms, criteria, and standards distributed by the National Council.

(ii) If HCFA identifies significant variations, it will notify the PSRO and the National Council.

(3) National Council action. (i) The National Council must, after appropriate consultation with the PSRO, approve or disapprove the variant norms, criteria, and standards.

(ii) The National Council will base its decision on whether a reasonable justification exists for the use of the variant norms, criteria, and standards.

(4) PSRO action following National Council decision. If the National Council disapproves the variant norms, criteria, or standards, the PSRO must modify and resubmit them for review by HCFA, and if appropriate, by the National Council.

(b) Submission of other norms, criteria, and standards. The PSRO must submit to HCFA, upon request:

(1) Criteria and standards it uses in individual MCE studies; and

(2) Norms, criteria, and standards it uses in profile analyses.

PART 473-HEARINGS AND APPEALS ON PSRO DETERMINATIONS

Sec.

473.1 Applicability.

473.2 Right to reconsideration, review and hearing.

473.3 Utilization of procedures under Title XVIII. Part A, hearing procedures. 473.4 Professional consultation. 473.5 Determining amount in controversy in case of proposed services. 473.6 Right of judicial review.