Title 42—Public Health--Volume 5

§ 494.70 Condition: Patients' rights.

The dialysis facility must inform patients (or their representatives) of their rights (including their privacy rights) and responsibilities when they begin their treatment and must protect and provide for the exercise of those rights.

(a) Standard: Patients' rights. The patient has the right to—

(1) Respect, dignity, and recognition of his or her individuality and personal needs, and sensitivity to his or her psychological needs and ability to cope with kidney failure;

(2) Receive all information in a way that he or she can understand;

(3) Privacy and confidentiality in all aspects of treatment;

(4) Privacy and confidentiality in personal medical records;

(5) Be informed about and participate, if desired, in all aspects of his or her care, and be informed of the right to refuse treatment, to discontinue treatment, and to refuse to participate in experimental research;

(6) Be informed about his or her right to execute advance directives, and the facility's policy regarding advance directives;

(7) Be informed about all treatment modalities and settings, including but not limited to, transplantation, home dialysis modalities (home hemodialysis, intermittent peritoneal dialysis, continuous ambulatory peritoneal dialysis, continuous cycling peritoneal dialysis),and in-facility hemodialysis. The patient has the right to receive resource information for dialysis modalities not offered by the facility, including information about alternative scheduling options for working patients;

(8) Be informed of facility policies regarding patient care, including, but not limited to, isolation of patients;

(9) Be informed of facility policies regarding the reuse of dialysis supplies, including hemodialyzers;

(10) Be informed by the physician, nurse practitioner, clinical nurse specialist, or physician's assistant treating the patient for kidney failure of his or her own medical status as documented in the patient's medical record, unless the medical record contains a documented contraindication;

(11) Be informed of services available in the facility and charges for services not covered under Medicare;

(12) Receive the necessary services outlined in the patient plan of care described in § 494.90;

(13) Be informed of the rules and expectations of the facility regarding patient conduct and responsibilities;

(14) Be informed of the facility's internal grievance process;

(15) Be informed of external grievance mechanisms and processes, including how to contact the ESRD Network and the State survey agency;

(16) Be informed of his or her right to file internal grievances or external grievances or both without reprisal or denial of services; and

(17) Be informed that he or she may file internal or external grievances, personally, anonymously or through a representative of the patient's choosing.

(b) Standard: Right to be informed regarding the facility's discharge and transfer policies. The patient has the right to—

(1) Be informed of the facility's policies for transfer, routine or involuntary discharge, and discontinuation of services to patients; and

(2) Receive written notice 30 days in advance of an involuntary discharge, after the facility follows the involuntary discharge procedures described in § 494.180(f)(4). In the case of immediate threats to the health and safety of others, an abbreviated discharge procedure may be allowed.

(c) Standard: Right to be informed of health coverage options. For patients of dialysis facilities that make payments of premiums for individual market health plans (in any amount), whether directly, through a parent organization (such as a dialysis corporation), or through another entity (including by providing contributions to entities that make such payments), the patient has the right to—

(1) Be informed annually, on a timely basis for each plan year, of all available health coverage options, including but not limited to Medicare, Medicaid, CHIP and individual market plans. This must include information on:

(i) How plans in the individual market will affect the patient's access to, and costs for the providers and suppliers, services, and prescription drugs that are currently within the individual's plan of care as well as those likely to result from other documented health care needs. This must include an overview of the health-related and financial risks and benefits of the individual market plans available to the patient (including plans offered through and outside the Exchange).

(ii) Medicare and Medicaid/Children's Health Insurance Coverage (CHIP) coverage, including Medicare Savings Programs, and how enrollment in those programs will affect the patient's access to and costs for health care providers, services, and prescription drugs that are currently within the individual's plan of care.

(iii) Each option's coverage and anticipated costs associated with transplantation, including patient and living donor costs for pre- and post-transplant care.

(2) Receive current information from the facility about premium assistance for enrollment in an individual market health plan that may be available to the patient from the facility, its parent organization, or third parties, including but not limited to limitations and any associated risks of such assistance.

(3) Receive current information about the facility's, or its parent organization's, contributions to patients or third parties that subsidize the individual's enrollment in individual market health plans for individuals on dialysis, including the reimbursements for services rendered that the facility receives as a result of subsidizing such enrollment.

(d) Standard: Posting of rights. The dialysis facility must prominently display a copy of the patient's rights in the facility, including the current State agency and ESRD network mailing addresses and telephone complaint numbers, where it can be easily seen and read by patients.

[73 FR 20475, Apr. 15, 2008, as amended at 81 FR 90227, Dec. 14, 2016; 89 FR 89213, Nov. 12, 2024]

§ 494.80 Condition: Patient assessment.

The facility's interdisciplinary team consists of, at a minimum, the patient or the patient's designee (if the patient chooses), a registered nurse, a physician treating the patient for kidney failure, a social worker, and a dietitian. The interdisciplinary team is responsible for providing each patient with an individualized and comprehensive assessment of his or her needs. The comprehensive assessment must be used to develop the patient's treatment plan and expectations for care.

(a) Standard: Assessment criteria. The patient's comprehensive assessment must include, but is not limited to, the following:

(1) Evaluation of current health status and medical condition, including co-morbid conditions.

(2) Evaluation of the appropriateness of the dialysis prescription, blood pressure, and fluid management needs.

(3) Laboratory profile, immunization history, and medication history.

(4) Evaluation of factors associated with anemia, such as hematocrit, hemoglobin, iron stores, and potential treatment plans for anemia, including administration of erythropoiesis-stimulating agent(s).

(5) Evaluation of factors associated with renal bone disease.

(6) Evaluation of nutritional status by a dietitian.

(7) Evaluation of psychosocial needs by a social worker.

(8) Evaluation of dialysis access type and maintenance (for example, arteriovenous fistulas, arteriovenous grafts, and peritoneal catheters).

(9) Evaluation of the patient's abilities, interests, preferences, and goals, including the desired level of participation in the dialysis care process; the preferred modality (hemodialysis or peritoneal dialysis), and setting, (for example, home dialysis), and the patient's expectations for care outcomes.

(10) Evaluation of suitability for a transplantation referral, based on criteria developed by the prospective transplantation center and its surgeon(s). If the patient is not suitable for transplantation referral, the basis for nonreferral must be documented in the patient's medical record.

(11) Evaluation of family and other support systems.

(12) Evaluation of current patient physical activity level.

(13) Evaluation for referral to vocational and physical rehabilitation services.

(b) Standard: Frequency of assessment for patients admitted to the dialysis facility. (1) An initial comprehensive assessment must be conducted on all new patients (that is, all admissions to a dialysis facility), within the latter of 30 calendar days or 13 outpatient hemodialysis sessions beginning with the first outpatient dialysis session.

(2) A follow up comprehensive reassessment must occur within 3 months after the completion of the initial assessment to provide information to adjust the patient's plan of care specified in § 494.90.

(c) Standard: Assessment of treatment prescription. The adequacy of the patient's dialysis prescription, as described in § 494.90(a)(1), must be assessed on an ongoing basis as follows:

(1) Hemodialysis patients. At least monthly by calculating delivered Kt/V or an equivalent measure.

(2) Peritoneal dialysis patients. At least every 4 months by calculating delivered weekly Kt/V or an equivalent measure.

(d) Standard: Patient reassessment. In accordance with the standards specified in paragraphs (a)(1) through (a)(13) of this section, a comprehensive reassessment of each patient and a revision of the plan of care must be conducted—

(1) At least annually for stable patients; and

(2) At least monthly for unstable patients including, but not limited to, patients with the following:

(i) Extended or frequent hospitalizations;

(ii) Marked deterioration in health status;

(iii) Significant change in psychosocial needs; or

(iv) Concurrent poor nutritional status, unmanaged anemia, and inadequate dialysis.

[73 FR 20475, Apr. 15, 2008, as amended at 89 FR 89213, Nov. 12, 2024]

§ 494.90 Condition: Patient plan of care.

The interdisciplinary team as defined at § 494.80 must develop and implement a written, individualized comprehensive plan of care that specifies the services necessary to address the patient's needs, as identified by the comprehensive assessment and changes in the patient's condition, and must include measurable and expected outcomes and estimated timetables to achieve these outcomes. The outcomes specified in the patient plan of care must be consistent with current evidence-based professionally-accepted clinical practice standards.

(a) Standard: Development of patient plan of care. The interdisciplinary team must develop a plan of care for each patient. The plan of care must address, but not be limited to, the following:

(1) Dose of dialysis. The interdisciplinary team must provide the necessary care and services to manage the patient's volume status; and achieve and sustain the prescribed dose of dialysis to meet a hemodialysis Kt/V of at least 1.2 and a peritoneal dialysis weekly Kt/V of at least 1.7 or meet an alternative equivalent professionally-accepted clinical practice standard for adequacy of dialysis.

(2) Nutritional status. The interdisciplinary team must provide the necessary care and counseling services to achieve and sustain an effective nutritional status. A patient's albumin level and body weight must be measured at least monthly. Additional evidence-based professionally-accepted clinical nutrition indicators may be monitored, as appropriate.

(3) Mineral metabolism. Provide the necessary care to manage mineral metabolism and prevent or treat renal bone disease.

(4) Anemia. The interdisciplinary team must provide the necessary care and services to achieve and sustain the clinically appropriate hemoglobin/hematocrit level. The patient's hemoglobin/hematocrit must be measured at least monthly. The dialysis facility must conduct an evaluation of the patient's anemia management needs. For a home dialysis patient, the facility must evaluate whether the patient can safely, aseptically, and effectively administer erythropoiesis-stimulating agents and store this medication under refrigeration if necessary. The patient's response to erythropoiesis-stimulating agent(s), including blood pressure levels and utilization of iron stores, must be monitored on a routine basis.

(5) Vascular access. The interdisciplinary team must provide vascular access monitoring and appropriate, timely referrals to achieve and sustain vascular access. The hemodialysis patient must be evaluated for the appropriate vascular access type, taking into consideration co-morbid conditions, other risk factors, and whether the patient is a potential candidate for arteriovenous fistula placement. The patient's vascular access must be monitored to prevent access failure, including monitoring of arteriovenous grafts and fistulae for symptoms of stenosis.

(6) Psychosocial status. The interdisciplinary team must provide the necessary monitoring and social work interventions. These include counseling services and referrals for other social services, to assist the patient in achieving and sustaining an appropriate psychosocial status as measured by a standardized mental and physical assessment tool chosen by the social worker, at regular intervals, or more frequently on an as-needed basis.

(7) Modality—(i) Home dialysis. The interdisciplinary team must identify a plan for the patient's home dialysis or explain why the patient is not a candidate for home dialysis.

(ii) Transplantation status. When the patient is a transplant referral candidate, the interdisciplinary team must develop plans for pursuing transplantation. The patient's plan of care must include documentation of the—

(A) Plan for transplantation, if the patient accepts the transplantation referral;

(B) Patient's decision, if the patient is a transplantation referral candidate but declines the transplantation referral; or

(C) Reason(s) for the patient's nonreferral as a transplantation candidate as documented in accordance with § 494.80(a)(10).

(8) Rehabilitation status. The interdisciplinary team must assist the patient in achieving and sustaining an appropriate level of productive activity, as desired by the patient, including the educational needs of pediatric patients (patients under the age of 18 years), and make rehabilitation and vocational rehabilitation referrals as appropriate.

(b) Standard: Implementation of the patient plan of care. (1) The patient's plan of care must—

(i) Be completed by the interdisciplinary team, including the patient if the patient desires; and

(ii) Be signed by team members, including the patient or the patient's designee; or, if the patient chooses not to sign the plan of care, this choice must be documented on the plan of care, along with the reason the signature was not provided.

(2) Implementation of the initial plan of care must begin within the latter of 30 calendar days after admission to the dialysis facility or 13 outpatient hemodialysis sessions beginning with the first outpatient dialysis session. Implementation of monthly or annual updates of the plan of care must be performed within 15 days of the completion of the additional patient assessments specified in § 494.80(d).

(3) If the expected outcome is not achieved, the interdisciplinary team must adjust the patient's plan of care to achieve the specified goals. When a patient is unable to achieve the desired outcomes, the team must—

(i) Adjust the plan of care to reflect the patient's current condition;

(ii) Document in the record the reasons why the patient was unable to achieve the goals; and

(iii) Implement plan of care changes to address the issues identified in paragraph (b)(3)(ii) of this section.

(4) The dialysis facility must ensure that all dialysis patients are seen by a physician, nurse practitioner, clinical nurse specialist, or physician's assistant providing dialysis care at least monthly, as evidenced by a monthly progress note placed in the medical record, and periodically while the hemodialysis patient is receiving in-facility dialysis.

(c) Standard: Transplantation referral tracking. The interdisciplinary team must—

(1) Track the results of each kidney transplant center referral;

(2) Monitor the status of any facility patients who are on the transplant wait list; and

(3) Communicate with the transplant center regarding patient transplant status at least annually, and when there is a change in transplant candidate status.

(d) Standard: Patient education and training. The patient care plan must include, as applicable, education and training for patients and family members or caregivers or both, in aspects of the dialysis experience, dialysis management, infection prevention and personal care, home dialysis and self-care, quality of life, rehabilitation, transplantation, and the benefits and risks of various vascular access types.

[73 FR 20475, Apr. 15, 2008, as amended at 89 FR 89213, Nov. 12, 2024]

§ 494.100 Condition: Care at home.

A dialysis facility that is certified to provide services to home patients must ensure through its interdisciplinary team, that home dialysis services are at least equivalent to those provided to in-facility patients and meet all applicable conditions of this part.

(a) Standard: Training. The interdisciplinary team must oversee training of the home dialysis patient, the designated caregiver, or self-dialysis patient before the initiation of home dialysis or self-dialysis (as defined in § 494.10) and when the home dialysis caregiver or home dialysis modality changes. The training must—

(1) Be provided by a dialysis facility that is approved to provide home dialysis services;

(2) Be conducted by a registered nurse who meets the requirements of § 494.140(b)(2); and

(3) Be conducted for each home dialysis patient and address the specific needs of the patient, in the following areas:

(i) The nature and management of their kidney failure.

(ii) The full range of techniques associated with the treatment modality selected, including effective use of dialysis supplies and equipment in achieving and delivering the physician's prescription of Kt/V or URR, and effective administration of erythropoiesis-stimulating agent(s) (if prescribed) to achieve and maintain a target level hemoglobin or hematocrit as written in patient's plan of care.

(iii) How to detect, report, and manage potential dialysis complications, including water treatment problems.

(iv) Availability of support resources and how to access and use resources.

(v) How to self-monitor health status and record and report health status information.

(vi) How to handle medical and non-medical emergencies.

(vii) Infection control precautions.

(viii) Proper waste storage and disposal procedures.

(b) Standard: Home dialysis monitoring. The dialysis facility must—

(1) Document in the medical record that the patient, the caregiver, or both received and demonstrated adequate comprehension of the training;

(2) Retrieve and review complete self-monitoring data and other information from self-care patients or their designated caregiver(s) at least every 2 months; and

(3) Maintain this information in the patient's medical record.

(c) Standard: Support services. (1) A home dialysis facility must furnish (either directly, under agreement, or by arrangement with another ESRD facility) home dialysis support services regardless of whether dialysis supplies are provided by the dialysis facility or a durable medical equipment company. Services include, but are not limited to, the following:

(i) Periodic monitoring of the patient's home adaptation, including visits to the patient's home by facility personnel in accordance with the patient's plan of care.

(ii) Coordination of the home patient's care by a member of the dialysis facility's interdisciplinary team.

(iii) Development and periodic review of the patient's individualized comprehensive plan of care that specifies the services necessary to address the patient's needs and meets the measurable and expected outcomes as specified in § 494.90 of this part.

(iv) Patient consultation with members of the interdisciplinary team, as needed.

(v) Monitoring of the quality of water and dialysate used by home hemodialysis patients including conducting an onsite evaluation and testing of the water and dialysate system in accordance with—

(A) The recommendations specified in the manufacturers' instructions; and

(B) The system's FDA-approved labeling for preconfigured systems designed, tested, and validated to meet AAMI quality (which includes standards for chemical and chlorine/chloramine testing) water and dialysate. The facility must meet testing and other requirements of AAMI RD52:2004. In addition, bacteriological and endotoxin testing must be performed on a quarterly, or more frequent basis as needed, to ensure that the water and dialysate are within the AAMI limits.

(C) The dialysis facility must correct any water and dialysate quality problem for the home hemodialysis patient, and if necessary, arrange for backup dialysis until the problem is corrected if—

(1) Analysis of the water and dialysate quality indicates contamination; or

(2) The home hemodialysis patient demonstrates clinical symptoms associated with water and dialysate contamination.

(vi) Purchasing, leasing, renting, delivering, installing, repairing and maintaining medically necessary home dialysis supplies and equipment (including supportive equipment) prescribed by the attending physician.

(vii) Identifying a plan and arranging for emergency back-up dialysis services when needed.

(2) The dialysis facility must maintain a recordkeeping system that ensures continuity of care and patient privacy. This includes items and services furnished by durable medical equipment (DME) suppliers referred to in § 414.330(a)(2) of this chapter.

[73 FR 20475, Apr. 15, 2008, as amended at 89 FR 89213, Nov. 12, 2024]

§ 494.110 Condition: Quality assessment and performance improvement.

The dialysis facility must develop, implement, maintain, and evaluate an effective, data-driven, quality assessment and performance improvement program with participation by the professional members of the interdisciplinary team. The program must reflect the complexity of the dialysis facility's organization and services (including those services provided under arrangement), and must focus on indicators related to improved health outcomes and the prevention and reduction of medical errors. The dialysis facility must maintain and demonstrate evidence of its quality improvement and performance improvement program for review by CMS.

(a) Standard: Program scope. (1) The program must include, but not be limited to, an ongoing program that achieves measurable improvement in health outcomes and reduction of medical errors by using indicators or performance measures associated with improved health outcomes and with the identification and reduction of medical errors.

(2) The dialysis facility must measure, analyze, and track quality indicators or other aspects of performance that the facility adopts or develops that reflect processes of care and facility operations. These performance components must influence or relate to the desired outcomes or be the outcomes themselves. The program must include, but not be limited to, the following:

(i) Adequacy of dialysis.

(ii) Nutritional status.

(iii) Mineral metabolism and renal bone disease.

(iv) Anemia management.

(v) Vascular access.

(vi) Medical injuries and medical errors identification.

(vii) Hemodialyzer reuse program, if the facility reuses hemodialyzers.

(viii) Patient satisfaction and grievances.

(ix) Infection control; with respect to this component the facility must—

(A) Analyze and document the incidence of infection to identify trends and establish baseline information on infection incidence;

(B) Develop recommendations and action plans to minimize infection transmission, promote immunization; and

(C) Take actions to reduce future incidents.

(b) Standard: Monitoring performance improvement. The dialysis facility must continuously monitor its performance, take actions that result in performance improvements, and track performance to ensure that improvements are sustained over time.

(c) Standard: Prioritizing improvement activities. The dialysis facility must set priorities for performance improvement, considering prevalence and severity of identified problems and giving priority to improvement activities that affect clinical outcomes or patient safety. The facility must immediately correct any identified problems that threaten the health and safety of patients.

§ 494.120 Condition: Special purpose renal dialysis facilities.

A special purpose renal dialysis facility is approved to furnish dialysis on a short-term basis at special locations. Special purpose dialysis facilities are divided into two categories: vacation camps (locations that serve patients with kidney failure while the patients are in a temporary residence) and facilities established to serve patients with kidney failure under emergency circumstances.

(a) Standard: Approval period. The period of approval for a special purpose renal dialysis facility may not exceed 8 months in any 12-month period.

(b) Standard: Service limitation. Special purpose renal dialysis facilities are limited to areas in which there are limited dialysis resources or access-to-care problems due to an emergency circumstance. A special purpose renal dialysis facility may provide services only to those patients who would otherwise be unable to obtain treatments in the geographic locality served by the facility.

(c) Standard: Scope of requirements—(1) Scope of requirements for a vacation camp. A vacation camp that provides dialysis services must be operated under the direction of a certified renal dialysis facility that assumes full responsibility for the care provided to patients. A special purpose renal dialysis facility established as a vacation camp must comply with the following conditions for coverage—

(i) Infection control at § 494.30;

(ii) Water and dialysate quality at § 494.40 (except as provided in paragraph (c)(1)(viii) of this section);

(iii) Reuse of hemodialyzers at § 494.50 (if reuse is performed);

(iv) Patients' rights and posting of patients' rights at § 494.70(a) and § 494.70(c);

(v) Laboratory services at § 494.130;

(vi) Medical director responsibilities for staff education and patient care policies and procedures at § 494.150(c) and § 494.150(d);

(vii) Medical records at § 494.170; and

(viii) When portable home water treatment systems are used in place of a central water treatment system, the facility may adhere to § 494.100(c)(1)(v) (home monitoring of water quality), in place of § 494.40 (water quality).

(2) Scope of requirements for an emergency circumstance facility. A special purpose renal dialysis facility set up due to emergency circumstances may provide services only to those patients who would otherwise be unable to obtain treatments in the geographic areas served by the facility. These types of special purpose dialysis facilities must comply with paragraph (c)(1) of this section and addition to complying with the following conditions:

(i) Section 494.20 (compliance with Federal, State, and local laws and regulations).

(ii) Section 494.60 (physical environment).

(iii) Section 494.70(a) through section 494.70(c) (patient rights).

(iv) Section 494.140 (personnel qualifications).

(v) Section 494.150 (medical director).

(vi) Section 494.180 (governance).

(d) Standard: Physician contact. The facility must contact the patient's physician, if possible, prior to initiating dialysis in the special purpose renal dialysis facility, to discuss the patient's current condition to assure care provided in the special purpose renal dialysis facility is consistent with the patient plan of care (described in § 494.90).

(e) Standard: Documentation. All patient care provided in the special purpose facility is documented and forwarded to the patient's usual dialysis facility, if possible, within 30 days of the last scheduled treatment in the special purpose renal dialysis facility.

[73 FR 20475, Apr. 15, 2008, as amended at 89 FR 89213, Nov. 12, 2024]

§ 494.130 Condition: Laboratory services.

The dialysis facility must provide, or make available, laboratory services (other than tissue pathology and histocompatibility) to meet the needs of the patient. Any laboratory services, including tissue pathology and histocompatibility must be furnished by or obtained from, a facility that meets the requirements for laboratory services specified in part 493 of this chapter.

[89 FR 89213, Nov. 12, 2024]

§ 494.140 Condition: Personnel qualifications.

All dialysis facility staff must meet the applicable scope of practice board and licensure requirements in effect in the State in which they are employed. The dialysis facility's staff (employee or contractor) must meet the personnel qualifications and demonstrated competencies necessary to serve collectively the comprehensive needs of the patients. The dialysis facility's staff must have the ability to demonstrate and sustain the skills needed to perform the specific duties of their positions.

(a) Standard: Medical director. (1) The medical director must be a board-certified physician in internal medicine or pediatrics by a professional board who has completed a board-approved training program in nephrology and has at least 12-months of experience providing care to patients receiving dialysis.

(2) If a physician, as specified in paragraph (a)(1) of this section, is not available to direct a certified dialysis facility another physician may direct the facility, subject to the approval of the Secretary.

(b) Standard: Nursing services—(1) Nurse manager. The facility must have a nurse manager responsible for nursing services in the facility who must—

(i) Be a full time employee of the facility;

(ii) Be a registered nurse; and

(iii) Have at least 12 months of experience in clinical nursing, and an additional 6 months of experience in providing nursing care to patients on maintenance dialysis.

(2) Self-care and home dialysis training nurse. The nurse responsible for self-care and/or home care training must—

(i) Be a registered nurse; and

(ii) Have at least 12 months experience in providing nursing care and an additional 3 months of experience in the specific modality for which the nurse will provide self-care training.

(3) Charge nurse. The charge nurse responsible for each shift must—

(i) Be a registered nurse, a licensed practical nurse, or vocational nurse who meets the practice requirements in the State in which he or she is employed;

(ii) Have at least 12 months experience in providing nursing care, including 3 months of experience in providing nursing care to patients on maintenance dialysis; and

(iii) If such nurse is a licensed practical nurse or licensed vocational nurse, work under the supervision of a registered nurse in accordance with state nursing practice act provisions.

(4) Staff nurse. Each nurse who provides care and treatment to patients must be either a registered nurse or a practical nurse who meets the practice requirements in the State in which he or she is employed.

(c) Standard: Dietitian. The facility must have a dietitian who must—

(1) Be a registered dietitian with the Commission on Dietetic Registration; and

(2) Have a minimum of 1 year professional work experience in clinical nutrition as a registered dietitian.

(d) Standard: Social worker. The facility must have a social worker who—

(1) Holds a master's degree in social work with a specialization in clinical practice from a school of social work accredited by the Council on Social Work Education; or

(2) Has served at least 2 years as a social worker, 1 year of which was in a dialysis unit or transplantation program prior to September 1, 1976, and has established a consultative relationship with a social worker who qualifies under § 494.140(d)(1).

(e) Standard: Patient care dialysis technicians. Patient care dialysis technicians must—

(1) Meet all applicable State requirements for education, training, credentialing, competency, standards of practice, certification, and licensure in the State in which he or she is employed as a dialysis technician; and

(2) Have a high school diploma or equivalency;

(3) Have completed a training program that is approved by the medical director and governing body, under the direction of a registered nurse, focused on the operation of kidney dialysis equipment and machines, providing direct patient care, and communication and interpersonal skills, including patient sensitivity training and care of difficult patients. The training program must include the following subjects:

(i) Principles of dialysis.

(ii) Care of patients with kidney failure, including interpersonal skills.

(iii) Dialysis procedures and documentation, including initiation, proper cannulation techniques, monitoring, and termination of dialysis.

(iv) Possible complications of dialysis.

(v) Water treatment and dialysate preparation.

(vi) Infection control.

(vii) Safety.

(viii) Dialyzer reprocessing, if applicable.

(4) Be certified under a State certification program or a national commercially available certification program, as follows—

(i) For newly employed patient care technicians, within 18 months of being hired as a dialysis patient care technician; or

(ii) For patient care technicians employed on October 14, 2008, within 18 months after such date.

(f) Standard: Water treatment system technicians. Technicians who perform monitoring and testing of the water treatment system must complete a training program that has been approved by the medical director and the governing body.

§ 494.150 Condition: Responsibilities of the medical director.

The dialysis facility must have a medical director who meets the qualifications of § 494.140(a) to be responsible for the delivery of patient care and outcomes in the facility. The medical director is accountable to the governing body for the quality of medical care provided to patients. Medical director responsibilities include, but are not limited to, the following:

(a) Quality assessment and performance improvement program.

(b) Staff education, training, and performance.

(c) Policies and procedures. The medical director must—

(1) Participate in the development, periodic review and approval of a “patient care policies and procedures manual” for the facility; and

(2) Ensure that—

(i) All policies and procedures relative to patient admissions, patient care, infection control, and safety are adhered to by all individuals who treat patients in the facility, including attending physicians and nonphysician providers; and

(ii) The interdisciplinary team adheres to the discharge and transfer policies and procedures specified in § 494.180(f).

§ 494.160 [Reserved]

§ 494.170 Condition: Medical records.

The dialysis facility must maintain complete, accurate, and accessible records on all patients, including home patients who elect to receive dialysis supplies and equipment from a supplier that is not a provider of dialysis services and all other home dialysis patients whose care is under the supervision of the facility.

(a) Standard: Protection of the patient's record. The dialysis facility must—

(1) Safeguard patient records against loss, destruction, or unauthorized use; and

(2) Keep confidential all information contained in the patient's record, except when release is authorized pursuant to one of the following:

(i) The transfer of the patient to another facility.

(ii) Certain exceptions provided for in the law.

(iii) Provisions allowed under third party payment contracts.

(iv) Approval by the patient.

(v) Inspection by authorized agents of the Secretary, as required for the administration of the dialysis program.

(3) Obtaining written authorization from the patient or legal representative before releasing information that is not authorized by law.

(b) Standard: Completion of patient records and centralization of clinical information. (1) Current medical records and those of discharged patients must be completed promptly.

(2) All clinical information pertaining to a patient must be centralized in the patient's record, including whether the patient has executed an advance directive. These records must be maintained in a manner such that each member of the interdisciplinary team has access to current information regarding the patient's condition and prescribed treatment.

(3) The dialysis facility must complete, maintain, and monitor home care patients' records, including the records of patients who receive supplies and equipment from a durable medical equipment supplier.

(c) Standard: Record retention and preservation. In accordance with 45 CFR § 164.530(j)(2), all patient records must be retained for 6 years from the date of the patient's discharge, transfer, or death.

(d) Standard: Transfer of patient record information. When a dialysis patient is transferred, the dialysis facility releasing the patient must send all requested medical record information to the receiving facility within 1 working day of the transfer.

[73 FR 20475, Apr. 15, 2008, as amended at 89 FR 89213, Nov. 12, 2024]

§ 494.180 Condition: Governance.

The ESRD facility is under the control of an identifiable governing body, or designated person(s) with full legal authority and responsibility for the governance and operation of the facility. The governing body adopts and enforces rules and regulations relative to its own governance and to the health care and safety of patients, to the protection of the patients' personal and property rights, and to the general operation of the facility.

(a) Standard: Designating a chief executive officer or administrator. The governing body or designated person responsible must appoint an individual who serves as the dialysis facility's chief executive officer or administrator who exercises responsibility for the management of the facility and the provision of all dialysis services, including, but not limited to—

(1) Staff appointments;

(2) Fiscal operations;

(3) The relationship with the ESRD networks; and

(4) Allocation of necessary staff and other resources for the facility's quality assessment and performance improvement program as described in § 494.110.

(b) Standard: Adequate number of qualified and trained staff. The governing body or designated person responsible must ensure that—

(1) An adequate number of qualified personnel are present whenever patients are undergoing dialysis so that the patient/staff ratio is appropriate to the level of dialysis care given and meets the needs of patients; and the registered nurse, social worker and dietitian members of the interdisciplinary team are available to meet patient clinical needs;

(2) A registered nurse, who is responsible for the nursing care provided, is present in the facility at all times that in-center dialysis patients are being treated;

(3) All staff, including the medical director, have appropriate orientation to the facility and their work responsibilities; and

(4) All employees have an opportunity for continuing education and related development activities.

(c) Standard: Medical staff appointments. The governing body—

(1) Is responsible for all medical staff appointments and credentialing in accordance with State law, including attending physicians, physician assistants, nurse practitioners, and clinical nurse specialists; and

(2) Ensures that all medical staff who provide care in the facility are informed of all facility policies and procedures, including the facility's quality assessment and performance improvement program specified in § 494.110.

(3) Communicates expectations to the medical staff regarding staff participation in improving the quality of medical care provided to facility patients.

(d) Standard: Furnishing services. The governing body is responsible for ensuring that the dialysis facility furnishes services directly on its main premises or on other premises that are contiguous with the main premises and are under the direction of the same professional staff and governing body as the main premises (except for services provided under § 494.100).

(e) Standard: Internal grievance process. The facility's internal grievance process must be implemented so that the patient may file an oral or written grievance with the facility without reprisal or denial of services. The grievance process must include:

(1) A clearly explained procedure for the submission of grievances.

(2) Timeframes for reviewing the grievance.

(3) A description of how the patient or the patient's designated representative will be informed of steps taken to resolve the grievance.

(f) Standard: Involuntary discharge and transfer policies and procedures. The governing body must ensure that all staff follow the facility's patient discharge and transfer policies and procedures. The medical director ensures that no patient is discharged or transferred from the facility unless—

(1) The patient or payer no longer reimburses the facility for the ordered services;

(2) The facility ceases to operate;

(3) The transfer is necessary for the patient's welfare because the facility can no longer meet the patient's documented medical needs; or

(4) The facility has reassessed the patient and determined that the patient's behavior is disruptive and abusive to the extent that the delivery of care to the patient or the ability of the facility to operate effectively is seriously impaired, in which case the medical director ensures that the patient's interdisciplinary team—

(i) Documents the reassessments, ongoing problem(s), and efforts made to resolve the problem(s), and enters this documentation into the patient's medical record;

(ii) Provides the patient and the local ESRD Network with a 30-day notice of the planned discharge;

(iii) Obtains a written physician's order that must be signed by both the medical director and the patient's attending physician concurring with the patient's discharge or transfer from the facility;

(iv) Contacts another facility, attempts to place the patient there, and documents that effort; and

(v) Notifies the State survey agency of the involuntary transfer or discharge.

(5) In the case of immediate severe threats to the health and safety of others, the facility may utilize an abbreviated involuntary discharge procedure.

(g) Standard: Emergency coverage. (1) The governing body is responsible for ensuring that the dialysis facility provides patients and staff with written instructions for obtaining emergency medical care.

(2) The dialysis facility must have available at the nursing/monitoring station, a roster with the names of physicians to be called for emergencies, when they can be called, and how they can be reached.

(3) The dialysis facility must have an agreement with a hospital that can provide inpatient care, routine and emergency dialysis and other hospital services, and emergency medical care which is available 24 hours a day, 7 days a week. The agreement must:

(i) Ensure that hospital services are available promptly to the dialysis facility's patients when needed.

(ii) Include reasonable assurances that patients from the dialysis facility are accepted and treated in emergencies.

(h) Standard: Furnishing data and information for ESRD program administration. Effective February 1, 2009, the dialysis facility must furnish data and information to CMS and at intervals as specified by the Secretary. This information is used in a national ESRD information system and in compilations relevant to program administration, including claims processing and reimbursement, quality improvement, and performance assessment. The data and information must—

(1) Be submitted at the intervals specified by the Secretary;

(2) Be submitted electronically in the format specified by the Secretary;

(3) Include, but not be limited to—

(i) Cost reports;

(ii) ESRD administrative forms;

(iii) Patient survival information; and

(iv) Existing ESRD clinical performance measures, and any future clinical performance standards developed in accordance with a voluntary consensus standards process identified by the Secretary.

(i) Standard: Relationship with the ESRD network. The governing body receives and acts upon recommendations from the ESRD network. The dialysis facility must cooperate with the ESRD network designated for its geographic area, in fulfilling the terms of the Network's current statement of work. Each facility must participate in ESRD network activities and pursue network goals.

(j) Standard: Disclosure of ownership. In accordance with § 420.200 through § 420.206 of this chapter, the governing body must report ownership interests of 5 percent or more to its State survey agency.

(k) Standard: Disclosure to Insurers of Payments of Premiums. (1) Facilities that make payments of premiums for individual market health plans (in any amount), whether directly, through a parent organization (such as a dialysis corporation), or through another entity (including by providing contributions to entities that make such payments) must—

(i) Disclose to the applicable issuer each policy for which a third party payment described in this paragraph (k) will be made, and

(ii) Obtain assurance from the issuer that the issuer will accept such payments for the duration of the plan year. If such assurances are not provided, the facility shall not make payments of premiums and shall take reasonable steps to ensure such payments are not made by the facility or by third parties to which the facility contributes as described in this paragraph (k).

(2) If a facility is aware that a patient is not eligible for Medicaid and is not eligible to enroll in Medicare Part A and/or Part B except during the General Enrollment Period, and the facility is aware that the patient intends to enroll in Medicare Part A and/or Part B during that period, the standards under this paragraph (k) will not apply with respect to payments for that patient until July 1, 2017.

[73 FR 20475, Apr. 15, 2008, as amended at 81 FR 90228, Dec. 14, 2016]

§ 495.2 Basis and purpose.

This part implements the following:

(a) Section 1848(o) of the Act by establishing payment incentives under Medicare Part B for eligible professionals who adopt and meaningfully use certified electronic health record (EHR) technology.

(b) Section 1853(1) of the Act to provide incentive payments to Medicare Advantage organizations for certain affiliated professionals who meaningfully use certified EHR technology and meet certain other requirements.

(c) Section 1886(n) of the Act by establishing incentives payments for the meaningful use of certified EHR technology by subsection (d) hospitals, as defined under section 1886(d)(1)(B) of the Act, participating in the Medicare FFS program.

(d) Section 1814(l) of the Act to provide an incentive payment to critical access hospitals that meaningfully use certified EHR technology based on the hospitals' reasonable costs.

(e) Section 1853(m) of the Act to provide incentive payments to MA organizations for certain affiliated hospitals that meaningfully use certified EHR technology.

(f) Sections 1903(a)(3)(F) and 1903(t) of the Act to provide 100 percent Federal financial participation (FFP) to States for incentive payments to certain eligible providers participating in the Medicaid program to purchase, implement, and operate (including support services and training for staff) certified EHR technology and 90 percent FFP for State administrative expenses related to such incentive payments.

(g) Sections 1848(a)(7), 1853(l)(4), 1886(b)(3)(B)(ix)(I), and 1853(m)(4) of the Act, providing for payment reductions for inpatient services furnished on or after October 1, 2014 to Medicare beneficiaries by hospitals that are not meaningful users of certified EHR technology, and for covered professional services furnished on or after January 1, 2015 to Medicare beneficiaries by certain professionals who are not meaningful users of certified EHR technology.

§ 495.4 Definitions.

In this part, unless otherwise indicated—

Ambulatory surgical center-based EP means an EP who furnishes 75 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an ASC setting in the calendar year that is 2 years before the payment adjustment year.

API stands for application programming interface.

Certified electronic health record technology (CEHRT) means the following:

(1) For any Federal fiscal year or calendar year before 2018, EHR technology (which could include multiple technologies) certified under the ONC Health IT Certification Program that meets one of the following:

(i) The 2014 Edition Base EHR definition (as defined at 45 CFR 170.102) and has been certified to the certification criteria that are necessary to be a Meaningful EHR User (as defined in this section), including the applicable measure calculation certification criterion at 45 CFR 170.314(g)(1) or (2) for all certification criteria that support a meaningful use objective with a percentage-based measure.

(ii) Certification to—

(A) The following certification criteria:

(1) CPOE at—

(i) 45 CFR 170.314(a)(1), (18), (19) or (20); or

(ii) 45 CFR 170.315(a)(1), (2) or (3).

(2)(i) Record demographics at 45 CFR 170.314(a)(3); or

(ii) 45 CFR 170.315(a)(5).

(3)(i) Problem list at 45 CFR 170.314(a)(5); or

(ii) 45 CFR 170.315(a)(6).

(4)(i) Medication list at 45 CFR 170.314(a)(6); or

(ii) 45 CFR 170.315(a)(7).

(5)(i) Medication allergy list 45 CFR 170.314(a)(7); or

(ii) 45 CFR 170.315(a)(8).

(6)(i) Clinical decision support at 45 CFR 170.314(a)(8); or

(ii) 45 CFR 170.315(a)(9).

(7) Health information exchange at transitions of care at one of the following:

(i) 45 CFR 170.314(b)(1) and (2).

(ii) 45 CFR 170.314(b)(1), (b)(2), and (h)(1).

(iii) 45 CFR 170.314(b)(1), (b)(2), and (b)(8).

(iv) 45 CFR 170.314(b)(1), (b)(2), (b)(8), and (h)(1).

(v) 45 CFR 170.314(b)(8) and (h)(1).

(vi) 45 CFR 170.314(b)(1), (b)(2), and 170.315(h)(2).

(vii) 45 CFR 170.314(b)(1), (b)(2), (h)(1), and 170.315(h)(2).

(viii) 45 CFR 170.314(b)(1), (b)(2), (b)(8), and 170.315(h)(2).

(ix) 45 CFR 170.314(b)(1), (b)(2), (b)(8), (h)(1), and 170.315(h)(2).

(x) 45 CFR 170.314(b)(8), (h)(1), and 170.315(h)(2).

(xi) 45 CFR 170.314(b)(1), (b)(2), and 170.315(b)(1).

(xii) 45 CFR 170.314(b)(1), (b)(2), (h)(1), and 170.315(b)(1).

(xiii) 45 CFR 170.314(b)(1), (b)(2), (b)(8), and 170.315(b)(1).

(xiv) 45 CFR 170.314(b)(1), (b)(2), (b)(8), (h)(1), and 170.315(b)(1).

(xv) 45 CFR 170.314(b)(8), (h)(1), and 170.315(b)(1).

(xvi) 45 CFR 170.314(b)(1), (b)(2), (b)(8), (h)(1), 170.315(b)(1), and 170.315(h)(1).

(xvii) 45 CFR 170.314(b)(1), (b)(2), (b)(8), (h)(1), 170.315(b)(1), and 170.315(h)(2).

(xviii) 45 CFR 170.314(h)(1) and 170.315(b)(1).

(xix) 45 CFR 170.315(b)(1) and (h)(1).

(xx) 45 CFR 170.315(b)(1) and (h)(2).

(xxi) 45 CFR 170.315(b)(1), (h)(1), and (h)(2); and

(B) Clinical quality measures at—

(1) 45 CFR 170.314(c)(1) or 170.315(c)(1);

(2) 45 CFR 170.314(c)(2) or 170.315(c)(2);

(3) Clinical quality measure certification criteria that support the calculation and reporting of clinical quality measures at 45 CFR 170.314(c)(2) and (3); or 45 CFR 170.315(c)(3)(i) and (ii); and can be electronically accepted by CMS if the provider is submitting electronically.

(C) Privacy and security at—

(1) 45 CFR 170.314(d)(1) or 170.315(d)(1);

(2) 45 CFR 170.314(d)(2) or 170.315(d)(2);

(3) 45 CFR 170.314(d)(3) or 170.315(d)(3);

(4) 45 CFR 170.314(d)(4) or 170.315(d)(4);

(5) 45 CFR 170.314(d)(5) or 170.315(d)(5);

(6) 45 CFR 170.314(d)(6) or 170.315(d)(6);

(7) 45 CFR 170.314(d)(7) or 170.315(d)(7);

(8) 45 CFR 170.314(d)(8) or 170.315(d)(8); and

(D) The certification criteria that are necessary to be a Meaningful EHR User (as defined in this section), including the applicable measure calculation certification criterion at 45 CFR 170.314(g)(1) or (2) or 45 CFR 170.315(g)(1) or (2) for all certification criteria that support a meaningful use objective with a percentage-based measure.

(iii) The definition for 2019 and subsequent years specified in paragraph (2) of this definition.

(2) For 2019 and subsequent years, EHR technology (which could include multiple technologies) certified under the ONC Health IT Certification Program that meets the 2015 Edition Base EHR definition, or subsequent Base EHR definition (as defined at 45 CFR 170.102) and has been certified to the ONC health IT certification criteria, as adopted and updated in 45 CFR 170.315-

(i) For 2019 through 2026, at 45 CFR 170.315(a)(12) (family health history) and 45 CFR 170.315(e)(3) (patient health information capture); and

(ii) Necessary to be a Meaningful EHR User (as defined in this section), including the following:

(A) For 2019 through 2026, the applicable measure calculation certification criterion at 45 CFR 170.315(g)(1) or (2) for all certification criteria that support a meaningful use objective with a percentage-based measure.

(B) Clinical quality measure certification criteria that support the calculation and reporting of clinical quality measures at 45 CFR 170.315(c)(2) and (c)(3)(i) and (ii), and can be electronically accepted by CMS.

Critical access hospital (CAH) means a facility that has been certified as a critical access hospital under section 1820(e) of the Act and for which Medicare payment is made under section 1814(l) of the Act for inpatient services and under section 1834(g) of the Act for outpatient services.

EHR reporting period. Except with respect to payment adjustment years, EHR reporting period means either of the following:

(1) For an eligible EP—

(i) The following are applicable before 2015:

(A) For the payment year in which the EP is first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within the calendar year;

(B) Except as specified in paragraphs (1)(iii) and (1)(iv) of this definition, for the subsequent payment years following the payment year in which the EP first successfully demonstrates he or she is a meaningful EHR user, the calendar year.

(C) For an EP seeking to demonstrate he or she is a meaningful EHR user for the Medicare EHR incentive program for CY 2014, any of the following 3-month periods:

(1) January 1, 2014 through March 31, 2014.

(2) April 1, 2014 through June 30, 2014.

(3) July 1, 2014 through September 30, 2014.

(4) October 1, 2014 through December 31, 2014.

(D) For an EP seeking to demonstrate he or she is a meaningful EHR user for the Medicaid EHR incentive program for CY 2014 any continuous 90-day period within CY 2014.

(ii) The following are applicable for 2015, 2016, 2017, and 2018:

(A) For the CY 2015 payment year, any continuous 90-day period within CY 2015.

(B) For the CY 2016 payment year:

(1) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2016.

(2) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2016.

(C) For the CY 2017 payment year under the Medicaid EHR Incentive Program:

(1) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2017.

(2) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2017.

(3) For the EP demonstrating the Stage 3 objectives and measures at § 495.24, any continuous 90-day period within CY 2017.

(D) For the CY 2018 payment year under the Medicaid EHR Incentive Program:

(1) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2018.

(2) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2018.

(iii) For the CY 2019 payment year under the Medicaid Promoting Interoperability Program:

(A) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2019.

(B) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2019.

(iv) For the CY 2020 payment year under the Medicaid Promoting Interoperability Program:

(A) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2020.

(B) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2020.

(v) Under the Medicaid Promoting Interoperability Program, for the CY 2021 payment year:

(A) For the EP first demonstrating he or she is a meaningful EHR user, any continuous 90-day period within CY 2021 that ends before October 31, 2021, or that ends before an earlier date in CY 2021 that is specified by the state and approved by CMS in the State Medicaid HIT plan described at § 495.332.

(B) For the EP who has successfully demonstrated he or she is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2021 that ends before October 31, 2021, or that ends before an earlier date in CY 2021 that is specified by the state and approved by CMS in the State Medicaid HIT plan described at § 495.332.

(2) For an eligible hospital or CAH—

(i) The following are applicable before 2015:

(A) For the payment year in which the eligible hospital or CAH is first demonstrating it is a meaningful EHR user, any continuous 90-day period within the Federal fiscal year;

(B) Except as specified in paragraph (2)(iii) of this definition, for the subsequent payment years following the payment year in which the eligible hospital or CAH first successfully demonstrates it is a meaningful EHR user, the Federal fiscal year.

(C) For an eligible hospital or CAH seeking to demonstrate it is a meaningful EHR user for FY 2014, any of the following 3-month periods:

(1) October 1, 2013 through December 31, 2013.

(2) January 1, 2014 through March 31, 2014.

(3) April 1, 2014 through June 30, 2014.

(4) July 1, 2014 through September 30, 2014.

(ii) The following are applicable for 2015, 2016, 2017, and 2018:

(A) For the FY 2015 payment year, any continuous 90-day period within the period beginning on October 1, 2014 and ending on December 31, 2015.

(B) For the FY 2016 payment year as follows:

(1) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2016.

(2) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2016.

(C) For the FY 2017 payment year as follows:

(1) Under the Medicaid EHR Incentive Program:

(i) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2017.

(ii) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2017.

(iii) For the eligible hospital or CAH demonstrating the Stage 3 objectives and measures at § 495.24, any continuous 90-day period within CY 2017.

(2) Under the Medicare EHR Incentive Program, for a Puerto Rico eligible hospital, any continuous 14-day period within CY 2017.

(D) For the FY 2018 payment year as follows:

(1) Under the Medicaid Promoting Interoperability Program:

(i) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2018.

(ii) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2018.

(2) Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2018.

(iii) For the FY 2019 payment year as follows:

(A) Under the Medicaid Promoting Interoperability Program:

(1) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2019.

(2) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2019.

(B) Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2019.

(iv) For the FY 2020 payment year as follows:

(A) Under the Medicaid Promoting Interoperability Program:

(1) For the eligible hospital or CAH first demonstrating it is a meaningful EHR user, any continuous 90-day period within CY 2020.

(2) For the eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year, any continuous 90-day period within CY 2020.

(B) Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2020.

(v) For the FY 2021 payment year as follows: Under the Medicare Promoting Interoperability Program, for a Puerto Rico eligible hospital, any continuous 90-day period within CY 2021.

EHR reporting period for a payment adjustment year. For a payment adjustment year, the EHR reporting period means the following:

(1) For an EP—

(i) The following are applicable before 2015:

(A)(1) Except as provided in paragraphs (1)(i)(A)(2), (1)(i)(B), and (1)(i)(C) of this definition, the calendar year that is 2 years before the payment adjustment year.

(2) The special EHR reporting period for CY 2014 (specified in paragraph (1)(i)(C) of this definition, as applicable) of the definition of “EHR Reporting Period” that occurs within the calendar year that is 2 years before the payment adjustment year and is only for EHR reporting periods in CY 2014.

(B) If an EP is demonstrating he or she is a meaningful EHR user for the first time in the calendar year, that is 2 years before the payment adjustment year, then any continuous 90-day period within such (2 years prior) calendar year.

(C)(1) If in the calendar year that is 2 years before the payment adjustment year and in all prior calendar years, the EP has not successfully demonstrated he or she is a meaningful EHR user, then any continuous 90-day period that both begins in the calendar year 1 year before the payment adjustment year and ends at least 3 months before the end of such prior year.

(2) Under this exception, the provider must successfully register for and attest to meaningful use no later than the date October 1 of the year before the payment adjustment year.

(ii) The following are applicable for 2015, 2016, and 2017:

(A) In 2015 as follows:

(1) If an EP has not successfully demonstrated he or she is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2015 and applies for the CY 2016 and 2017 payment adjustment years.

(2) If in a prior year an EP has successfully demonstrated he or she is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2015 and applies for the CY 2017 payment adjustment year.

(B) In 2016 as follows:

(1) If an EP has not successfully demonstrated he or she is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2016 and applies for the CY 2017 and 2018 payment adjustment years. For the CY 2017 payment adjustment year, the EHR reporting period must end before and the EP must successfully register for and attest to meaningful use no later than October 1, 2016.

(2) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2016 and applies for the FY 2018 payment adjustment year.

(C) In 2017 as follows:

(1) If an EP has not successfully demonstrated he or she is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the CY 2018 payment adjustment year. For the CY 2018 payment adjustment year, the EHR reporting period must end before and the EP must successfully register for and attest to meaningful use no later than October 1, 2017.

(2) [Reserved]

(2) For an eligible hospital—

(i) The following are applicable before 2015:

(A)(1) Except as provided in paragraphs (2)(i)(A)(2), (2)(i)(B), and (2)(i)(C) of this definition, the Federal fiscal year that is 2 years before the payment adjustment year.

(2) The special EHR reporting period for FY 2014 (defined in paragraph (2)(i)(C) of the definition “EHR Reporting Period”) that occurs within the fiscal year that is 2 years before the payment adjustment year and is only for EHR reporting periods in fiscal year 2014.

(B) If an eligible hospital is demonstrating it is a meaningful EHR user for the first time in the Federal fiscal year that is 2 years before the payment adjustment year, then any continuous 90-day period within such (2 years prior) Federal fiscal year.

(C)(1) If in the Federal fiscal year that is 2 years before the payment adjustment year and for all prior Federal fiscal years the eligible hospital has not successfully demonstrated it is a meaningful EHR user, then any continuous 90-day period that both begins in the Federal fiscal year that is 1 year before the payment adjustment year and ends at least 3 months before the end of such prior Federal fiscal year.

(2) Under this exception, the eligible hospital must successfully register for and attest to meaningful use no later than July 1 of the year before the payment adjustment year.

(ii) The following are applicable for 2015, 2016, 2017, and 2018:

(A) In 2015 as follows:

(1) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within the period beginning on October 1, 2014 and ending on December 31, 2015 and applies for the FY 2016 and 2017 payment adjustment years.

(2) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within the period beginning on October 1, 2014 and ending on December 31, 2015 and applies for the FY 2017 payment adjustment year.

(B) In 2016 as follows:

(1) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2016 and 2017 applies for the FY 2017 and 2018 payment adjustment years. For the FY 2017 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2016.

(2) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2016 and applies for the FY 2018 payment adjustment year.

(C) In 2017 as follows:

(1) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the FY 2018 and 2019 payment adjustment years. For the FY 2018 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2017.

(2) If an eligible hospital is demonstrating Stage 3 of meaningful use under § 495.24, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the FY 2019 payment adjustment year.

(3) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the FY 2019 payment adjustment year.

(D) In 2018 as follows:

(1) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2018 and applies for the FY 2019 and 2020 payment adjustment years. For the FY 2019 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2018.

(2) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2018 and applies for the FY 2020 payment adjustment year.

(iii) The following are applicable for 2019:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2020 and FY 2021 payment adjustment years.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2021 payment adjustment year.

(iv) The following are applicable for 2020:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2021 and 2022 payment adjustment years. For the FY 2021 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2020.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2022 payment adjustment year.

(v) The following are applicable for 2021:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2021 and applies for the FY 2022 and 2023 payment adjustment years. For the FY 2022 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2021.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2021 and applies for the FY 2023 payment adjustment year.

(vi) The following are applicable for 2022:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2023 and 2024 payment adjustment years. For the FY 2023 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2022.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2024 payment adjustment year.

(vii) The following are applicable for 2023:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2023 and applies for the FY 2024 and 2025 payment adjustment years. For the FY 2024 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2023.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2023 and applies for the FY 2025 payment adjustment year.

(viii) The following are applicable for 2024:

(A) If an eligible hospital has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 180-day period within CY 2024 and applies for the FY 2025 and 2026 payment adjustment years. For the FY 2025 payment adjustment year, the EHR reporting period must end before and the eligible hospital must successfully register for and attest to meaningful use no later than October 1, 2024.

(B) If in a prior year an eligible hospital has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 180-day period within CY 2024 and applies for the FY 2026 payment adjustment year.

(ix) For an eligible hospital in CY 2025, the EHR reporting period is any continuous 180-day period within CY 2025 and applies for the FY 2027 payment adjustment year.

(x) For an eligible hospital in CY 2026 and subsequent years, the EHR reporting period is any continuous 180-day period within that calendar year and applies for the fiscal year payment adjustment year that is 2 years after the calendar year of the EHR reporting period.

(3) For a CAH—

(i) The following are applicable before 2015:

(A) Except as provided in paragraph (3)(i)(B) of this definition, the Federal fiscal year that is the payment adjustment year.

(B) If the CAH is demonstrating it is a meaningful EHR user for the first time in the payment adjustment year, any continuous 90-day period within the Federal fiscal year that is the payment adjustment year.

(ii) The following are applicable for 2015, 2016, 2017, and 2018:

(A) In 2015 as follows:

(1) The EHR reporting period is any continuous 90-day period within the period beginning on October 1, 2014 and ending on December 31, 2015 and applies for the FY 2015 payment adjustment year.

(2) [Reserved]

(B) In 2016 as follows:

(1) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2016 and applies for the FY 2016 payment adjustment year.

(2) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2016 and applies for the FY 2016 payment adjustment year.

(C) In 2017 as follows:

(1) If the CAH has not successfully demonstrated meaningful EHR use in a prior year the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the FY 2017 payment adjustment year.

(2) If a CAH is demonstrating Stage 3 of meaningful use under § 495.24, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for that begins on the first day of second quarter of the FY 2017 payment adjustment year.

(3) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2017 and applies for the FY 2017 payment adjustment year.

(D) In 2018 as follows:

(1) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2018 and applies for the FY 2018 payment adjustment year.

(2) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2018 and applies for the FY 2018 payment adjustment year.

(iii) The following are applicable for 2019:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2019 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2019 and applies for the FY 2019 payment adjustment year.

(iv) The following are applicable for 2020:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2020 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2020 and applies for the FY 2020 payment adjustment year.

(v) The following are applicable for 2021:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2021 and applies for the FY 2021 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2021 and applies for the FY 2021 payment adjustment year.

(vi) The following are applicable for 2022:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2022 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2022 and applies for the FY 2022 payment adjustment year.

(vii) The following are applicable for 2023:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 90-day period within CY 2023 and applies for the FY 2023 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 90-day period within CY 2023 and applies for the FY 2023 payment adjustment year.

(viii) The following are applicable for 2024:

(A) If a CAH has not successfully demonstrated it is a meaningful EHR user in a prior year, the EHR reporting period is any continuous 180-day period within CY 2024 and applies for the FY 2024 payment adjustment year.

(B) If in a prior year a CAH has successfully demonstrated it is a meaningful EHR user, the EHR reporting period is any continuous 180-day period within CY 2024 and applies for the FY 2024 payment adjustment year.

(ix) For a CAH in CY 2025, the EHR reporting period is any continuous 180-day period within CY 2025 and applies for the FY 2025 payment adjustment year.

(x) For a CAH in CY 2026 and subsequent years, the EHR reporting period is any continuous 180-day period within that calendar year and applies for the fiscal year payment adjustment year for the calendar year of the EHR reporting period.

Eligible hospital means an eligible hospital as defined under § 495.100 or Medicaid eligible hospital under subpart D of this part.

Eligible professional (EP) means an eligible professional as defined under § 495.100 or a Medicaid eligible professional under subpart D of this part.

First, second, third, fourth, fifth, or sixth payment years mean as follows:

(1) The first payment year is: with respect to an EP, the first calendar year for which the EP receives an incentive payment under this part; and with respect to an eligible hospital or CAH, the first FY for which the hospital receives an incentive payment under this part.

(2) The second, third, fourth, fifth, or sixth payment year is:

(i) With respect to a Medicare EP, the second, third, fourth or fifth successive CY immediately following the first payment year; and with respect to a Medicare eligible hospital or CAH, the second, third, or fourth successive Federal FY immediately following the first payment year. (Note: Medicare EPs are not eligible for a sixth payment year and Medicare eligible hospitals are not eligible for a fifth or sixth payment year.)

(ii)(A) With respect to a Medicaid EP, the second, third, fourth, fifth, or sixth CY for which the EP receives an incentive payment under subpart D, regardless of whether the year immediately follows the prior payment year; and

(B) With respect to a Medicaid eligible hospital, for years prior to FY 2017, the second, third, fourth, fifth, or sixth Federal FY for which the hospital receives an incentive payment under subpart D of this part, regardless of whether the year immediately follows the prior payment year. Beginning with FY 2017, payments to Medicaid eligible hospitals must be consecutive, and the hospital is not eligible for an incentive payment under subpart D of this part unless it received such incentive payment for the prior fiscal year.

Hospital-based EP. Unless it meets the requirements of § 495.5, a hospital-based EP means an EP who furnishes 90 percent or more of his or her covered professional services in sites of service identified by the codes used in the HIPAA standard transaction as an inpatient hospital or emergency room setting in the year preceding the payment year, or in the case of a payment adjustment year, in either of the 2 years before the year preceding such payment adjustment year.

(1) For Medicare, this is calculated based on—

(i) The Federal fiscal year preceding the payment year; and

(ii) For the payment adjustments, based on—

(A) The Federal fiscal year 2 years before the payment adjustment year; or

(B) The Federal fiscal year 3 years before the payment adjustment year.

(2) For Medicaid, it is at the State's discretion if the data are gathered on the Federal fiscal year or calendar year preceding the payment year.

(3) For the CY 2013 payment year only, an EP who furnishes services billed by a CAH receiving payment under Method II (as described in § 413.70(b)(3) of this chapter) is considered to be hospital-based if 90 percent or more of his or her covered professional services are furnished in sites of service identified by the codes used in the HIPAA standard transaction as an inpatient hospital or emergency room setting in each of the Federal fiscal years 2012 and 2013.

Meaningful EHR user means all of the following:

(1) Subject to paragraphs (3) and (4) of this definition, an eligible professional, eligible hospital or CAH that, for an EHR reporting period for a payment year or payment adjustment year—

(i) Demonstrates in accordance with § 495.40 meaningful use of certified EHR technology by meeting the applicable objectives and associated measures under §§ 495.20, 495.22, 495.24;

(ii) Does not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of CEHRT;

(iii) Engages in activities related to supporting providers with the performance of CEHRT; and

(iv) Successfully reports the clinical quality measures selected by CMS to CMS or the States, as applicable, in the form and manner specified by CMS or the States, as applicable.

(2)(i) Except as specified in paragraph (2)(ii) of this definition, a Medicaid EP or Medicaid eligible hospital, that meets the requirements of paragraph (1) of this definition and any additional criteria for meaningful use imposed by the State and approved by CMS under §§ 495.316 and 495.332.

(ii) An eligible hospital or CAH is deemed to be a meaningful EHR user for purposes of receiving an incentive payment under subpart D of this part, if the hospital participates in both the Medicare and Medicaid EHR incentive programs, and the hospital meets the requirements of paragraph (1) of this definition.

(3) To be considered a meaningful EHR user, at least 50 percent of an EP's patient encounters during an EHR reporting period for a payment year (or, in the case of a payment adjustment year, during an applicable EHR reporting period for such payment adjustment year) must occur at a practice/location or practices/locations equipped with certified EHR technology.

(4) An eligible professional, eligible hospital or CAH is not a meaningful EHR user in a payment adjustment year if the HHS Inspector General refers a determination that the eligible hospital or CAH committed information blocking as defined at 45 CFR 171.103 during the calendar year of the EHR reporting period.

Payment adjustment year means the following:

(1) For an EP, a calendar year beginning with CY 2015.

(2) For a CAH or an eligible hospital, a Federal fiscal year beginning with FY 2015.

(3) For a Puerto Rico eligible hospital, a Federal fiscal year beginning with FY 2022.

Payment year means the following:

(1) For an EP, a calendar year beginning with CY 2011.

(2) For a CAH or an eligible hospital, a Federal fiscal year beginning with FY 2011.

(3) For a Puerto Rico eligible hospital, a Federal fiscal year beginning with FY 2016.

Qualified EHR has the same definition as this term is defined at 45 CFR 170.102.

[75 FR 44565, July 28, 2010]

Editorial Note:For Federal Register citations affecting § 495.4, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.

§ 495.5 Requirements for EPs seeking to reverse a hospital-based determination under § 495.4.

(a) Exception for certain EPs. Beginning with payment year 2013, an EP who meets the definition of hospital-based EP specified in § 495.4 but who can demonstrate to CMS that the EP funds the acquisition, implementation, and maintenance of Certified EHR Technology, including supporting hardware and interfaces needed for meaningful use without reimbursement from an eligible hospital or CAH, and uses such Certified EHR Technology in the inpatient or emergency department of a hospital (instead of the hospital's Certified EHR Technology), may be determined by CMS to be a nonhospital-based EP.

(b) Process for determining a nonhospital-based EP. When an EP registers for a given payment year they should receive a determination of whether they have been determined “hospital-based.”

(1) An EP determined “hospital-based,” but who wishes to be determined nonhospital-based as specified in paragraph (a) of section, may use an administrative process to provide documentation and seek a nonhospital-based determination. Such administrative process will be available throughout the incentive payment year and including the 2 months following the incentive payment year in which the EP may attest to being a meaningful EHR user.

(2) If an EP is determined nonhospital-based under paragraph (a) of this section, to be considered nonhospital-based for subsequent payment years, the EP must attest in such payment year (or by the time the EP must attest it is a meaningful EHR user for such year) that the EP continues to meet the criteria of paragraph (a) of this section.

(c) Requirements for nonhospital-based EPs. An EP determined nonhospital-based must—

(1) Continue to meet all applicable requirements to receive an incentive payment, including meeting all requirements for meaningful use; and

(2) Demonstrate meaningful use using all encounters at all locations equipped with Certified EHR Technology, including those in the inpatient and emergency departments of the hospital.

[77 FR 54149, Sept. 4, 2012]

§ 495.20 Meaningful use objectives and measures for EPs, eligible hospitals, and CAHs before 2015.

The following criteria are applicable before 2015:

(a) Stage 1 criteria for EPs—(1) General rule regarding Stage 1 criteria for meaningful use for EPs. Except as specified in paragraphs (a)(2) and (a)(3) of this section, EPs must meet all objectives and associated measures of the Stage 1 criteria specified in paragraph (d) of this section and five objectives of the EP's choice from paragraph (e) of this section to meet the definition of a meaningful EHR user.

(2) Exclusion for non-applicable objectives. (i) An EP may exclude a particular objective contained in paragraphs (d) or (e) of this section, if the EP meets all of the following requirements:

(A) Must ensure that the objective in paragraph (d) or (e) of this section includes an option for the EP to attest that the objective is not applicable.

(B) Meets the criteria in the applicable objective that would permit the attestation.

(C) Attests.

(ii) (A) An exclusion will reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply. For example, an EP that has an exclusion from one of the objectives in paragraph (e) of this section must meet four (and not five) objectives of the EP's choice from such paragraph to meet the definition of a meaningful EHR user.

(B) Beginning 2014, an exclusion does not reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (e) of this section unless five or more objectives can be excluded. An EP must meet five of the objectives and associated measures specified in paragraph (e) of this section, one of which must be either paragraph (e)(9) or (10) of this section, unless the EP has an exclusion from five or more objectives specified in paragraph (e) of this section, in which case the EP must meet all remaining objectives and associated measures in paragraph (e) of this section.

(3) Exception for Medicaid EPs who adopt, implement or upgrade in their first payment year. For Medicaid EPs who adopt, implement, or upgrade certified EHR technology in their first payment year, the meaningful use objectives and associated measures of the Stage 1 criteria specified in paragraphs (d) and (e) apply beginning with the second payment year, and do not apply to the first payment year.

(4) Flexible options for using certified EHR technology in 2014. For an EHR reporting period in 2014, if an EP could not fully implement 2014 Edition certified EHR technology due to delays in availability and uses—

(i) Only 2011 Edition certified EHR technology, the EP must satisfy the objectives and associated measures of the Stage 1 criteria that were applicable for 2013; or

(ii) A combination of 2011 Edition certified EHR technology and 2014 Edition certified EHR technology, the EP may choose to satisfy one of the following sets of objectives and associated measures:

(A) The Stage 1 criteria that were applicable for 2013.

(B) The Stage 1 criteria that are applicable beginning 2014.

(C) If the EP is scheduled to begin Stage 2 in 2014, the Stage 2 criteria.

(b) Stage 1 criteria for eligible hospitals and CAHs—(1) General rule regarding Stage 1 criteria for meaningful use for eligible hospitals or CAHs. Except as specified in paragraphs (b)(2) and (b)(3) of this section, eligible hospitals and CAHs must meet all objectives and associated measures of the Stage 1 criteria specified in paragraph (f) of this section and five objectives of the eligible hospital's or CAH's choice from paragraph (g) of this section to meet the definition of a meaningful EHR user.

(2) Exclusions for nonapplicable objectives. (i) An eligible hospital or CAH may exclude a particular objective that includes an option for exclusion contained in paragraphs (f) or (g) of this section, if the hospital meets all of the following requirements:

(A) The hospital meets the criteria in the applicable objective that would permit an exclusion.

(B) The hospital so attests.

(ii)(A) An exclusion will reduce (by the number of exclusions received) the number of objectives that would otherwise apply. For example, an eligible hospital that is excluded from one of the objectives in paragraph (g) of this section must meet four (and not five) objectives of the hospital's choice from such paragraph to meet the definition of a meaningful EHR user.

(B) Beginning 2014, an exclusion does not reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (g) of this section. Eligible hospitals or CAHs must meet five of the objectives and associated measures specified in paragraph (g) of this section, one which must be specified in paragraph (g)(8), (9), or (10) of this section.

(3) Exception for Medicaid eligible hospitals that adopt, implement or upgrade in their first payment year. For Medicaid eligible hospitals that adopt, implement, or upgrade certified EHR technology in their first payment year, the meaningful use objectives and associated measures of the Stage 1 criteria specified in paragraphs (f) and (g) of this section apply beginning with the second payment year, and do not apply to the first payment year.

(4) Flexible options for using certified EHR technology in 2014. For an EHR reporting period in 2014, if an eligible hospital or CAH could not fully implement 2014 Edition certified EHR technology due to delays in availability and uses—

(i) Only 2011 Edition certified EHR technology, the eligible hospital or CAH must satisfy the objectives and associated measures of the Stage 1 criteria that were applicable for 2013;

(ii) A combination of 2011 Edition certified EHR technology and 2014 Edition certified EHR technology, the eligible hospital or CAH may choose to satisfy one of the following sets of objectives and associated measures:

(A) The Stage 1 criteria that were applicable for 2013.

(B) The Stage 1 criteria that are applicable beginning 2014.

(C) If the eligible hospital or CAH is scheduled to begin Stage 2 in 2014, the Stage 2 criteria.

(c) Many of the objective and associated measures in paragraphs paragraphs (d) through (m) of this section rely on measures that count unique patients or actions.

(1) If a measure (or associated objective) in paragraphs (d) through (g) of this section references paragraph (c) of this section, then the measure may be calculated by reviewing only the actions for patients whose records are maintained using certified EHR technology. A patient's record is maintained using certified EHR technology if sufficient data was entered in the certified EHR technology to allow the record to be saved, and not rejected due to incomplete data.

(2) If the objective and associated measure does not reference this paragraph (c) of this section, then the measure must be calculated by reviewing all patient records, not just those maintained using certified EHR technology.

(d) Stage 1 core criteria for EPs. An EP must satisfy the following objectives and associated measures, except those objectives and associated measures for which an EP qualifies for an exclusion under paragraph (a)(2) of this section specified in this paragraph:

(1)(i) Objective. Use computerized provider order entry (CPOE) for medication orders directly entered by any licensed healthcare professional who can enter orders into the medical record per state, local and professional guidelines.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 30 percent of all unique patients with at least one medication in their medication list seen by the EP have at least one medication order entered using CPOE.

(B) Subject to paragraph (c) of this section, more than 30 percent of medication orders created by the EP during the EHR reporting period are recorded using computerized provider order entry, or the measure specified in paragraph (d)(1)(ii)(A) of this section.

(iii) Exclusion in accordance with paragraph (a)(2) of this section Any EP who writes fewer than 100 prescriptions during the EHR reporting period.

(2)(i) Objective. Implement drug-drug and drug-allergy interaction checks.

(ii) Measure. The EP has enabled this functionality for the entire EHR reporting period.

(3)(i) Objective. Maintain an up-to-date problem list of current and active diagnoses.

(ii) Measure. More than 80 percent of all unique patients seen by the EP have at least one entry or an indication that no problems are known for the patient recorded as structured data.

(4)(i) Objective. Generate and transmit permissible prescriptions electronically (eRx).

(ii) Measure. Subject to paragraph (c) of this section, more than 40 percent of all permissible prescriptions written by the EP are transmitted electronically using certified EHR technology.

(iii) Exclusion in accordance with paragraph (a)(2) of this section (A) Any EP who writes fewer than 100 prescriptions during the EHR reporting period.

(B) Beginning 2013, any EP who does not have a pharmacy within their organization and there are no pharmacies that accept electronic prescriptions within 10 miles of the EP's practice location at the start of his/her EHR reporting period, or the exclusion specified in (d)(4)(iii)(A) of this section.

(5)(i) Objective. Maintain active medication list.

(ii) Measure. More than 80 percent of all unique patients seen by the EP have at least one entry (or an indication that the patient is not currently prescribed any medication) recorded as structured data.

(6)(i) Objective. Maintain active medication allergy list.

(ii) Measure. More than 80 percent of all unique patients seen by the EP have at least one entry (or an indication that the patient has no known medication allergies) recorded as structured data.

(7)(i) Objective. Record all of the following demographics:

(A) Preferred language.

(B) Gender.

(C) Race.

(D) Ethnicity.

(E) Date of birth.

(ii) Measure. More than 50 percent of all unique patients seen by the EP have demographics recorded as structured data.

(8)(i) Objective. Record and chart changes in the following vital signs:

(A) Height.

(B) Weight.

(C) Blood pressure.

(D) Calculate and display body mass index (BMI).

(E)(1) Plot and display growth charts for children 2-20 years, including BMI.

(2) For 2013, plot and display growth charts for patients 0-20 years, including body mass index, or paragraph (d)(8)(i)(E)(1) of this section.

(3) Beginning 2014, plot and display growth charts for patients 0-20 years, including body mass index.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 50 percent of all unique patients age 2 and over seen by the EP, height, weight and blood pressure are recorded as structured data.

(B) For 2013—(1) Subject to paragraph (c) of this section, more than 50 percent of all unique patients seen by the EP during the EHR reporting period have blood pressure (for patients age 3 and over only) and height/length and weight (for all ages) recorded as structured data; or

(2) The measure specified in paragraph (d)(8)(ii)(A) of this section.

(C) Beginning 2014, only the measure specified in paragraph (d)(8)(ii)(B)(1) of this section.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. (A) Any EP who either see no patients 2 years or older, or who believes that all three vital signs of height, weight, and blood pressure of their patients have no relevance to their scope of practice.

(B) For 2013, either of the following:

(1) The exclusion specified in paragraph (d)(8)(iii)(A) of this section.

(2) The exclusion for an EP who—

(i) Sees no patients 3 years or older is excluded from recording blood pressure;

(ii) Believes that all three vital signs of height/length, weight, and blood pressure have no relevance to their scope of practice is excluded from recording them;

(iii) Believes that height/length and weight are relevant to their scope of practice, but blood pressure is not, is excluded from recording blood pressure; or

(iv) Believes that blood pressure is relevant to their scope of practice, but height/length and weight are not, is excluded from recording height/length and weight.

(C) Beginning 2014, only the exclusion specified in paragraph (d)(8)(iii)(B)(2) of this section.

(9)(i) Objective. Record smoking status for patients 13 years old or older.

(ii) Measure. Subject to paragraph (c) of this section, more than 50 percent of all unique patients 13 years old or older seen by the EP have smoking status recorded as structured data.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. Any EP who sees no patients 13 years or older.

(10)(i) Objective. (A) Report ambulatory clinical quality measures to CMS or, in the case of Medicaid EPs, the States.

(B) Beginning 2013, this objective is reflected in the definition of a meaningful EHR user in § 495.4 and is no longer listed as an objective in this paragraph (d).

(ii) Measure. (A) Subject to paragraph (c) of this section, successfully report to CMS (or, in the case of Medicaid EPs, the States) ambulatory clinical quality measures selected by CMS in the manner specified by CMS (or in the case of Medicaid EPs, the States).

(B) Beginning 2013, this measure is reflected in the definition of a meaningful EHR user in § 495.4 and no longer listed as a measure in this paragraph (d).

(11)(i) Objective. Implement one clinical decision support rules relevant to specialty or high clinical priority along with the ability to track compliance with that rule.

(ii) Measure. Implement one clinical decision support rule.

(12)(i) Objective. (A) Provide patients with an electronic copy of their health information (including diagnostics test results, problem list, medication lists, medication allergies) upon request.

(B) Beginning 2014, provide patients the ability to view online, download, and transmit their health information within 4 business days of the information being available to the EP.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 50 percent of all patients who request an electronic copy of their health information are provided it within 3 business days.

(B) Beginning 2014, subject to paragraph (c) of this section, more than 50 percent of all unique patients seen by the EP during the EHR reporting period are provided timely (available to the patient within 4 business days after the information is available to the EP) online access to their health information subject to the EP's discretion to withhold certain information.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. (A) Any EP that has no requests from patients or their agents for an electronic copy of patient health information during the EHR reporting period.

(B) Beginning 2014, any EP who neither orders nor creates any of the information listed for inclusion as part of this measure.

(13)(i) Objective. Provide clinical summaries for patients for each office visit.

(ii) Measure. Subject to paragraph (c) of this section, clinical summaries provided to patients for more than 50 percent of all office visits within 3 business days.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. Any EP who has no office visits during the EHR reporting period.

(14)(i) Objective. (A) Capability to exchange key clinical information (for example, problem list, medication list, medication allergies, and diagnostic test results), among providers of care and patient authorized entities electronically.

(B) Beginning 2013, this objective is no longer required as part of the core set.

(ii) Measure. (A) Performed at least one test of certified EHR technology's capacity to electronically exchange key clinical information.

(B) Beginning 2013, this measure is no longer required as part of the core set.

(15)(i) Objective. Protect electronic health information created or maintained by the certified EHR technology through the implementation of appropriate technical capabilities.

(ii) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1) and implement security updates as necessary and correct identified security deficiencies as part of its risk management process.

(e) Stage 1 menu set criteria for EPs. An EP must meet five of the following objectives and associated measures, one of which must be either paragraph (e)(9) or (e)(10) of this section, except that the required number of objectives and associated measures is reduced by an EP's paragraph (a)(2) of this section exclusions specified in this paragraph. Beginning 2014, an EP must meet five of the following objectives and associated measures, one of which must be either paragraph (e)(9) or (10) of this section unless the EP has an exclusion from five or more objectives in this paragraph (e), in which case the EP must meet all remaining objectives and associated measures in paragraph (e) of this section.

(1)(i) Objective. Implement drug-formulary checks.

(ii) Measure. The EP has enabled this functionality and has access to at least one internal or external formulary for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. Any EP who writes fewer than 100 prescriptions during the EHR reporting period.

(2)(i) Objective. Incorporate clinical lab-test results into EHR as structured data.

(ii) Measure. Subject to paragraph (c) of this section, more than 40 percent of all clinical lab tests results ordered by the EP during the EHR reporting period whose results are either in a positive/negative or numerical format are incorporated in certified EHR technology as structured data.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who orders no lab tests whose results are either in a positive/negative or numeric format during the EHR reporting period.

(3)(i) Objective. Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research, or outreach.

(ii) Measure. Subject to paragraph (c) of this section, generate at least one report listing patients of the EP with a specific condition.

(4)(i) Objective. Send reminders to patients per patient preference for preventive/follow-up care.

(ii) Measure. Subject to paragraph (c) of this section, more than 20 percent of all patients 65 years or older or 5 years old or younger were sent an appropriate reminder during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who has no patients 65 years old or older or 5 years old or younger with records maintained using certified EHR technology.

(5)(i) Objective. (A) Provide patients with timely electronic access to their health information (including lab results, problem list, medication lists, and allergies) within 4 business days of the information being available to the EP.

(B) Beginning 2014, this objective is no longer included in the menu set.

(ii) Measure. (A) At least 10 percent of all unique patients seen by the EP are provided timely (available to the patient within four business days of being updated in the certified EHR technology) electronic access to their health information subject to the EP's discretion to withhold certain information.

(B) Beginning 2014, this measure is no longer included in the menu set.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. Any EP that neither orders nor creates any of the information listed at 45 CFR 170.314(g) during the EHR reporting period.

(6)(i) Objective. Use certified EHR technology to identify patient-specific education resources and provide those resources to the patient if appropriate.

(ii) Measure. More than 10 percent of all unique patients seen by the EP are provided patient-specific education resources.

(7)(i) Objective. The EP who receives a patient from another setting of care or provider of care or believes an encounter is relevant should perform medication reconciliation.

(ii) Measure. Subject to paragraph (c) of this section, the EP performs medication reconciliation for more than 50 percent of transitions of care in which the patient is transitioned into the care of the EP.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who was not the beneficiary of any transitions of care during the EHR reporting period.

(8)(i) Objective. The EP who transitions their patient to another setting of care or provider of care or refers their patient to another provider of care should provide summary care record for each transition of care or referral.

(ii) Measure. Subject to paragraph (c) of this section, the EP who transitions or refers their patient to another setting of care or provider of care provides a summary of care record for more than 50 percent of transitions of care and referrals.

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who neither transfers a patient to another setting nor refers a patient to another provider during the EHR reporting period.

(9)(i) Objective. (A) Capability to submit electronic data to immunization registries or immunization information systems and actual submission according to applicable law and practice.

(B) Beginning 2013, capability to submit electronic data to immunization registries or immunization information systems and actual submission except where prohibited and according to applicable law and practice.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to submit electronic data to immunization registries and follow up submission if the test is successful (unless none of the immunization registries to which the EP submits such information has the capacity to receive the information electronically).

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who administers no immunizations during the EHR reporting period or where no immunization registry has the capacity to receive the information electronically.

(10)(i) Objective. (A) Capability to submit electronic syndromic surveillance data to public health agencies and actual submission according to applicable law and practice.

(B) Beginning 2013, capability to submit electronic syndromic surveillance data to public health agencies and actual submission except where prohibited and according to applicable law and practice.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to provide electronic syndromic surveillance data to public health agencies and follow-up submission if the test is successful (unless none of the public health agencies to which an EP submits such information has the capacity to receive the information electronically).

(iii) Exclusion in accordance with paragraph (a)(2) of this section. An EP who does not collect any reportable syndromic information on their patients during the EHR reporting period or does not submit such information to any public health agency that has the capacity to receive the information electronically.

(f) Stage 1 core criteria for eligible hospitals or CAHs. An eligible hospital or CAH must meet the following objectives and associated measures except those objectives and associated measures for which an eligible hospital or CAH qualifies for a paragraph (b)(2) of this section exclusion specified in this paragraph:

(1)(i) Objective. Use CPOE for medication orders directly entered by any licensed healthcare professional who can enter orders into the medical record per State, local, and professional guidelines.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 30 percent of all unique patients with at least one medication in their medication list admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have at least one medication order entered using CPOE.

(B) Subject to paragraph (c) of this section, more than 30 percent of medication orders created by the authorized providers of the eligible hospital or CAH for patients admitted to their inpatient or emergency departments (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry, or the measure specified in paragraph (f)(1)(ii)(A) of this section.

(2)(i) Objective. Implement drug-drug and drug-allergy interaction checks.

(ii) Measure. The eligible hospital or CAH has enabled this functionality for the entire EHR reporting period.

(3)(i) Objective. Maintain an up-to-date problem list of current and active diagnoses.

(ii) Measure. More than 80 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have at least one entry or an indication that no problems are known for the patient recorded as structured data.

(4)(i) Objective. Maintain active medication list.

(ii) Measure. More than 80 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have at least one entry (or an indication that the patient is not currently prescribed any medication) recorded as structured data.

(5)(i) Objective. Maintain active medication allergy list.

(ii) Measure. More than 80 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have at least one entry (or an indication that the patient has no known medication allergies) recorded as structured data.

(6)(i) Objective. Record all of the following demographics;

(A) Preferred language.

(B) Gender.

(C) Race.

(D) Ethnicity.

(E) Date of birth.

(F) Date and preliminary cause of death in the event of mortality in the eligible hospital or CAH.

(ii) Measure. More than 50 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have demographics recorded as structured data.

(7)(i) Objective. Record and chart changes in the following vital signs:

(A) Height.

(B) Weight.

(C) Blood pressure.

(D) Calculate and display body mass index (BMI).

(E)(1) Plot and display growth charts for children 2-20 years, including BMI.

(2) For 2013, plot and display growth charts for patients 0-20 years, including body mass index, or paragraph (f)(7)(i)(E)(1) of this section.

(3) Beginning 2014, plot and display growth charts for patients 0-20 years, including body mass index.

(ii) Measure. (A) Subject to paragraph (c) of this section, for more than 50 percent of all unique patients age 2 and over admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23), height, weight, and blood pressure are recorded as structured data.

(B) For 2013—

(1) Subject to paragraph (c) of this section, more than 50 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period have blood pressure (for patients age 3 and over only) and height/length and weight (for all ages) recorded as structured data; or

(2) The measure specified in paragraph (f)(7)(ii)(A) of this section.

(C) Beginning 2014, only the measure specified in paragraph (f)(7)(ii)(B)(1) of this section.

(8)(i) Objective. Record smoking for patients 13 years old or older.

(ii) Measure. Subject to paragraph (c) of this section, more than 50 percent of all unique patients 13 years old or older or admitted to the eligible hospital's inpatient or emergency department (POS 21 or 23) have smoking status recorded as structured data.

(iii) Exclusion in accordance with paragraph (b)(2) of this section. Any eligible hospital or CAH that admits no patients 13 years or older to their inpatient or emergency department (POS 21 or 23).

(9)(i) Objective. (A) Report hospital clinical quality measures to CMS or, in the case of Medicaid eligible hospitals, the States.

(B) Beginning 2013, this objective is reflected in the definition of a meaningful EHR user in § 495.4 and no longer listed as an objective in this paragraph (f).

(ii) Measure. (A) Subject to paragraph (c) of this section, successfully report to CMS (or, in the case of Medicaid eligible hospitals or CAHs, the States) hospital clinical quality measures selected by CMS in the manner specified by CMS (or, in the case of Medicaid eligible hospitals or CAHs, the States).

(B) Beginning 2013, this measure is reflected in the definition of a meaningful EHR user in § 495.4 and no longer listed as a measure in this paragraph (f).

(10)(i) Objective. Implement one clinical decision support rule related to a high priority hospital condition along with the ability to track compliance with that rule.

(ii) Measure. Implement one clinical decision support rule.

(11)(i) Objective. (A) Provide patients with an electronic copy of their health information (including diagnostic test results, problem list, medication lists, medication allergies, discharge summary, procedures), upon request.

(B) Beginning 2014, this objective is no longer required as part of the core set.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 50 percent of all patients of the inpatient or emergency departments of the eligible hospital or CAH (POS 21 or 23) who request an electronic copy of their health information are provided it within 3 business days.

(B) Beginning 2014, this measure is no longer required as part of the core set.

(iii) Exclusion in accordance with paragraph (b)(2) of this section. Any eligible hospital or CAH that has no requests from patients or their agents for an electronic copy of patient health information during the EHR reporting period.

(12)(i) Objective. (A) Provide patients with an electronic copy of their discharge instructions at time of discharge, upon request.

(B) Beginning 2014, provide patients the ability to view online, download, and transmit information about a hospital admission.

(ii) Measure. (A) Subject to paragraph (c) of this section, more than 50 percent of all patients who are discharged from an eligible hospital or CAH's inpatient or emergency department (POS 21 or 23) and who request an electronic copy of their discharge instructions are provided it.

(B) Beginning 2014, subject to paragraph (c) of this section, more than 50 percent of all unique patients who are discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH have their information available online within 36 hours of discharge.

(iii) Exclusion in accordance with paragraph (b)(2) of this section. (A) Any eligible hospital or CAH that has no requests from patients or their agents for an electronic copy of the discharge instructions during the EHR reporting period.

(B) Beginning 2014, this exclusion is no longer available.

(13)(i) Objective. (A) Capability to exchange key clinical information (for example, problem list, medication list, medication allergies, and diagnostic test results), among providers of care and patient authorized entities electronically.

(B) Beginning 2013, this objective is no longer required as part of the core set.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to electronically exchange key clinical information.

(B) Beginning 2013, this measure is no longer required as part of the core set.

(14)(i) Objective. Protect electronic health information created or maintained by the certified EHR technology through the implementation of appropriate technical capabilities.

(ii) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1) and implement security updates as necessary and correct identified security deficiencies as part of its risk management process.

(g) Stage 1 menu set criteria for eligible hospitals or CAHs. Eligible hospitals or CAHs must meet five of the following objectives and associated measures, one which must be specified in paragraph (g)(8), (g)(9), or (g)(10) of this section, except that the required number of objectives and associated measures is reduced by a hospital's paragraph (b)(2) of this section exclusions specified in this paragraph. Beginning 2014, eligible hospitals or CAHs must meet five of the following objectives and associated measures, one which must be specified in paragraph (g)(8), (9), or (10) of this section:

(1)(i) Objective. Implement drug-formulary checks.

(ii) Measure. The eligible hospital or CAH has enabled this functionality and has access to at least one internal or external formulary for the entire EHR reporting period.

(2)(i) Objective. Record advance directives for patient 65 years old or older.

(ii) Measure. Subject to paragraph (c) of this section, more than 50 percent of all unique patients 65 years old or older admitted to the eligible hospital's or CAH's inpatient (POS 21) have an indication of an advance directive status recorded as structured data.

(iii) Exclusion in accordance with paragraph (b)(2) of this section. An eligible hospital or CAH that admits no patients age 65 years old or older during the EHR reporting period.

(3)(i) Objective. Incorporate clinical lab-test results into EHR as structured data.

(ii) Measure. Subject to paragraph (c) of this section, more than 40 percent of all clinical lab test results ordered by an authorized provider of the eligible hospital or CAH for patients admitted to its inpatient or emergency department (POS 21 and 23) during the EHR reporting period whose results are either in a positive/negative or numerical format are incorporated in certified EHR technology as structured data.

(4)(i) Objective. Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research, or outreach.

(ii) Measure. Subject to paragraph (c) of this section, generate at least one report listing patients of the eligible hospital or CAH with a specific condition.

(5)(i) Objective. Use certified EHR technology to identify patient-specific education resources and provide those resources to the patient if appropriate.

(ii) Measure. More than 10 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) are provided patient-specific education resources.

(6)(i) Objective. The eligible hospital or CAH who receives a patient from another setting of care or provider of care or believes an encounter is relevant should perform medication reconciliation.

(ii) Measure. Subject to paragraph (c) of this section, the eligible hospital or CAH performs medication reconciliation for more than 50 percent of transitions of care in which the patient is admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23).

(7)(i) Objective. The eligible hospital or CAH that transitions their patient to another setting of care or provider of care or refers their patient to another provider of care should provide summary care record for each transition of care or referral.

(ii) Measure. Subject to paragraph (c) of this section, the eligible hospital or CAH that transitions or refers their patient to another setting of care or provider of care provides a summary of care record for more than 50 percent of transitions of care and referrals.

(8)(i) Objective. (A) Capability to submit electronic data to immunization registries or immunization information systems and actual submission according to applicable law and practice.

(B) Beginning 2013, Capability to submit electronic data to immunization registries or immunization information systems and actual submission except where prohibited and according to applicable law and practice.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to submit electronic data to immunization registries and follow up submission if the test is successful (unless none of the immunization registries to which the eligible hospital or CAH submits such information has the capacity to receive the information electronically).

(iii) Exclusion in accordance with paragraph (b)(2) of this section. An eligible hospital or CAH that administers no immunizations during the EHR reporting period or where no immunization registry has the capacity to receive the information electronically.

(9)(i) Objective. (A) Capability to submit electronic data on reportable (as required by State or local law) lab results to public health agencies and actual submission according to applicable law and practice.

(B) Beginning 2013, capability to submit electronic data on reportable (as required by State or local law) lab results to public health agencies and actual submission except where prohibited according to applicable law and practice.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to provide electronic submission of reportable lab results to public health agencies and follow-up submission if the test is successful (unless none of the public health agencies to which an eligible hospital or CAH submits such information has the capacity to receive the information electronically).

(iii) Exclusion in accordance with paragraph (b)(2) of this section. No public health agency to which the eligible hospital or CAH submits such information has the capacity to receive the information electronically.

(10)(i) Objective. (A) Capability to submit electronic syndromic surveillance data to public health agencies and actual submission according to applicable law and practice.

(B) Beginning 2013, capability to submit electronic syndromic surveillance data to public health agencies and actual submission except where prohibited and according to applicable law and practice.

(ii) Measure. Performed at least one test of certified EHR technology's capacity to provide electronic syndromic surveillance data to public health agencies and follow-up submission if the test is successful (unless none of the public health agencies to which an eligible hospital or CAH submits information has the capacity to receive the information electronically).

(iii) Exclusion in accordance with paragraph (a)(2) of this section. No public health agency to which the eligible hospital or CAH submits information has the capacity to receive the information electronically.

(h) Stage 2 criteria for EPs—(1) General rule regarding Stage 2 criteria for meaningful use for EPs. Except as specified in paragraph (h)(2) of this section, EPs must meet all objectives and associated measures of the Stage 2 criteria specified in paragraph (j) of this section and 3 objectives of the EP's choice from paragraph (k) of this section to meet the definition of a meaningful EHR user.

(2) Exclusion for nonapplicable objectives. (i) An EP may exclude a particular objective contained in paragraph (j) or (k) of this section, if the EP meets all of the following requirements:

(A) Must ensure that the objective in paragraph (j) or (k) of this section includes an option for the EP to attest that the objective is not applicable.

(B) Meets the criteria in the applicable objective that would permit the attestation.

(C) Attests.

(ii)(A) An exclusion will reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (j) of this section. For example, an EP that has an exclusion from one of the objectives in paragraph (j) of this section must meet 16 objectives from such paragraph to meet the definition of a meaningful EHR user.

(B) An exclusion does not reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (k) of this section unless four or more exclusions apply. For example, an EP that has an exclusion for one of the objectives in paragraph (k) of this section must meet three of the five nonexcluded objectives from such paragraph to meet the definition of a meaningful EHR user. If an EP has an exclusion for four of the objectives in paragraph (k) of this section, then he or she must meet the remaining two nonexcluded objectives from such paragraph to meet the definition of a meaningful EHR user.

(3) Flexible options for using certified EHR technology in 2014. For an EHR reporting period in 2014, if an EP is scheduled to begin Stage 2 in 2014, but is unable to fully implement all the functions of 2014 Edition certified EHR technology required for the objectives and associated measures of the Stage 2 criteria due to delays in availability, the EP may choose to satisfy the objectives and associated measures of the Stage 1 criteria that are applicable beginning 2014 using 2014 Edition certified EHR technology.

(i) Stage 2 criteria for eligible hospitals and CAHs—(1) General rule regarding Stage 2 criteria for meaningful use for eligible hospitals or CAHs. Except as specified in paragraph (i)(2) of this section, eligible hospitals and CAHs must meet all objectives and associated measures of the Stage 2 criteria specified in paragraph (l) of this section and three objectives of the eligible hospital's or CAH's choice from paragraph (m) of this section to meet the definition of a meaningful EHR user.

(2) Exclusions for nonapplicable objectives. (i) An eligible hospital or CAH may exclude a particular objective that includes an option for exclusion contained in paragraphs (l) or (m) of this section, if the hospital meets all of the following requirements:

(A) The hospital meets the criteria in the applicable objective that would permit an exclusion.

(B) The hospital so attests.

(ii)(A) An exclusion will reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (l) of this section. For example, an eligible hospital that has an exclusion from 1 of the objectives in paragraph (l) of this section must meet 15 objectives from such paragraph to meet the definition of a meaningful EHR user.

(B) An exclusion does not reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (m) of this section. For example, an eligible hospital that has an exclusion for one of the objectives in paragraph (m) of this section must meet three of the five nonexcluded objectives from such paragraph to meet the definition of a meaningful EHR user.

(3) Flexible options for using certified EHR technology in 2014. For an EHR reporting period in 2014, if an eligible hospital or CAH is scheduled to begin Stage 2 in 2014, but is unable to fully implement all the functions of 2014 Edition certified EHR technology required for the objectives and associated measures of the Stage 2 criteria due to delays in availability, the eligible hospital or CAH may choose to satisfy the objectives and associated measures of the Stage 1 criteria that are applicable beginning 2014 using 2014 Edition certified EHR technology.

(j) Stage 2 core criteria for EPs. An EP must satisfy the following objectives and associated measures, except those objectives and associated measures for which an EP qualifies for an exclusion under paragraph (h)(2) of this section specified in this paragraph (j).

(1)(i) Objective. Use computerized provider order entry for medication, laboratory, and radiology orders directly entered by any licensed healthcare professional who can enter orders into the medical record per State, local, and professional guidelines.

(ii) Measures. Subject to paragraph (c) of this section—

(A) More than 60 percent of medication orders created by the EP during the EHR reporting period are recorded using computerized provider order entry;

(B) More than 30 percent of laboratory orders created by the EP during the EHR reporting period are recorded using computerized provider order entry; and

(C) More than 30 percent of radiology orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(iii) Exclusions in accordance with paragraph (h)(2) of this section. (A) For the measure specified in paragraph (j)(1)(ii)(A) of this section, any EP who writes fewer than 100 medication orders during the EHR reporting period.

(B) For the measure specified in paragraph (j)(1)(ii)(B) of this section, any EP who writes fewer than 100 laboratory orders during the EHR reporting period.

(C) For the measure specified in paragraph (j)(1)(ii)(C), any EP who writes fewer than 100 radiology orders during the EHR reporting period.

(2)(i) Objective. Generate and transmit permissible prescriptions electronically (eRx).

(ii) Measure. Subject to paragraph (c) of this section, more than 50 percent of all permissible prescriptions, or all prescriptions, written by the EP are queried for a drug formulary and transmitted electronically using Certified EHR Technology.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who—

(A) Writes fewer than 100 permissible prescriptions during the EHR reporting period; or (B) Does not have a pharmacy within their organization and there are no pharmacies that accept electronic prescriptions within 10 miles of the EP's practice location at the start of his or her EHR reporting period.

(3)(i) Objective. Record all of the following demographics:

(A) Preferred language.

(B) Sex.

(C) Race.

(D) Ethnicity.

(E) Date of birth.

(ii) Measure. More than 80 percent of all unique patients seen by the EP during the EHR reporting period have demographics recorded as structured data.

(4)(i) Objective. Record and chart changes in the following vital signs:

(A) Height/Length.

(B) Weight.

(C) Blood pressure (ages 3 and over).

(D) Calculate and display body mass index (BMI).

(E) Plot and display growth charts for patients 0-20 years, including body mass index.

(ii) Measure. Subject to paragraph (c) of this section, more than 80 percent of all unique patients seen by the EP during the EHR reporting period have blood pressure (for patients age 3 and over only) and height/length and weight (for all ages) recorded as structured data.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who—

(A) Sees no patients 3 years or older is excluded from recording blood pressure;

(B) Believes that all three vital signs of height/length, weight, and blood pressure have no relevance to their scope of practice is excluded from recording them;

(C) Believes that height/length and weight are relevant to their scope of practice, but blood pressure is not, is excluded from recording blood pressure; or

(D) Believes that blood pressure is relevant to their scope of practice, but height/length and weight are not, is excluded from recording height/length and weight.

(5)(i) Objective. Record smoking status for patients 13 years old or older.

(ii) Measure. Subject to paragraph (c) of this section, more than 80 percent of all unique patients 13 years old or older seen by the EP during the EHR reporting period have smoking status recorded as structured data.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who sees no patients 13 years old or older.

(6)(i) Objective. Use clinical decision support to improve performance on high priority health conditions.

(ii) Measures. (A) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an EP's scope of practice or patient population, the clinical decision support interventions must be related to high-priority health conditions; and

(B) The EP has enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section for paragraph (j)(6)(ii)(B) of this section. An EP who writes fewer than 100 medication orders during the EHR reporting period.

(7)(i) Objective. Incorporate clinical lab test results into Certified EHR Technology as structured data.

(ii) Measure. Subject to paragraph (c) of this section, more than 55 percent of all clinical lab tests results ordered by the EP during the EHR reporting period whose results are either in a positive/negative affirmation or numerical format are incorporated in Certified EHR Technology as structured data.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who orders no lab tests whose results are either in a positive/negative affirmation or numerical format during the EHR reporting period.

(8)(i) Objective. Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research, or outreach.

(ii) Measure. Generate at least one report listing patients of the EP with a specific condition.

(9)(i) Objective. Use clinically relevant information to identify patients who should receive reminders for preventive/follow-up care and send these patients the reminder, per patient preference.

(ii) Measure. Subject to paragraph (c) of this section, more than 10 percent of all unique patients who have had two or more office visits with the EP within the 24 months before the beginning of the EHR reporting period were sent a reminder, per patient preference when available.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who has had no office visits in the 24 months before the beginning of the EHR reporting period.

(10)(i) Objective. Provide patients the ability to view online, download, and transmit their health information within 4 business days of the information being available to the EP.

(ii) Measures. (A) More than 50 percent of all unique patients seen by the EP during the EHR reporting period are provided timely (available to the patient within 4 business days after the information is available to the EP) online access to their health information subject to the EP's discretion to withhold certain information; and

(B) More than 5 percent of all unique patients seen by the EP during the EHR reporting period (or their authorized representatives) view, download or transmit to a third party their health information.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who—

(A) Neither orders nor creates any of the information listed for inclusion as part of the measures in paragraphs (j)(10)(ii)(A) and (B) of this section, except for “Patient name” and “Provider's name and office contact information,” is excluded from both paragraphs (j)(10)(ii)(A) and (B) of this section; or

(B) Conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 3Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from paragraph (j)(10)(ii)(B) of this section.

(11)(i) Objective. Provide clinical summaries for patients for each office visit.

(ii) Measure. Subject to paragraph (c) of this section, clinical summaries provided to patients or patient-authorized representatives within 1 business day for more than 50 percent of office visits.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who has no office visits during the EHR reporting period.

(12)(i) Objective. Use clinically relevant information from Certified EHR Technology to identify patient-specific education resources and provide those resources to the patient.

(ii) Measure. Patient-specific education resources identified by Certified EHR Technology are provided to patients for more than 10 percent of all unique patients with office visits seen by the EP during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who has no office visits during the EHR reporting period.

(13)(i) Objective. The EP who receives a patient from another setting of care or provider of care or believes an encounter is relevant should perform medication reconciliation.

(ii) Measure. Subject to paragraph (c) of this section, the EP performs medication reconciliation for more than 50 percent of transitions of care in which the patient is transitioned into the care of the EP.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who was not the beneficiary of any transitions of care during the EHR reporting period.

(14)(i) Objective. The EP who transitions their patient to another setting of care or provider of care or refers their patient to another provider of care provides a summary care record for each transition of care or referral.

(ii) Measures. (A) Subject to paragraph (c) of this section, the EP that transitions or refers their patient to another setting of care or provider of care provides a summary of care record for more than 50 percent of transitions of care and referrals;

(B) Subject to paragraph (c) of this section, the EP that transitions or refers their patient to another setting of care or provider of care provides a summary of care record for more than 10 percent of such transitions and referrals either—

(1) Electronically transmitted using Certified EHR Technology to a beneficiary; or

(2) Where the beneficiary receives the summary of care record via exchange facilitated by an organization that is a NwHIN Exchange participant or in a manner that is consistent with the governance mechanism ONC establishes for the nationwide health information network, and

(C) Subject to paragraph (c) of this section an EP must satisfy one of the following:

(1) Conducts one or more successful electronic exchanges of a summary of care record meeting the measure specified in paragraph (j)(14)(ii)(B) of this section with a beneficiary using technology to receive the summary of care record that was designed by a different EHR developer than the sender's EHR technology certified at 45 CFR 170.314(b)(2); or

(2) Conducts one or more successful tests with the CMS designated test EHR during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who transfers a patient to another setting or refers a patient to another provider less than 100 times during the EHR reporting period.

(15)(i) Objective. Capability to submit electronic data to immunization registries or immunization information systems except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of electronic immunization data from Certified EHR Technology to an immunization registry or immunization information system for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP that meets one or more of the following criteria:

(A) Does not administer any of the immunizations to any of the populations for which data is collected by their jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(B) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required for Certified EHR Technology at the start of his or her EHR reporting period.

(C) Operates in a jurisdiction where no immunization registry or immunization information system provides information timely on capability to receive immunization data.

(D) Operates in a jurisdiction for which no immunization registry or immunization information system that is capable of accepting the specific standards required by Certified EHR Technology at the start of his or her EHR reporting period can enroll additional EPs.

(16)(i) Objective. Protect electronic health information created or maintained by the Certified EHR Technology through the implementation of appropriate technical capabilities.

(ii) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the encryption/security of data stored in Certified EHR Technology in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), and implement security updates as necessary and correct identified security deficiencies as part of the EP's risk management process.

(17)(i) Objective. Use secure electronic messaging to communicate with patients on relevant health information.

(ii) Measure. A secure message was sent using the electronic messaging function of Certified EHR Technology by more than 5 percent of unique patients (or their authorized representatives) seen by the EP during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who meets one or more of the following criteria:

(A) Has no office visits during the EHR reporting period.

(B) Who conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 3Mbps broadband availability according to the latest information available from the FCC on the first day of their EHR reporting period.

(k) Stage 2 menu set criteria for EPs. An EP must meet 3 of the following objectives and associated measures, unless the EP has an exclusion from 4 or more objectives in this paragraph (k) of this section, in which case the EP must meet all remaining objectives and associated measures.

(1)(i) Objective. Imaging results consisting of the image itself and any explanation or other accompanying information are accessible through Certified EHR Technology.

(ii) Measure. Subject to paragraph (c) of this section, more than 10 percent of all tests whose result is one or more images ordered by the EP during the EHR reporting period are accessible through Certified EHR Technology.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who meets one or more of the following criteria.

(A) Orders less than 100 tests whose result is an image during the EHR reporting period.

(B) Has no access to electronic imaging results at the start of the EHR reporting period.

(2)(i) Objective. Record patient family health history as structured data.

(ii) Measure. More than 20 percent of all unique patients seen by the EP during the EHR reporting period have a structured data entry for one or more first-degree relatives.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who has no office visits during the EHR reporting period.

(3)(i) Objective. Capability to submit electronic syndromic surveillance data to public health agencies, except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of electronic syndromic surveillance data from Certified EHR Technology to a public health agency for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP that meets one or more of the following criteria:

(A) Is not in a category of providers who collect ambulatory syndromic surveillance information on their patients during the EHR reporting period.

(B) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required for Certified EHR Technology at the start of their EHR reporting period.

(C) Operates in a jurisdiction where no public health agency provides information timely on capability to receive syndromic surveillance data.

(D) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific standards required by Certified EHR Technology at the start of their EHR reporting period can enroll additional EPs.

(4)(i) Objective. Capability to identify and report cancer cases to a public health central cancer registry, except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of cancer case information from Certified EHR Technology to a public health central cancer registry for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who meets one or more of the following—

(A) Does not diagnose or directly treat cancer.

(B) Operates in a jurisdiction for which no public health agency is capable of receiving electronic cancer case information in the specific standards required for Certified EHR Technology at the start of their EHR reporting period.

(C) Operates in a jurisdiction where no public health agency provides information timely on capability to receive electronic cancer case information.

(D) Operates in a jurisdiction for which no public health agency that is capable of receiving electronic cancer case information in the specific standards required for Certified EHR Technology at the beginning of their EHR reporting period can enroll additional EPs.

(5)(i) Objective. Capability to identify and report specific cases to a specialized registry (other than a cancer registry), except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of specific case information from Certified EHR Technology to a specialized registry for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (h)(2) of this section. Any EP who meets one or more of the following criteria:

(A) Does not diagnose or directly treat any disease associated with a specialized registry sponsored by a national specialty society for which the EP is eligible, or the public health agencies in their jurisdiction;

(B) Operates in a jurisdiction for which no specialized registry sponsored by a public health agency or by a national specialty society for which the EP is eligible is capable of receiving electronic specific case information in the specific standards required by Certified EHR Technology at the beginning of their EHR reporting period;

(C) Operates in a jurisdiction where no public health agency or national specialty society for which the EP is eligible provides information timely on capability to receive information into their specialized registries; or

(D) Operates in a jurisdiction for which no specialized registry sponsored by a public health agency or by a national specialty society for which the EP is eligible that is capable of receiving electronic specific case information in the specific standards required by Certified EHR Technology at the beginning of his or her EHR reporting period can enroll additional EPs.

(6)(i) Objective. Record electronic notes in patient records.

(ii) Measure. Enter at least one electronic progress note created, edited, and signed by an EP for more than 30 percent of unique patients with at least one office visit during the EHR reporting period. The text of the electronic note must be text-searchable and may contain drawings and other content.

(l) Stage 2 core criteria for eligible hospitals or CAHs. An eligible hospital or CAH must meet the following objectives and associated measures except those objectives and associated measures for which an eligible hospital or CAH qualifies for an exclusion under paragraph (i)(2) of this section.

(1)(i) Objective. Use computerized provider order entry for medication, laboratory, and radiology orders directly entered by any licensed healthcare professional who can enter orders into the medical record per State, local, and professional guidelines.

(ii) Measures. Subject to paragraph (c) of this section, more than—

(A) Sixty percent of medication orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry,

(B) Thirty percent of laboratory orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry, and

(C) Thirty percent of radiology orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(2)(i) Objective. Record all of the following demographics:

(A) Preferred language.

(B) Sex.

(C) Race.

(D) Ethnicity.

(E) Date of birth.

(F) Date and preliminary cause of death in the event of mortality in the eligible hospital or CAH.

(ii) Measure. More than 80 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period have demographics recorded as structured data.

(3)(i) Objective. Record and chart changes in the following vital signs:

(A) Height/Length.

(B) Weight.

(C) Blood pressure (ages 3 and over).

(D) Calculate and display body mass index (BMI).

(E) Plot and display growth charts for patients 0-20 years, including body mass index.

(ii) Measure. Subject to paragraph (c) of this section, more than 80 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period have blood pressure (for patients age 3 and over only) and height/length and weight (for all ages) recorded as structured data.

(4)(i) Objective. Record smoking status for patients 13 years old or older.

(ii) Measure. Subject to paragraph (c) of this section, more than 80 percent of all unique patients 13 years old or older admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period have smoking status recorded as structured data.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that admits no patients 13 years old or older to their inpatient or emergency department (POS 21 or 23) during the EHR reporting period.

(5)(i) Objective. Use clinical decision support to improve performance on high priority health conditions.

(ii) Measures. (A) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an eligible hospital or CAH's patient population, the clinical decision support interventions must be related to high-priority health conditions; and

(B) The eligible hospital or CAH has enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(6)(i) Objective. Incorporate clinical lab test results into Certified EHR Technology as structured data.

(ii) Measure. Subject to paragraph (c) of this section, more than 55 percent of all clinical lab tests results ordered by authorized providers of the eligible hospital or CAH for patients admitted to its inpatient or emergency department (POS 21 or 23) during the EHR reporting period whose results are either in a positive/negative affirmation or numerical format are incorporated in Certified EHR Technology as structured data.

(7)(i) Objective. Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research or outreach.

(ii) Measure. Generate at least one report listing patients of the eligible hospital or CAH with a specific condition.

(8)(i) Objective. Provide patients the ability to view online, download, and transmit information about a hospital admission.

(ii) Measures. (A) More than 50 percent of all unique patients who are discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH have their information available online within 36 hours of discharge; and

(B) More than 5 percent of all unique patients who are discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH (or their authorized representative) view, download or transmit to a third party their information during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that is located in a county that does not have 50 percent or more of its housing units with 3Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from paragraph (l)(8)(ii)(B) of this section.

(9)(i) Objective. Use clinically relevant information from Certified EHR Technology to identify patient-specific education resources and provide those resources to the patient.

(ii) Measure. More than 10 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) are provided patient-specific education resources identified by Certified EHR Technology.

(10)(i) Objective. The eligible hospital or CAH that receives a patient from another setting of care or provider of care or believes an encounter is relevant should perform medication reconciliation.

(ii) Measure. Subject to paragraph (c) of this section, the eligible hospital or CAH performs medication reconciliation for more than 50 percent of transitions of care in which the patient is admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23).

(11)(i) Objective. The eligible hospital or CAH that transitions their patient to another setting of care or provider of care or refers their patient to another provider of care provides a summary care record for each transition of care or referral.

(ii) Measures. (A) Subject to paragraph (c) in this section, the eligible hospital or CAH that transitions or refers their patient to another setting of care or provider of care provides a summary of care record for more than 50 percent of transitions of care and referrals,

(B) Subject to paragraph (c) in this section, the eligible hospital or CAH that transitions their patient to another setting of care or provider of care provides a summary of care record for more than 10 percent of such transitions and referrals either—

(1) Electronically transmitted using Certified EHR Technology to a beneficiary; or

(2) Where the beneficiary receives the summary of care record via exchange facilitated by an organization that is a NwHIN Exchange participant or in a manner that is consistent with the governance mechanism ONC establishes for the nationwide health information network; and

(C) Subject to paragraph (c) of this section an eligible hospital or CAH must satisfy one of the following:

(1) Conducts one or more successful electronic exchanges of a summary of care record meeting the measure specified in paragraph (l)(11)(ii)(B) of this section with a beneficiary using technology to receive the summary of care record that was designed by a different EHR developer than the sender's EHR technology certified at 45 CFR 170.314(b)(2); or

(2) Conducts one or more successful tests with the CMS designated test EHR during the EHR reporting period.

(12)(i) Objective. Capability to submit electronic data to immunization registries or immunization information systems except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of electronic immunization data from Certified EHR Technology to an immunization registry or immunization information system for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that meets one or more of the following criteria:

(A) The eligible hospital or CAH does not administer any of the immunizations to any of the populations for which data is collected by their jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(B) The eligible hospital or CAH operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required for Certified EHR Technology at the start of their EHR reporting period.

(C) The eligible hospital or CAH operates in a jurisdiction where no immunization registry or immunization information system provides information timely on capability to receive immunization data.

(D) Operates in a jurisdiction for which no immunization registry or immunization information system that is capable of accepting the specific standards required by Certified EHR Technology at the start of their EHR reporting period can enroll additional eligible hospitals or CAHs.

(13)(i) Objective. Capability to submit electronic reportable laboratory results to public health agencies, where except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of electronic reportable laboratory results from Certified EHR Technology to a public health agency for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that meets one or more of the following criteria:

(A) Operates in a jurisdiction for which no public health agency is capable of receiving electronic reportable laboratory results in the specific standards required for Certified EHR Technology at the start of their EHR reporting period.

(B) Operates in a jurisdiction for which no public health agency provides information timely on capability to receive electronic reportable laboratory results.

(C) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific standards required by Certified EHR Technology at the start of their EHR reporting period can enroll additional eligible hospitals or CAHs.

(14)(i) Objective. Capability to submit electronic syndromic surveillance data to public health agencies, except where prohibited, and in accordance with applicable law and practice.

(ii) Measure. Successful ongoing submission of electronic syndromic surveillance data from Certified EHR Technology to a public health agency for the entire EHR reporting period.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that meets one or more of the following criteria:

(A) Does not have an emergency or urgent care department.

(B) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required for Certified EHR Technology at the start of their EHR reporting period or can enroll additional eligible hospitals or CAHs.

(C) Operates in a jurisdiction for which no public health agency provides information timely on capability to receive syndromic surveillance data.

(D) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific standards required by Certified EHR Technology at the start of their EHR reporting period can enroll additional eligible hospitals or CAHs.

(15)(i) Objective. Protect electronic health information created or maintained by the Certified EHR Technology through the implementation of appropriate technical capabilities.

(ii) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the encryption/security of data stored in Certified EHR Technology in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), and implement security updates as necessary and correct identified security deficiencies as part of the eligible hospital's or CAH's risk management process.

(16)(i) Objective. Automatically track medications from order to administration using assistive technologies in conjunction with an electronic medication administration record (eMAR).

(ii) Measure. Subject to paragraph (c) of this section, more than 10 percent of medication orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period for which all doses are tracked using eMAR.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH with an average daily inpatient census of fewer than 10 patients.

(m) Stage 2 menu set criteria for eligible hospitals or CAHs. An eligible hospital or CAH must meet the measure criteria for three of the following objectives and associated measures.

(1)(i) Objective. Record whether a patient 65 years old or older has an advance directive.

(ii) Measure. Subject to paragraph (c) of this section, more than 50 percent of all unique patients 65 years old or older admitted to the eligible hospital's or CAH's inpatient department (POS 21) during the EHR reporting period have an indication of an advance directive status recorded as structured data.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that admits no patients age 65 years old or older during the EHR reporting period.

(2)(i) Objective. Imaging results consisting of the image itself and any explanation or other accompanying information are accessible through Certified EHR Technology.

(ii) Measure. Subject to paragraph (c) of this section, more than 10 percent of all tests whose result is an image ordered by an authorized provider of the eligible hospital or CAH for patients admitted to its inpatient or emergency department (POS 21 or 23) during the EHR reporting period are accessible through Certified EHR Technology.

(3)(i) Objective. Record patient family health history as structured data.

(ii) Measure. More than 20 percent of all unique patients admitted to the eligible hospital or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period have a structured data entry for one or more first-degree relatives.

(4)(i) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx).

(ii) Measure. Subject to paragraph (c) of this section, more than 10 percent of hospital discharge medication orders for permissible prescriptions (for new, changed and refilled prescriptions) are queried for a drug formulary and transmitted electronically using Certified EHR Technology.

(iii) Exclusion in accordance with paragraph (i)(2) of this section. Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and there are no pharmacies that accept electronic prescriptions within 10 miles at the start of its EHR reporting period.

(5)(i) Objective. Record electronic notes in patient records.

(ii) Measure: Enter at least one electronic progress note created, edited and signed by an authorized provider of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) for more than 30 percent of unique patients admitted to the eligible hospital or CAH's inpatient or emergency department during the EHR reporting period. The text of the electronic note must be text-searchable and may contain drawings and other content.

(6)(i) Objective. Provide structured electronic lab results to ambulatory providers.

(ii) Measures. Hospital labs send structured electronic clinical lab results to the ordering provider for more than 20 percent of—

(A) The electronic lab orders received; or

(B) The lab orders received.

[75 FR 44565, July 28, 2010, as amended at 75 FR 81887, Dec. 29, 2010; 77 FR 54149, Sept. 4, 2012; 77 FR 64758, Oct. 23, 2012; 77 FR 72991, Dec. 7, 2012; 79 FR 52932, Sept. 4, 2014. Redesignated and amended at 80 FR 62943, Oct. 16, 2015; 85 FR 59026, Sept. 18, 2020]

§ 495.22 Meaningful use objectives and measures for EPs, eligible hospitals, and CAHs for 2015 through 2018.

(a) General rules. (1) Subject to the provisions of paragraph (a)(2) of this section, the criteria specified in this section are applicable for EPs, eligible hospitals, and CAHs for 2015 through 2018.

(2) For 2017 and 2018, EPs, eligible hospitals, and CAHs that have successfully demonstrated meaningful use in a prior year have the option to use the criteria specified for 2019 in § 495.24 instead of the criteria specified for 2017 and 2018 under paragraphs (e) and (f) of this section.

(b) Criteria for EPs for 2015 through 2018—(1) General rule regarding criteria for meaningful use for 2015 through 2018 for EPs. Except as specified in paragraph (b)(2) of this section, EPs must meet all objectives and associated measures of the meaningful use criteria specified under paragraph (e) of this section to meet the definition of a meaningful EHR user.

(2) Exclusion for non-applicable objectives. (i) An EP may exclude a particular objective contained in paragraph (e) of this section, if the EP meets all of the following requirements:

(A) Must ensure that the objective in paragraph (e) of this section includes an option for the EP to attest that the objective is not applicable.

(B) Meets the criteria in the applicable objective that would permit the attestation to the exclusion.

(C) Attests.

(ii) An exclusion will reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (e) of this section.

(c) Criteria for eligible hospitals and CAHs for 2015 through 2018—(1) General rule regarding criteria for meaningful use for 2015 through 2018 for eligible hospitals and CAHs. Except as specified in paragraph (c)(2) of this section, eligible hospitals and CAHs attesting to CMS must meet all objectives and associated measures of the meaningful use criteria specified under paragraph (e) of this section to meet the definition of a meaningful EHR user in 2015 and 2016 and must meet all objectives and associated measures of the meaningful use criteria specified under paragraph (f) of this section to meet the definition of a meaningful EHR user in 2017 and 2018. Except as specified in paragraph (c)(2) of this section, eligible hospitals and CAHs attesting to a State for the Medicaid EHR Incentive Program must meet all objectives and associated measures of the meaningful use criteria specified under paragraph (e) of this section to meet the definition of a meaningful EHR user in 2015 through 2018.

(2) Exclusion for non-applicable objectives. (i) An eligible hospital or CAH may exclude a particular objective contained in paragraph (e) of this section, if the eligible hospital or CAH meets all of the following requirements:

(A) Must ensure that the objective in paragraph (e) of this section includes an option for the eligible hospital or CAH to attest that the objective is not applicable.

(B) Meets the criteria in the applicable objective that would permit the attestation to the exclusion.

(C) Attests.

(ii) An exclusion will reduce (by the number of exclusions applicable) the number of objectives that would otherwise apply in paragraph (e) of this section.

(d) Many of the objectives and associated measures in paragraph (e) of this section rely on measures that count unique patients or actions. (1) If a measure (or associated objective) in paragraph (e) or (f) of this section references this paragraph (d), the measure may be calculated by reviewing only the actions for patients whose records are maintained using CEHRT. A patient's record is maintained using CEHRT if sufficient data were entered in the CEHRT to allow the record to be saved, and not rejected due to incomplete data.

(2) If the objective and associated measure does not reference this paragraph (d) of this section, then the measure must be calculated by reviewing all patient records, not just those maintained using CEHRT.

(e) Meaningful use objectives and measures for EPs for 2015 through 2018, for eligible hospitals and CAHs attesting to CMS for 2015 and 2016, and for eligible hospitals and CAHs attesting to a State for the Medicaid EHR Incentive Program for 2015 through 2018.—(1) Protect patient health information—(i) Objective. Protect electronic protected health information created or maintained by the CEHRT through the implementation of appropriate technical capabilities.

(ii) Measures—(A) EP measure. Conduct or review a security risk analysis in accordance with the requirements in 45 CFR 164.308(a)(1), including addressing the security (to include encryption) of ePHI created or maintained by CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), and implement security updates as necessary and correct identified security deficiencies as part of the EP's risk management process.

(B) Eligible hospital or CAH measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including Addressing the security (to include encryption) of ePHI created or maintained in CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), and implement security updates as necessary, and correct identified security deficiencies as part of the eligible hospital's or CAH's risk management process.

(2) Clinical decision support—(i) Objective. Use clinical decision support to improve performance on high-priority health conditions.

(ii) EP measures—(A) Measure. In order for EPs to meet the objective they must satisfy both of the following measures:

(1) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an EP's scope of practice or patient population, the clinical decision support interventions must be related to high-priority health conditions.

(2) Enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(B) Exclusion in accordance with paragraph (b)(2) of this section. An EP who writes fewer than 100 medication orders during the EHR reporting period may be excluded from the measure under paragraph (e)(2)(i)(A)(2) of this section.

(C) Alternate specifications. An EP previously scheduled to be in Stage 1 in 2015 may meet an alternate objective and measure specified in paragraph (e)(2)(ii)(C)(1) and (2) in place of the measure outlined under paragraph (e)(2)(ii)(A)(1) of this section for an EHR reporting period in 2015 only.

(1) Alternate objective. Implement one clinical decision support rule relevant to specialty or high clinical priority along with the ability to track compliance with that rule.

(2) Alternate measure. Implement one clinical decision support rule.

(iii) Eligible hospital and CAH measures—(A) Measure. In order for eligible hospitals and CAHs to meet the objective they must satisfy both of the following measures:

(1) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an eligible hospital or CAH's scope of practice or patient population, the clinical decision support interventions must be related to high-priority health conditions.

(2) Enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(B) Alternate specifications. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may meet an alternate measure described in paragraph (e)(2)(iii)(B)(2) of this section in place of the measure described in paragraph (e)(2)(iii)(A)(1) of this section for an EHR reporting period in 2015.

(1) Alternate objective. Implement one clinical decision support rule relevant to a high priority hospital condition along with the ability to track compliance with that rule.

(2) Alternate measure. Implement one clinical decision support rule.

(3) Computerized provider order entry—(i) Objective. Use computerized provider order entry for medication, laboratory, and radiology orders directly entered by any licensed healthcare professional who can enter orders into the medical record per state, local, and professional guidelines.

(ii) EP measures—(A) Measures. An EP must meet the following 3 measures, subject to paragraph (d) of this section:

(1) More than 60 percent of medication orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(2) More than 30 percent of laboratory orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(3) More than 30 percent of radiology orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(B) Exclusion in accordance with paragraph (b)(2) of this section. (1) For the measure specified in paragraph (e)(3)(ii)(A)(1) of this section, any EP who writes fewer than 100 medication orders during the EHR reporting period.

(2) For the measure specified in paragraph (e)(3)(ii)(A)(2) of this section, any EP who writes fewer than 100 laboratory orders during the EHR reporting period.

(3) For the measure specified in paragraph (e)(3)(ii)(A)(3) of this section, any EP who writes fewer than 100 radiology orders during the EHR reporting period.

(C) Alternate exclusions and specifications. An EP previously scheduled to be in Stage 1 in 2015 may meet an alternate measure (e)(3)(ii)(C)(1) in place of the measure outlined under paragraph (e)(3)(ii)(A)(1) of this section, and may exclude the measures outlined under paragraphs (e)(3)(ii)(A)(2) and (3) of this section for an EHR reporting period in 2015. An EP previously scheduled to be in Stage 1 in 2016 may exclude the measures outlined under paragraphs (e)(3)(ii)(A)(2) and (3) of this section for an EHR reporting period in 2016.

(1) Alternate measure 1 in 2015. Subject to paragraph (d) of this section—

(i) More than 30 percent of all unique patients with at least one medication in their medication list seen by the EP during the EHR reporting period have at least one medication order entered using CPOE; or

(ii) More than 30 percent of medication orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(2) Alternate exclusions in 2015. An EP scheduled to be in Stage 1 in 2015 may exclude the measures specified in paragraphs (e)(3)(ii)(A)(2) and (e)(3)(ii)(A)(3) of this section in 2015.

(3) Alternate exclusions in 2016. An EP scheduled to be in Stage 1 in 2016 may exclude the measure specified in paragraphs (e)(3)(ii)(A)(2) and (e)(3)(ii)(A)(3) of this section in 2016.

(iii) Eligible hospital and CAH measures. (A) An eligible hospital or CAH must meet the following 3 measures, subject to paragraph (d) of this section:

(1) More than 60 percent of medication orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(2) More than 30 percent of laboratory orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(3) More than 30 percent of radiology orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(B) Alternate exclusions and specifications. (1) An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may meet an alternate measure specified in paragraph (e)(3)(iii)(B)(2) of this section in place of the measure outlined under paragraph (e)(3)(iii)(A)(1) of this section, and may exclude the measures outlined under paragraphs (e)(3)(iii)(A)(2) and (e)(3)(iii)(A)(3) of this section for an EHR reporting period in 2015. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2016 may exclude the measures outlined under paragraphs (e)(3)(iii)(A)(2) and (3) of this section for an EHR reporting period in 2016.

(2) Alternate measure 1 in 2015. Subject to paragraph (d) of this section—

(i) More than 30 percent of all unique patients with at least one medication in their medication list admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) have at least one medication order entered using CPOE; or

(ii) More than 30 percent of medication orders created by the authorized providers of the eligible hospital or CAH for patients admitted to their inpatient or emergency departments (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(3) Alternate exclusions in 2015 and 2016. An eligible hospital or CAH scheduled to be in Stage 1 in 2015 may exclude the following measures in 2015 and eligible hospital or CAH scheduled to be in Stage 1 in 2016 may exclude the following measures in 2016:

(i) The measure specified in paragraph (e)(3)(iii)(A)(2) of this section.

(ii) The measure specified in paragraph (e)(3)(iii)(A)(3) of this section.

(4) Electronic prescribing—(i) Objective. For EPs, generate and transmit permissible prescriptions electronically (eRx); and, for eligible hospitals and CAHs, generate, and transmit permissible discharge prescriptions electronically (eRx).

(ii) EP measure—(A) Measure. Subject to paragraph (d) of this section, more than 50 percent of all permissible prescriptions written by the EP are queried for a drug formulary and transmitted electronically using CEHRT.

(B) Exclusion in accordance with paragraph (b)(2) of this section. Any EP who—

(1) Writes fewer than 100 permissible prescriptions during the EHR reporting period; or

(2) Does not have a pharmacy within his or her organization and there are no pharmacies that accept electronic prescriptions within 10 miles of the EP's practice location at the start of his or her EHR reporting period.

(C) Alternate specification. In 2015 an EP—

(1) Previously scheduled to be in Stage 1 in 2015 may meet an alternate measure under paragraph (e)(4)(ii)(C)(2) of this section in place of the measure outlined under paragraph(e)(4)(ii)(A) of this section; and

(2) Subject to paragraph (d) of this section, more than 40 percent of all permissible prescriptions written by the EP are transmitted electronically using CEHRT.

(iii) Eligible hospital and CAH measure—(A) Measure. Subject to paragraph (d) of this section, more than 10 percent of hospital discharge medication orders for permissible prescriptions are queried for a drug formulary and transmitted electronically using CEHRT.

(B) Exclusion in accordance with paragraph (c)(2) of this section. Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and is not located within 10 miles of any pharmacy that accepts electronic prescriptions at the start of their EHR reporting period.

(C) Alternate exclusions. (1) An eligible hospital or CAH previously scheduled to be in—

(i) Stage 1 in 2015 may exclude the measure specified in paragraph (e)(4)(iii)(A) of this section for an EHR reporting period in 2015; or

(ii) Stage 2 in 2015 may exclude the measure specified in paragraph (e)(4)(iii)(A) of this section for an EHR reporting period in 2015.

(2) An eligible hospital or CAH previously scheduled to be in—

(i) Stage 1 in 2016, may exclude the measure specified in paragraph (e)(4)(iii)(A) of this section for an EHR reporting period in 2016; or

(ii) Stage 2 in 2016, may exclude the measure specified in paragraph (e)(4)(iii)(A) of this section for an EHR reporting period in 2016.

(5) Health Information Exchange—(i) Objective. The EP, eligible hospital or CAH who transitions a patient to another setting of care or provider of care or refers a patient to another provider of care provides a summary care record for each transition of care or referral.

(ii) EP measure—(A) Measure. Subject to paragraph (d) of this section, the EP who transitions or refers his or her patient to another setting of care or provider of care must do the following:

(1) Use CEHRT to create a summary of care record.

(2) Electronically transmit such summary to a receiving provider for more than 10 percent of transitions of care and referrals.

(B) Exclusion in accordance with paragraph (b)(2) of this section. Any EP who transfers a patient to another setting or refers a patient to another provider less than 100 times during the EHR reporting period.

(C) Alternate exclusion. An EP previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(5)(ii)(A) of this section for an EHR reporting period in 2015.

(iii) Eligible hospital and CAH measure—(A) Measure. Subject to paragraph (d) of this section, the eligible hospital or CAH that transitions or refers its patient to another setting of care or provider of care must do the following:

(1) Use CEHRT to create a summary of care record.

(2) Electronically transmit such summary to a receiving provider for more than 10 percent of transitions of care and referrals.

(B) Alternate exclusion. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(5)(iii)(A) of this section for an EHR reporting period in 2015.

(6) Patient specific education—(i) Objective. Use clinically relevant information from CEHRT to identify patient-specific education resources and provide those resources to the patient.

(ii) EP measure—(A) Measure. Patient-specific education resources identified by CEHRT are provided to patients for more than 10 percent of all unique patients with office visits seen by the EP during the EHR reporting period.

(B) Exclusion in accordance with paragraph (b)(2) of this section. Any EP who has no office visits during the EHR reporting period.

(C) Alternate exclusion. An EP previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(6)(ii)(A) of this section for an EHR reporting period in 2015.

(iii) Eligible hospital and CAH measure—(A) Measure. More than 10 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) are provided patient-specific education resources identified by CEHRT.

(B) Alternate exclusion. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(6)(iii)(A) of this section for an EHR reporting period in 2015.

(7) Medication reconciliation—(i) Objective. The EP, eligible hospital or CAH that receives a patient from another setting of care or provider of care or believes an encounter is relevant performs medication reconciliation.

(ii) EP measure—(A) Measure. Subject to paragraph (d) of this section, the EP performs medication reconciliation for more than 50 percent of transitions of care in which the patient is transitioned into the care of the EP.

(B) Exclusion in accordance with paragraph (b)(2) of this section. Any EP who was not the recipient of any transitions of care during the EHR reporting period.

(C) Alternate exclusion. An EP previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(7)(ii)(A) of this section for an EHR reporting period in 2015.

(iii) Eligible hospital or CAH measure. An eligible hospital or CAH must meet the following measure, subject to paragraph (d) of this section:

(A) Measure. Subject to paragraph (d) of this section, the eligible hospital or CAH performs medication reconciliation for more than 50 percent of transitions of care in which the patient is admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23).

(B) Alternate exclusion. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(7)(iii)(A) of this section for an EHR reporting period in 2015.

(8) Patient electronic access—(i) EP objective. Provide patients the ability to view online, download, and transmit their health information within 4 business days of the information being available to the EP.

(A) EP measures. An EP must meet the following 2 measures:

(1) Measure 1: More than 50 percent of all unique patients seen by the EP during the EHR reporting period are provided timely access to view online, download and transmit to a third party their health information subject to the EP's discretion to withhold certain information.

(2) Measure 2: For an EHR reporting period—

(i) In 2015 and 2016, at least 1 patient seen by the EP during the EHR reporting period (or patient-authorized representative) views, downloads or transmits his or her health information to a third party during the EHR reporting period.

(ii) In 2017 and 2018, more than 5 percent of unique patients seen by the EP during the EHR reporting period (or their authorized representatives) views, downloads or transmits their health information to a third party during the EHR reporting period.

(B) Exclusion in accordance with paragraph (b)(2) of this section—(1) Any EP who neither orders nor creates any of the information listed for inclusion as part of the measure in paragraph (e)(8)(ii)(A)(1) or (2) of this section, except for “Patient name” and “Provider's name and office contact information,” is excluded from paragraphs (e)(8)(ii)(A)(1) and (2) of this section.

(2) Any EP who conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the Federal Communications Commission on the first day of the EHR reporting period is excluded from paragraph (e)(8)(ii)(A)(2) of this section.

(C) Alternate exclusion. An EP previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(8)(ii)(A)(2) of this section for an EHR reporting period in 2015.

(ii) Eligible hospital and CAH objective. Provide patients the ability to view online, download, and transmit information within 36 hours of hospital discharge.

(A) Eligible hospital and CAH measures. An eligible hospital or CAH must meet the following 2 measures:

(1) Measure 1. More than 50 percent of all unique patients who are discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH have timely access to view online, download and transmit to a third party their health information.

(2) Measure 2. For an EHR reporting period—

(i) In 2015 or 2016, at least 1 patient (or patient-authorized representative) who is discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH during the EHR reporting period views, downloads or transmits to a third party his or her information during the EHR reporting period; and

(ii) In 2017 and 2018, more than 5 percent of unique patients (or patient-authorized representatives) discharged from the inpatient or emergency department (POS 21 or POS 23) of an eligible hospital or CAH during the EHR reporting period view, download or transmit to a third party their health information during the EHR reporting period.

(B) Exclusion applicable under paragraph (c)(2) of this section. Any eligible hospital or CAH that is located in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from paragraph (e)(8)(iii)(A)(2) of this section.

(C) Alternate exclusion. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(8)(iii)(A)(2) of this section for an EHR reporting period in 2015.

(9) Secure messaging—(i) EP objective. Use secure electronic messaging to communicate with patients on relevant health information.

(ii) EP measure—(A) Measure. For an EHR reporting period—

(1) In 2015, the capability for patients to send and receive a secure electronic message with the EP was fully enabled during the EHR reporting period;

(2) In 2016, for at least 1 patient seen by the EP during the EHR reporting period, a secure message was sent using the electronic messaging function of CEHRT to the patient (or the patient-authorized representative), or in response to a secure message sent by the patient (or the patient-authorized representative) during the EHR reporting period; and

(3) In 2017 and 2018, for more than 5 percent of unique patients seen by the EP during the EHR reporting period, a secure message was sent using the electronic messaging function of CEHRT to the patient (or the patient-authorized representative), or in response to a secure message sent by the patient (or the patient-authorized representative) during the EHR reporting period.

(B) Exclusion in accordance with paragraph (b)(2) of this section. An EP may exclude from the measure if he or she—

(1) Has no office visits during the EHR reporting period; or

(2) Conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the Federal Communications Commission on the first day of the EP's EHR reporting period.

(C) Alternate specification. An EP previously scheduled to be in Stage 1 in 2015 may exclude the measure specified in paragraph (e)(9)(ii)(A) of this section for an EHR reporting period in 2015.

(10) Public Health Reporting—(i) EP Public Health Reporting—(A) Objective. The EP is in active engagement with a public health agency to submit electronic public health data from CEHRT, except where prohibited, and in accordance with applicable law and practice.

(B) Measures. In order to meet the objective under paragraph (e)(10)(i)(A) of this section, an EP must choose from measures 1 through 3 (as specified in paragraphs (e)(10)(i)(B)(1) through (3) of this section) and must successfully attest to any combination of two measures. The EP may attest to measure 3 (as specified in paragraph (e)(10)(i)(B)(3) of this section more than one time. These measures may be met by any combination in accordance with applicable law and practice.

(1) Immunization registry reporting. The EP is in active engagement with a public health agency to submit immunization data.

(2) Syndromic surveillance reporting. The EP is in active engagement with a public health agency to submit syndromic surveillance data.

(3) Specialized registry reporting. The EP is in active engagement to submit data to specialized registry.

(C) Exclusions in accordance with paragraph (b)(2) of this section. (1) Any EP meeting one or more of the following criteria may be excluded from the immunization registry reporting measure in paragraph (e)(10)(i)(B)(1) of this section if the EP:

(i) Does not administer any immunizations to any of the populations for which data is collected by his or her jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of his or her EHR reporting period.

(iii) Operates in a jurisdiction in which no immunization registry or immunization information system has declared readiness to receive immunization data from the EP at the start of the EHR reporting period.

(2) Any EP meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure described in paragraph (e)(10)(i)(B)(2) of the section if the EP:

(i) Is not in a category of providers from which ambulatory syndromic surveillance data is collected by their jurisdiction's syndromic surveillance system;

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data from EPs in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from EPs at the start of the EHR reporting period.

(3) Any EP who meets one or more of the following criteria may be excluded from the specialized registry reporting measure described in paragraph (e)(10)(i)(B)(3) of this section if the EP:

(i) Does not diagnose or treat any disease or condition associated with or collect relevant data that is required by a specialized registry in their jurisdiction during the EHR reporting period;

(ii) Operates in a jurisdiction for which no specialized registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period; or

(iii) Operates in a jurisdiction where no specialized registry for which the EP is eligible has declared readiness to receive electronic registry transactions at the beginning of the EHR reporting period.

(D) Alternate specifications. An EP previously scheduled to be in Stage 1 in 2015 may choose from measures 1 through 3 (as specified in paragraphs (e)(10)(i)(B)(1) through (3) of this section) and must successfully attest to any one measure in accordance with applicable law and practice for an EHR reporting period in 2015.

(ii) Eligible hospital and CAH Public Health and Clinical Data Registry reporting objective—(A) Objective. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic public health data from CEHRT, except where prohibited, and in accordance with applicable law and practice.

(B) Measures. In order to meet the objective under paragraph (e)(10)(ii)(A) of this section, an eligible hospital or CAH must choose from measures 1 through 4 (as described in paragraphs (e)(10)(ii)(B)(1) through (4) of this section) and must successfully attest to any combination of three measures. These measures may be met by any combination, including meeting the measure specified in paragraph (e)(10)(ii)(B)(3) of this section multiple times, in accordance with applicable law and practice:

(1) Immunization registry reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization.

(2) Syndromic surveillance reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data

(3) Specialized registry reporting. The eligible hospital or CAH is in active engagement to submit data to a specialized registry.

(4) Electronic reportable laboratory result reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results.

(C) Exclusions in accordance with paragraph (c)(2) of this section. (1) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the immunization registry reporting measure specified in paragraph (e)(10)(ii)(B)(1) of this section if the eligible hospital or CAH:

(i) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data from the eligible hospital or CAH at the start of the EHR reporting period.

(2) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure specified in paragraph (e)(10)(ii)(B)(2) of this section if the eligible hospital or CAH:

(i) Does not have an emergency or urgent care department.

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data from eligible hospitals or CAHs in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs at the start of the EHR reporting period.

(3) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the specialized registry reporting measure described in paragraph (e)(10)(i)(B)(3) of this section if the eligible hospital or CAH:

(i) Does not diagnose or directly treat any disease associated with or collect relevant data is required by a specialized registry for which the eligible hospital or CAH is eligible in their jurisdiction.

(ii) Operates in a jurisdiction for which no specialized registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period; or

(iii) Operates in a jurisdiction where no specialized registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions at the beginning of the EHR reporting period.

(4) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (d)(10)(ii)(B)(4) of this section if the eligible hospital or CAH:

(i) Does not perform or order laboratory tests that are reportable in the eligible hospital's or CAH's jurisdiction during the EHR reporting period

(ii) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from eligible hospitals or CAHs at the start of the EHR reporting period.

(D) Alternate specification. An eligible hospital or CAH previously scheduled to be in Stage 1 in 2015 may choose from measures 1 through 4 (as specified in paragraphs (e)(10)(ii)(B)(1) through (4) of this section) and must successfully attest to any 2 measures. These measures may be met by any combination, including meeting the measures specified in paragraph (e)(10)(ii)(B)(3) of this section multiple times, in accordance with applicable law and practice.

(f) Meaningful use objectives and measures for eligible hospitals and CAHs attesting to CMS for 2017 and 2018—(1) Protect patient health information—(i) Objective. Protect electronic protected health information created or maintained by the CEHRT through the implementation of appropriate technical capabilities.

(ii) Security risk analysis measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (to include encryption) of ePHI created or maintained in CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), and implement security updates as necessary, and correct identified security deficiencies as part of the eligible hospital's or CAH's risk management process.

(2)-(3) [Reserved]

(4) Electronic Prescribing—(i) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx).

(ii) e-Prescribing measure. Subject to the provisions of paragraph (d) of this section, more than 10 percent of hospital discharge medication orders for permissible prescriptions are queried for a drug formulary and transmitted electronically using CEHRT.

(iii) Exclusion for nonapplicable objectives. Subject to the provisions of paragraph (c)(2) of this section, any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and is not located within 10 miles of any pharmacy that accepts electronic prescriptions at the start of their EHR reporting period.

(5) Health Information Exchange—(i) Objective. The eligible hospital or CAH who transitions a patient to another setting of care or provider of care or refers a patient to another provider of care provides a summary care record for each transition of care or referral.

(ii) Health information exchange measure. Subject to the provisions of paragraph (d) of this section, the eligible hospital or CAH that transitions or refers their patient to another setting of care or provider of care must do the following:

(A) Use CEHRT to create a summary of care record; and

(B) Electronically transmit such summary to a receiving provider for more than 10 percent of transitions of care and referrals.

(6) Patient specific education—(i) Objective. Use clinically relevant information from CEHRT to identify patient-specific education resources and provide those resources to the patient.

(ii) Patient-specific education measure. More than 10 percent of all unique patients admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) are provided patient specific education resources identified by CEHRT.

(7) Medication reconciliation—(i) Objective. The eligible hospital or CAH that receives a patient from another setting of care or provider of care or believes an encounter is relevant performs medication reconciliation.

(ii) Medication reconciliation measure. Subject to the provisions of paragraph (d) of this section, the eligible hospital or CAH performs medication reconciliation for more than 50 percent of transitions of care in which the patient is admitted to the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23).

(8) Patient electronic access—(i) Objective. Provide patients the ability to view online, download, and transmit information within 36 hours of hospital discharge.

(ii) Measures. An eligible hospital or CAH must meet the following two measures:

(A) Provide patient access measure. More than 50 percent of all unique patients who are discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH have timely access to view online, download, and transmit to a third party their health information.

(B) View, download or transmit (VDT) measure. At least 1 patient (or patient-authorized representative) who is discharged from the inpatient or emergency department (POS 21 or 23) of an eligible hospital or CAH during the EHR reporting period views, downloads, or transmits to a third party his or her information during the EHR reporting period.

(iii) Exclusion for nonapplicable objectives. Subject to the provisions of paragraph (c)(2) of this section, any eligible hospital or CAH that is located in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from paragraph (f)(8)(ii)(B) of this section.

(9) Public health reporting—(i) Objective. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic public health data from CEHRT, except where prohibited, and in accordance with applicable law and practice.

(ii) Measures. In order to meet the objective under paragraph (f)(9)(i) of this section, an eligible hospital or CAH must choose from measures 1 through 4 (as described in paragraphs (f)(9)(ii)(A) through (D) of this section).

(A) Immunization registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization data.

(B) Syndromic surveillance reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data.

(C) Specialized registry reporting measure. The eligible hospital or CAH is in active engagement to submit data to a specialized registry.

(D) Electronic reportable laboratory result reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results.

(iii) Exclusions for non-applicable objectives. Subject to the provisions of paragraph (c)(2) of this section—

(A) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the immunization measure specified in paragraph (f)(9)(ii)(A) of this section if the eligible hospital or CAH—

(1) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(2) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data from the eligible hospital or CAH at the start of the EHR reporting period.

(B) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance measure specified in paragraph (f)(9)(ii)(B) of this section if the eligible hospital or CAH—

(1) Does not have an emergency or urgent care department.

(2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data from eligible hospitals or CAHs in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs at the start of the EHR reporting period.

(C) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the specialized registry measure specified in paragraph (f)(9)(ii)(C) of this section if the eligible hospital or CAH—

(1) Does not diagnose or directly treat any disease associated with or collect relevant data is required by a specialized registry for which the eligible hospital or CAH is eligible in their jurisdiction.

(2) Operates in a jurisdiction for which no specialized registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period; or

(3) Operates in a jurisdiction where no specialized registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions at the beginning of the EHR reporting period.

(D) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (f)(9)(ii)(D) of this section if the eligible hospital or CAH—

(1) Does not perform or order laboratory tests that are reportable in the eligible hospital's or CAH's jurisdiction during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from eligible hospitals or CAHs at the start of the EHR reporting period.

[80 FR 62943, Oct. 16, 2015, as amended at 81 FR 11449, Mar. 4, 2016; 81 FR 79882, Nov. 14, 2016; 82 FR 38517, Aug. 14, 2017]

§ 495.24 Stage 3 meaningful use objectives and measures for EPs, eligible hospitals and CAHs for 2019 and subsequent years.

The criteria specified in paragraphs (c) and (d) of this section are optional for 2017 and 2018 for EPs, eligible hospitals, and CAHs that have successfully demonstrated meaningful use in a prior year. The criteria specified in paragraph (d) of this section are applicable for all EPs for 2019 and subsequent years, and for eligible hospitals and CAHs attesting to a State for the Medicaid Promoting Interoperability Program for 2019 and subsequent years. The criteria specified in paragraph (e) of this section are applicable for eligible hospitals and CAHs attesting to CMS for 2019 through 2022. The criteria specified in paragraph (f) of this section are applicable for eligible hospitals and CAHs attesting to CMS for 2023 and subsequent years.

(a) Stage 3 criteria for EPs—(1) General rule regarding Stage 3 criteria for meaningful use for EPs. Except as specified in paragraphs (a)(2) and (3) of this section, EPs must meet all objectives and associated measures of the Stage 3 criteria specified in paragraph (d) of this section to meet the definition of a meaningful EHR user.

(2) Selection of measures for specified objectives in paragraph (d) of this section. An EP may meet the criteria for 2 out of the 3 measures associated with an objective, rather than meeting the criteria for all 3 of the measures, if the EP meets all of the following requirements:

(i) Must ensure that the objective in paragraph (d) of this section includes an option to meet 2 out of the 3 associated measures.

(ii) Meets the threshold for 2 out of the 3 measures for that objective.

(iii) Attests to all 3 of the measures for that objective.

(3) Exclusion for non-applicable objectives and measures. (i) An EP may exclude a particular objective that includes an option for exclusion contained in paragraph (d) of this section, if the EP meets all of the following requirements:

(A) Meets the criteria in the applicable objective that would permit the exclusion.

(B) Attests to the exclusion.

(ii) An EP may exclude a measure within an objective which allows for a provider to meet the threshold for 2 of the 3 measures, as outlined in paragraph (a)(2) of this section, in the following manner:

(A)(1) Meets the criteria in the applicable measure or measures that would permit the exclusion; and

(2) Attests to the exclusion or exclusions.

(B)(1) Meets the threshold; and

(2) Attests to any remaining measure or measures.

(4) Exception for Medicaid EPs who adopt, implement or upgrade in their first payment year. For Medicaid EPs who adopt, implement, or upgrade its CEHRT in their first payment year, the meaningful use objectives and associated measures of the Stage 3 criteria specified in paragraph (d) of this section apply beginning with the second payment year, and do not apply to the first payment year.

(5) Objectives and associated measures in paragraph (d) of this section that rely on measures that count unique patients or actions. (i) If a measure (or associated objective) in paragraph (d) of this section references paragraph (a)(5) of this section, the measure may be calculated by reviewing only the actions for patients whose records are maintained using CEHRT. A patient's record is maintained using CEHRT if sufficient data were entered in the CEHRT to allow the record to be saved, and not rejected due to incomplete data.

(ii) If the objective and associated measure does not reference paragraph (a)(5) of this section, the measure must be calculated by reviewing all patient records, not just those maintained using CEHRT.

(b) Stage 3 criteria for meaningful use for eligible hospitals and CAHs—(1) General rule. Except as specified in paragraphs (b)(2) and (3) of this section, eligible hospitals and CAHs must meet all objectives and associated measures of the Stage 3 criteria specified in paragraphs (c) and (d) of this section, as applicable, to meet the definition of a meaningful EHR user.

(2) Selection of measures for specified objectives in paragraphs (c) and (d) of this section. An eligible hospital or CAH may meet the criteria for 2 out of the 3 measures associated with an objective, rather than meeting the criteria for all 3 of the measures, if the eligible hospital or CAH meets all of the following requirements:

(i) Must ensure that the objective in paragraph (c) or (d) of this section, as applicable, includes an option to meet 2 out of the 3 associated measures.

(ii) Meets the threshold for 2 out of the 3 measures for that objective.

(iii) Attests to all 3 of the measures for that objective.

(3) Exclusion for nonapplicable objectives and measures. (i) An eligible hospital or CAH may exclude a particular objective that includes an option for exclusion contained in paragraph (c) or (d) of this section, as applicable, if the eligible hospital or CAH meets all of the following requirements:

(A) Meets the criteria in the applicable objective that would permit the exclusion.

(B) Attests to the exclusion.

(ii) An eligible hospital or CAH may exclude a measure within an objective which allows for a provider to meet the threshold for 2 of the 3 measures, as outlined in paragraph (b)(2) of this section, in the following manner:

(A)(1) Meets the criteria in the applicable measure or measures that would permit the exclusion; and

(2) Attests to the exclusion or exclusions.

(B)(1) Meets the threshold; and

(2) Attests to any remaining measure or measures.

(4) Exception for Medicaid eligible hospitals or CAHs that adopt, implement or upgrade in their first payment year. For Medicaid eligible hospitals or CAHs that adopt, implement or upgrade CEHRT in their first payment year, the meaningful use objectives and associated measures of the Stage 3 criteria specified in paragraph (c) or (d) of this section apply beginning with the second payment year, and do not apply to the first payment year.

(5) Objectives and associated measures in paragraph (c) or (d) of this section that rely on measures that count unique patients or actions. (i) If a measure (or associated objective) in paragraph (c) or (d) of this section, as applicable, references paragraph (b)(5) of this section, the measure may be calculated by reviewing only the actions for patients whose records are maintained using CEHRT. A patient's record is maintained using CEHRT if sufficient data were entered in the CEHRT to allow the record to be saved, and not rejected due to incomplete data.

(ii) If the objective and associated measure does not reference this paragraph (b)(5) of this section, the measure must be calculated by reviewing all patient records, not just those maintained using CEHRT.

(c) Stage 3 objectives and measures for eligible hospitals and CAHs attesting to CMS—(1) Protect patient health information—(i) Objective. Protect electronic protected health information (ePHI) created or maintained by the CEHRT through the implementation of appropriate technical, administrative, and physical safeguards.

(ii) Security risk analysis measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (including encryption) of data created or maintained by CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the provider's risk management process.

(2) Electronic prescribing—(i) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx).

(ii) e-Prescribing measure. Subject to paragraph (b)(5) of this section, more than 25 percent of hospital discharge medication orders for permissible prescriptions (for new and changed prescriptions) are queried for a drug formulary and transmitted electronically using CEHRT.

(iii) Exclusions in accordance with paragraph (b)(3) of this section. Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and there are no pharmacies that accept electronic prescriptions within 10 miles at the start of the eligible hospital or CAH's EHR reporting period.

(3)-(4) [Reserved]

(5) Patient electronic access to health information—(i) Objective. The eligible hospital or CAH provides patients (or patient-authorized representative) with timely electronic access to their health information and patient-specific education.

(ii) Measures. Eligible hospitals and CAHs must meet the following two measures:

(A) Provide patient access measure. For more than 50 percent of all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23):

(1) The patient (or patient-authorized representative) is provided timely access to view online, download, and transmit his or her health information; and

(2) The provider ensures the patient's health information is available for the patient (or patient-authorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the provider's CEHRT.

(B) Patient-specific education measure. The eligible hospital or CAH must use clinically relevant information from CEHRT to identify patient-specific educational resources and provide electronic access to those materials to more than 10 percent of unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period.

(iii) Exclusion in accordance with paragraph (b)(3) of this section. Any eligible hospital or CAH that is located in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from the measures specified in paragraphs (c)(5)(ii)(A) and (B) of this section.

(6) Coordination of care through patient engagement—(i) Objective. Use CEHRT to engage with patients or their authorized representatives about the patient's care.

(ii) Measures. In accordance with paragraph (b)(2) of this section, an eligible hospital or CAH must satisfy 2 of the 3 following measures in paragraphs (c)(6)(ii)(A), (B), and (C) of this section, except those measures for which an eligible hospital or CAH qualifies for an exclusion under paragraph (b)(3) of this section.

(A) View, download or transmit (VDT) measure. During the EHR reporting period, at least one unique patient (or their authorized representatives) discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) actively engage with the electronic health record made accessible by the provider and one of the following:

(1) View, download or transmit to a third party their health information.

(2) Access their health information through the use of an API that can be used by applications chosen by the patient and configured to the API in the provider's CEHRT; or

(3) A combination of paragraphs (c)(6)(ii)(A)(1) and (2) of this section.

(B) Secure messaging measure. During the EHR reporting period, more than 5 percent of all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period, a secure message was sent using the electronic messaging function of CEHRT to the patient (or the patient authorized representative), or in response to a secure message sent by the patient (or the patient authorized representative).

(C) Patient generated health data. Patient generated health data or data from a non-clinical setting is incorporated into the CEHRT for more than 5 percent of unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period.

(iii) Exclusions under paragraph (b)(3) of this section. Any eligible hospital or CAH operating in a location that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (c)(6)(ii)(A) through (C) of this section.

(7) Health information exchange—(i) Objective. The eligible hospital or CAH provides a summary of care record when transitioning or referring their patient to another setting of care, receives or retrieves a summary of care record upon the receipt of a transition or referral or upon the first patient encounter with a new patient, and incorporates summary of care information from other providers into their EHR using the functions of CEHRT.

(ii) Measures. In accordance with paragraph (b)(2) of this section, a eligible hospital or CAH must attest to all 3 measures, but must meet the threshold for 2 of the 3 measures in paragraphs (e)(7)(ii)(A) through (C) of this section. Subject to paragraph (b)(5) of this section—

(A) Send a summary of care measure. For more than 10 percent of transitions of care and referrals, the eligible hospital or CAH that transitions or refers its patient to another setting of care or provider of care—

(1) Creates a summary of care record using CEHRT; and

(2) Electronically exchanges the summary of care record.

(B) Request/accept summary of care measure. For more than 10 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the eligible hospital or CAH incorporates into the patient's EHR an electronic summary of care document.

(C) Clinical information reconciliation measure. For more than 50 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the eligible hospital or CAH performs a clinical information reconciliation. The provider must implement clinical information reconciliation for the following three clinical information sets:

(1) Medication. Review of the patient's medication, including the name, dosage, frequency, and route of each medication.

(2) Medication allergy. Review of the patient's known allergic medications.

(3) Current problem list. Review of the patient's current and active diagnoses.

(iii) Exclusions in accordance with paragraph (b)(3) of this section. (A) Any eligible hospital or CAH for whom the total of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, is fewer than 100 during the EHR reporting period may be excluded from paragraphs (c)(7)(ii)(B) and (C) of this section.

(B) Any eligible hospital or CAH operating in a location that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may be excluded from the measures specified in paragraphs (e)(7)(ii)(A) and (B) of this section.

(8) Public health and clinical data registry reporting—(i) Objective. The eligible hospital or CAH is in active engagement with a public health agency (PHA) or clinical data registry (CDR) to submit electronic public health data in a meaningful way using CEHRT, except where prohibited, and in accordance with applicable law and practice.

(ii) Measures. In order to meet the objective under paragraph (c)(8)(i) of this section, an eligible hospital or CAH must choose from measures 1 through 6 (as described in paragraphs (c)(8)(ii)(A) through (F) of this section) and must successfully attest to any combination of three measures. These measures may be met by any combination, including meeting the measure specified in paragraphs (c)(8)(ii)(D) and (E) of this section multiple times, in accordance with applicable law and practice:

(A) Immunization registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization data and receive immunization forecasts and histories from the public health immunization registry/immunization information system (IIS).

(B) Syndromic surveillance reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data from an urgent care setting.

(C) Electronic case reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit case reporting of reportable conditions.

(D) Public health registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit data to public health registries.

(E) Clinical data registry reporting measure. The eligible hospital or CAH is in active engagement to submit data to a clinical data registry.

(F) Electronic reportable laboratory result reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results.

(iii) Exclusions in accordance with paragraph (b)(3) of this section. (A) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the immunization registry reporting measure specified in paragraph (c)(8)(ii)(A) of this section if the eligible hospital or CAH—

(1) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(2) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data as of 6 months prior to the start of the EHR reporting period.

(B) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure specified in paragraph (c)(8)(ii)(B) of this section if the eligible hospital or CAH—

(1) Does not have an emergency or urgent care department.

(2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs as of 6 months prior to the start of the EHR reporting period.

(C) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the case reporting measure specified in paragraph (e)(8)(ii)(C) of this section if the eligible hospital or CAH—

(1) Does not treat or diagnose any reportable diseases for which data is collected by their jurisdiction's reportable disease system during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic case reporting data in the specific standards required to meet the CEHRT definition at the start of their EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic case reporting data as of 6 months prior to the start of the EHR reporting period.

(D) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the public health registry reporting measure specified in paragraph (c)(8)(ii)(D) of this section if the eligible hospital or CAH—

(1) Does not diagnose or directly treat any disease or condition associated with a public health registry in its jurisdiction during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(E) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the clinical data registry reporting measure specified in paragraph (c)(8)(ii)(E) of this section if the eligible hospital or CAH—

(1) Does not diagnose or directly treat any disease or condition associated with a clinical data registry in their jurisdiction during the EHR reporting period.

(2) Operates in a jurisdiction for which no clinical data registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no clinical data registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(F) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (c)(8)(ii)(F) of this section if the eligible hospital or CAH—

(1) Does not perform or order laboratory tests that are reportable in its jurisdiction during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from an eligible hospital or CAH as of 6 months prior to the start of the EHR reporting period.

(d) Stage 3 objectives and measures for all EPs for 2019 and subsequent years, and for eligible hospitals and CAHs attesting to a State for the Medicaid Promoting Interoperability Program for 2019 and subsequent years—(1) Protect patient health information—(i) EP protect patient health information—(A) Objective. Protect electronic protected health information (ePHI) created or maintained by the CEHRT through the implementation of appropriate technical, administrative, and physical safeguards.

(B) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (including encryption) of data created or maintained by CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the provider's risk management process.

(ii) Eligible hospital/CAH protect patient health information—(A) Objective. Protect electronic protected health information (ePHI) created or maintained by the CEHRT through the implementation of appropriate technical, administrative, and physical safeguards.

(B) Measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (including encryption) of data created or maintained by CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the provider's risk management process.

(2) Electronic Prescribing—(i) EP Electronic Prescribing—(A) Objective. Generate and transmit permissible prescriptions electronically (eRx).

(B) Measure. Subject to paragraph (a)(5) of this section, more than 60 percent of all permissible prescriptions written by the EP are queried for a drug formulary and transmitted electronically using CEHRT.

(C) Exclusions in accordance with paragraph (a)(3) of this section. (1) Any EP who writes fewer than 100 permissible prescriptions during the EHR reporting period; or

(2) Any EP who does not have a pharmacy within its organization and there are no pharmacies that accept electronic prescriptions within 10 miles of the EP's practice location at the start of his/her EHR reporting period.

(ii) Eligible hospital/CAH electronic prescribing—(A) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx).

(B) Measure. Subject to paragraph (b)(5) of this section, more than 25 percent of hospital discharge medication orders for permissible prescriptions (for new and changed prescriptions) are queried for a drug formulary and transmitted electronically using CEHRT.

(C) Exclusions in accordance with paragraph (b)(3) of this section. Any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and there are no pharmacies that accept electronic prescriptions within 10 miles at the start of the eligible hospital or CAH's EHR reporting period.

(3) Clinical decision support—(i) EP clinical decision support—(A) Objective. Implement clinical decision support (CDS) interventions focused on improving performance on high-priority health conditions.

(B) Measures. (1) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an EP's scope of practice or patient population, the clinical decision support interventions must be related to high-priority health conditions; and

(2) The EP has enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(C) Exclusion in accordance with paragraph (a)(3) of this section for paragraph (d)(3)(i)(B)(2) of this section. An EP who writes fewer than 100 medication orders during the EHR reporting period.

(ii) Eligible hospital/CAH clinical decision support—(A) Objective. Implement clinical decision support (CDS) interventions focused on improving performance on high-priority health conditions.

(B) Measures. (1) Implement five clinical decision support interventions related to four or more clinical quality measures at a relevant point in patient care for the entire EHR reporting period. Absent four clinical quality measures related to an eligible hospital or CAH's patient population, the clinical decision support interventions must be related to high-priority health conditions; and

(2) The eligible hospital or CAH has enabled and implemented the functionality for drug-drug and drug-allergy interaction checks for the entire EHR reporting period.

(4) Computerized provider order entry (CPOE)—(i) EP CPOE—(A) Objective. Use computerized provider order entry (CPOE) for medication, laboratory, and diagnostic imaging orders directly entered by any licensed healthcare professional, credentialed medical assistant, or a medical staff member credentialed to and performing the equivalent duties of a credentialed medical assistant, who can enter orders into the medical record per state, local, and professional guidelines.

(B) Measures. Subject to paragraph (a)(5) of this section—

(1) More than 60 percent of medication orders created by the EP during the EHR reporting period are recorded using computerized provider order entry;

(2) More than 60 percent of laboratory orders created by the EP during the EHR reporting period are recorded using computerized provider order entry; and

(3) More than 60 percent of diagnostic imaging orders created by the EP during the EHR reporting period are recorded using computerized provider order entry.

(C) Exclusions in accordance with paragraph (a)(3) of this section. (1) For the measure specified in paragraph (d)(4)(i)(B)(1) of this section, any EP who writes fewer than 100 medication orders during the EHR reporting period.

(2) For the measure specified in paragraph (d)(4)(i)(B)(2) of this section, any EP who writes fewer than 100 laboratory orders during the EHR reporting period.

(3) For the measure specified in paragraph (d)(4)(i)(B)(3) of this section, any EP who writes fewer than 100 diagnostic imaging orders during the EHR reporting period.

(ii) Eligible hospital and CAH CPOE—(A) Objective. Use computerized provider order entry (CPOE) for medication, laboratory, and diagnostic imaging orders directly entered by any licensed healthcare professional, credentialed medical assistant, or a medical staff member credentialed to and performing the equivalent duties of a credentialed medical assistant; who can enter orders into the medical record per State, local, and professional guidelines.

(B) Measures. Subject to paragraph (b)(5) of this section—

(1) More than 60 percent of medication orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry;

(2) More than 60 percent of laboratory orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry; and

(3) More than 60 percent of diagnostic imaging orders created by authorized providers of the eligible hospital's or CAH's inpatient or emergency department (POS 21 or 23) during the EHR reporting period are recorded using computerized provider order entry.

(5) Patient electronic access to health information—(i) EP patient electronic access to health information—(A) Objective. The EP provides patients (or patient-authorized representative) with timely electronic access to their health information and patient-specific education.

(B) Measures. EPs must meet the following two measures:

(1) For more than 80 percent of all unique patients seen by the EP—

(i) The patient (or the patient-authorized representative) is provided timely access to view online, download, and transmit his or her health information; and

(ii) The provider ensures the patient's health information is available for the patient (or patient-authorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the provider's CEHRT.

(2) The EP must use clinically relevant information from CEHRT to identify patient-specific educational resources and provide electronic access to those materials to more than 35 percent of unique patients seen by the EP during the EHR reporting period.

(C) Exclusions in accordance with paragraph (a)(3) of this section. (1) Any EP who has no office visits during the reporting period may exclude from the measures specified in paragraphs (d)(5)(i)(B)(1) and (2) of this section.

(2) Any EP that conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (d)(5)(i)(B)(1) and (2) of this section.

(ii) Eligible hospital and CAH patient electronic access to health information—(A) Objective. The eligible hospital or CAH provides patients (or patient-authorized representative) with timely electronic access to their health information and patient-specific education.

(B) Measures. Eligible hospitals and CAHs must meet the following two measures:

(1) For more than 80 percent of all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23):

(i) The patient (or patient-authorized representative) is provided timely access to view online, download, and transmit his or her health information; and

(ii) The provider ensures the patient's health information is available for the patient (or patient-authorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the provider's CEHRT.

(2) The eligible hospital or CAH must use clinically relevant information from CEHRT to identify patient-specific educational resources and provide electronic access to those materials to more than 35 percent of unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period.

(C) Exclusion in accordance with paragraph (b)(3) of this section. Any eligible hospital or CAH that is located in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period is excluded from the measures specified in paragraphs (d)(5)(ii)(B)(1) and (2) of this section.

(6) Coordination of care through patient engagement—(i) EP coordination of care through patient engagement—(A) Objective. Use CEHRT to engage with patients or their authorized representatives about the patient's care.

(B) Measures. In accordance with paragraph (a)(2) of this section, an EP must satisfy 2 out of the 3 following measures in paragraphs (d)(6)(i)(B)(1) through (3) of this section except those measures for which an EP qualifies for an exclusion under paragraph (a)(3) of this section.

(1) During the EHR reporting period, more than 5 percent of all unique patients (or their authorized representatives) seen by the EP actively engage with the electronic health record made accessible by the provider and do either of the following:

(i) View, download or transmit to a third party their health information;

(ii) Access their health information through the use of an API that can be used by applications chosen by the patient and configured to the API in the provider's CEHRT; or

(iii) A combination of paragraphs (d)(6)(i)(B)(1)(i) and (ii) of this section.

(2) A secure message was sent using the electronic messaging function of CEHRT to the patient (or their authorized representatives), or in response to a secure message sent by the patient, for more than 5 percent of all unique patients seen by the EP during the EHR reporting period.

(3) Patient generated health data or data from a nonclinical setting is incorporated into the CEHRT for more than 5 percent of all unique patients seen by the EP during the EHR reporting period.

(C) Exclusions in accordance with paragraph (a)(3) of this section. (1) Any EP who has no office visits during the reporting period may exclude from the measures specified in paragraphs (d)(6)(i)(B)(1) through (3) of this section.

(2) Any EP that conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (d)(6)(i)(B)(1) through (3) of this section.

(ii) Eligible hospital and CAH coordination of care through patient engagement—(A) Objective. Use CEHRT to engage with patients or their authorized representatives about the patient's care.

(B) Measures. In accordance with paragraph (b)(2) of this section, an eligible hospital or CAH must satisfy 2 of the 3 following measures in paragraphs (d)(6)(ii)(B)(1) through (3) of this section, except those measures for which an eligible hospital or CAH qualifies for an exclusion under paragraph (b)(3) of this section.

(1) During the EHR reporting period, more than 10 percent of all unique patients (or their authorized representatives) discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) actively engage with the electronic health record made accessible by the provider and one of the following:

(i) View, download or transmit to a third party their health information.

(ii) Access their health information through the use of an API that can be used by applications chosen by the patient and configured to the API in the provider's CEHRT.

(iii) A combination of paragraphs (d)(6)(ii)(B)(1)(i) and (ii) of this section.

(iv) For an EHR reporting period in 2017 and 2018, an eligible hospital or CAH may meet a threshold of 5 percent instead of 10 percent for the measure at paragraph (d)(6)(ii)(B)(1) of this section.

(2) During the EHR reporting period—

(i) For an EHR reporting period in 2017 and 2018, for more than 5 percent of all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period, a secure message was sent using the electronic messaging function of CEHRT to the patient (or their authorized representatives), or in response to a secure message sent by the patient (or their authorized representatives).

(ii) For an EHR reporting period other than 2017 and 2018, for more than 25 percent of all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period, a secure message was sent using the electronic messaging function of CEHRT to the patient (or their authorized representatives), or in response to a secure message sent by the patient (or their authorized representatives).

(3) Patient generated health data or data from a non-clinical setting is incorporated into the CEHRT for more than 5 percent of unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) during the EHR reporting period.

(C) Exclusions under paragraph (b)(3) of this section. Any eligible hospital or CAH operating in a location that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (d)(6)(ii)(B)(1) through (3) of this section.

(7) Health information exchange—(i) EP health information exchange—(A) Objective. The EP provides a summary of care record when transitioning or referring their patient to another setting of care, receives or retrieves a summary of care record upon the receipt of a transition or referral or upon the first patient encounter with a new patient, and incorporates summary of care information from other providers into their EHR using the functions of CEHRT.

(B) Measures. In accordance with paragraph (a)(2) of this section, an EP must attest to all 3 measures, but must meet the threshold for 2 of the 3 measures in paragraphs (d)(7)(i)(B)(1) through (3) of this section, in order to meet the objective. Subject to paragraph (c) of this section—

(1) Measure 1. For more than 50 percent of transitions of care and referrals, the EP that transitions or refers their patient to another setting of care or provider of care—

(i) Creates a summary of care record using CEHRT; and

(ii) Electronically exchanges the summary of care record.

(2) Measure 2. For more than 40 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the EP incorporates into the patient's EHR an electronic summary of care document.

(3) Measure 3. For more than 80 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the EP performs clinical information reconciliation. The EP must implement clinical information reconciliation for the following three clinical information sets:

(i) Medication. Review of the patient's medication, including the name, dosage, frequency, and route of each medication.

(ii) Medication allergy. Review of the patient's known allergic medications.

(iii) Current problem list. Review of the patient's current and active diagnoses.

(C) Exclusions in accordance with paragraph (a)(3) of this section. An EP must be excluded when any of the following occur:

(1) Any EP who transfers a patient to another setting or refers a patient to another provider less than 100 times during the EHR reporting period must be excluded from paragraph (d)(7)(i)(B)(1) of this section.

(2) Any EP for whom the total of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, is fewer than 100 during the EHR reporting period may be excluded from paragraphs (d)(7)(i)(B)(2) and (3) of this section.

(3) Any EP that conducts 50 percent or more of his or her patient encounters in a county that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (d)(7)(i)(B)(1) and (2) of this section.

(ii) Eligible hospitals and CAHs health information exchange—(A) Objective. The eligible hospital or CAH provides a summary of care record when transitioning or referring their patient to another setting of care, receives or retrieves a summary of care record upon the receipt of a transition or referral or upon the first patient encounter with a new patient, and incorporates summary of care information from other providers into their EHR using the functions of CEHRT.

(B) Measures. In accordance with paragraph (b)(2) of this section, an eligible hospital or CAH must attest to all three measures, but must meet the threshold for 2 of the 3 measures in paragraphs (d)(7)(ii)(B)(1) through (3) of this section. Subject to paragraph (b)(5) of this section—

(1) Measure 1. For more than 50 percent of transitions of care and referrals, the eligible hospital or CAH that transitions or refers its patient to another setting of care or provider of care—

(i) Creates a summary of care record using CEHRT; and

(ii) Electronically exchanges the summary of care record.

(2) Measure 2. For more than 40 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the eligible hospital or CAH incorporates into the patient's EHR an electronic summary of care document from a source other than the provider's EHR system.

(3) Measure 3. For more than 80 percent of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, the eligible hospital or CAH performs a clinical information reconciliation. The provider must implement clinical information reconciliation for the following three clinical information sets:

(i) Medication. Review of the patient's medication, including the name, dosage, frequency, and route of each medication.

(ii) Medication allergy. Review of the patient's known allergic medications.

(iii) Current problem list. Review of the patient's current and active diagnoses.

(C) Exclusions in accordance with paragraph (b)(3) of this section. (1) Any eligible hospital or CAH for whom the total of transitions or referrals received and patient encounters in which the provider has never before encountered the patient, is fewer than 100 during the EHR reporting period may be excluded from paragraphs (d)(7)(i)(B)(2) and (3) of this section.

(2) Any eligible hospital or CAH operating in a location that does not have 50 percent or more of its housing units with 4Mbps broadband availability according to the latest information available from the FCC on the first day of the EHR reporting period may exclude from the measures specified in paragraphs (d)(7)(ii)(B)(1) and (2) of this section.

(8) Public Health and Clinical Data Registry Reporting—(i) EP Public Health and Clinical Data Registry: Reporting objective—(A) Objective. The EP is in active engagement with a public health agency or clinical data registry to submit electronic public health data in a meaningful way using CEHRT, except where prohibited, and in accordance with applicable law and practice.

(B) Measures. In order to meet the objective under paragraph (d)(8)(i)(A) of this section, an EP must choose from measures 1 through 5 (paragraphs (d)(8)(i)(B)(1) through (5) of this section) and must successfully attest to any combination of two measures. These measures may be met by any combination, including meeting measure specified in paragraph (d)(8)(i)(B)(4) or (5) of this section multiple times, in accordance with applicable law and practice:

(1) Immunization registry reporting. The EP is in active engagement with a public health agency to submit immunization data and receive immunization forecasts and histories from the public health immunization registry/immunization information system (IIS).

(2) Syndromic surveillance reporting. The EP is in active engagement with a public health agency to submit syndromic surveillance data from an urgent care setting, or from any other setting from which ambulatory syndromic surveillance data are collected by the state or a local public health agency.

(3) Electronic case reporting. The EP is in active engagement with a public health agency to submit case reporting of reportable conditions.

(4) Public health registry reporting. The EP is in active engagement with a public health agency to submit data to public health registries.

(5) Clinical data registry reporting. The EP is in active engagement to submit data to a clinical data registry.

(C) Exclusions in accordance with paragraph (a)(3) of this section. (1) Any EP meeting one or more of the following criteria may be excluded from the immunization registry reporting measure in paragraph (d)(8)(i)(B)(1) of this section if the EP—

(i) Does not administer any immunizations to any of the populations for which data is collected by their jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of its EHR reporting period.

(iii) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data as of 6 months prior to the start of the EHR reporting period.

(2) Any EP meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure described in paragraph (d)(8)(i)(B)(2) of the section if the EP—

(i) Is not in a category of providers from which ambulatory syndromic surveillance data is collected by their jurisdiction's syndromic surveillance system.

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from EPs as of 6 months prior to the start of the EHR reporting period.

(3) Any EP meeting one or more of the following criteria may be excluded from the case reporting measure at paragraph (d)(8)(i)(B)(3) of this section if the EP:

(i) Does not treat or diagnose any reportable diseases for which data is collected by their jurisdiction's reportable disease system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic case reporting data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic case reporting data as of 6 months prior to the start of the EHR reporting period.

(4) Any EP meeting at least one of the following criteria may be excluded from the public health registry reporting measure specified in paragraph (d)(8)(i)(B)(4) of this section if the EP—

(i) Does not diagnose or directly treat any disease or condition associated with a public health registry in the EP's jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health registry for which the EP, eligible hospital, or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(5) Any EP meeting at least one of the following criteria may be excluded from the clinical data registry reporting measure specified in paragraph (d)(8)(i)(B)(5) of this section if the EP—

(i) Does not diagnose or directly treat any disease or condition associated with a clinical data registry in their jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no clinical data registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no clinical data registry for which the EP, eligible hospital, or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(ii) Eligible hospital and CAH Public Health and Clinical Data Registry: Reporting objective—(A) Objective. The eligible hospital or CAH is in active engagement with a public health agency (PHA) or clinical data registry (CDR) to submit electronic public health data in a meaningful way using CEHRT, except where prohibited, and in accordance with applicable law and practice.

(B) Measures. In order to meet the objective under paragraph (d)(8)(ii)(A) of this section, an eligible hospital or CAH must choose from measures 1 through 6 (as described in paragraphs (d)(8)(ii)(B)(1) through (6) of this section) and must successfully attest to any combination of four measures. These measures may be met by any combination, including meeting the measure specified in paragraph (d)(8)(ii)(B)(4) or (5) of this section multiple times, in accordance with applicable law and practice:

(1) Immunization registry reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization data and receive immunization forecasts and histories from the public health immunization registry/immunization information system (IIS).

(2) Syndromic surveillance reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data from an urgent care setting.

(3) Case reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit case reporting of reportable conditions.

(4) Public health registry reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit data to public health registries.

(5) Clinical data registry reporting. The eligible hospital or CAH is in active engagement to submit data to a clinical data registry.

(6) Electronic reportable laboratory result reporting. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results.

(C) Exclusions in accordance with paragraph (b)(3) of this section. (1) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from to the immunization registry reporting measure specified in paragraph (d)(8)(ii)(B)(1) of this section if the eligible hospital or CAH—

(i) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data as of 6 months prior to the start of the EHR reporting period.

(2) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure specified in paragraph (d)(8)(ii)(B)(2) of this section if the eligible hospital or CAH—

(i) Does not have an emergency or urgent care department.

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic syndromic surveillance data in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs as of 6 months prior to the start of the EHR reporting period.

(3) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the case reporting measure specified in paragraph (d)(8)(ii)(B)(3) of this section if the eligible hospital or CAH—

(i) Does not treat or diagnose any reportable diseases for which data is collected by their jurisdiction's reportable disease system during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency is capable of receiving electronic case reporting data in the specific standards required to meet the CEHRT definition at the start of their EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic case reporting data as of 6 months prior to the start of the EHR reporting period.

(4) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the public health registry reporting measure specified in paragraph (d)(8)(ii)(B)(4) of this section if the eligible hospital or CAH—

(i) Does not diagnose or directly treat any disease or condition associated with a public health registry in its jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(5) Any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the clinical data registry reporting measure specified in paragraph (d)(8)(ii)(B)(5) of this section if the eligible hospital or CAH—

(i) Does not diagnose or directly treat any disease or condition associated with a clinical data registry in their jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no clinical data registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no clinical data registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(6) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (d)(8)(ii)(B)(6) of this section if the eligible hospital or CAH—

(i) Does not perform or order laboratory tests that are reportable in its jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from an eligible hospital or CAH as of 6 months prior to the start of the EHR reporting period.

(e) Stage 3 objectives and measures for eligible hospitals and CAHs attesting to CMS for 2019 through 2022—(1) General rule. (i) Except as specified in paragraph (e)(2) of this section, eligible hospitals and CAHs must do all of the following as part of meeting the definition of a meaningful EHR user under § 495.4:

(A) Meet all objectives and associated measures of the Stage 3 criteria specified in this paragraph (e).

(B) In 2019, 2020, and 2021, earn a total score of at least 50 points.

(C) In 2022, earn a total score of at least 60 points.

(ii) Beginning in CY 2020, the numerator and denominator of measures increment based on actions occurring during the EHR reporting period selected by the eligible hospital or CAH, unless otherwise indicated.

(2) Exclusion for nonapplicable measures. (i) An eligible hospital or CAH may exclude a particular measure that includes an option for exclusion contained in this paragraph (e) if the eligible hospital or CAH meets the following requirements:

(A) Meets the criteria in the applicable measure that would permit the exclusion.

(B) Attests to the exclusion.

(ii) Distribution of points for nonapplicable measures. For eligible hospitals or CAHs that claim such exclusion, the points assigned to the excluded measure will be distributed to other measures as outlined in this paragraph (e).

(3) Objectives and associated measures in this paragraph (e) that rely on measures that count unique patients or actions. (i) If a measure (or associated objective) in this paragraph (e) references paragraph (e)(3) of this section, the measure may be calculated by reviewing only the actions for patients whose records are maintained using CEHRT. A patient's record is maintained using CEHRT if sufficient data were entered in the CEHRT to allow the record to be saved, and not rejected due to incomplete data.

(ii) If the objective and associated measure does not reference this paragraph (e)(3), the measure must be calculated by reviewing all patient records, not just those maintained using CEHRT.

(4) Protect patient health information—(i) Objective. Protect electronic protected health information (ePHI) created or maintained by the CEHRT through the implementation of appropriate technical, administrative, and physical safeguards.

(ii) Measure scoring. Eligible hospitals and CAHs are required to report on the security risk analysis measure in paragraph (e)(4)(iii) of this section, but no points are available for this measure. In 2022, eligible hospitals and CAHs are required to report on the SAFER Guides measure in paragraph (e)(4)(iv) of this section, but no points are available for this measure.

(iii) Security risk analysis measure. Conduct or review a security risk analysis in accordance with the requirements under 45 CFR 164.308(a)(1), including addressing the security (including encryption) of data created or maintained by CEHRT in accordance with requirements under 45 CFR 164.312(a)(2)(iv) and 45 CFR 164.306(d)(3), implement security updates as necessary, and correct identified security deficiencies as part of the provider's risk management process. Actions included in the security risk analysis measure may occur any time during the calendar year in which the EHR reporting period occurs.

(iv) SAFER Guides measure. Conduct an annual self- assessment using all nine SAFER Guides at any point during the calendar year in which the EHR reporting period occurs.

(5) Electronic prescribing—(i) Objective. Generate and transmit permissible discharge prescriptions electronically (eRx).

(ii) Measures scoring. (A) In 2019, eligible hospitals and CAHs must meet the e-Prescribing measure in paragraph (e)(5)(iii)(A) of this section and have the option to report on the query of PDMP measure and verify opioid treatment agreement measure in paragraphs (e)(5)(iii)(B) and (C) of this section. The electronic prescribing objective in paragraph (e)(5)(i) of this section is worth up to 20 points.

(B) In 2020 through 2022, eligible hospitals and CAHs must meet the e-Prescribing measure in paragraph (e)(5)(iii)(A) of this section, and have the option to report on the query of PDMP measure in paragraph (e)(5)(iii)(B) of this section.

(1) In 2020 and 2021, the electronic prescribing objective in paragraph (e)(5)(i) of this section is worth up to 15 points.

(2) In 2022, the electronic prescribing objective in paragraph (e)(5)(i) of this section is worth up to 20 points.

(iii) Measures—(A) e-Prescribing measure. Subject to paragraph (e)(3) of this section, at least one hospital discharge medication order for permissible prescriptions (for new and changed prescriptions) is queried for a drug formulary and transmitted electronically using CEHRT. This measure is worth up to 10 points in CY 2019 through CY 2022.

(B) Query of prescription drug monitoring program (PDMP) measure. Subject to paragraph (e)(3) of this section, for at least one Schedule II opioid electronically prescribed using CEHRT during the EHR reporting period, the eligible hospital or CAH uses data from CEHRT to conduct a query of a Prescription Drug Monitoring Program (PDMP) for prescription drug history, except where prohibited and in accordance with applicable law. This measure is worth—

(1) 5 bonus points in CYs 2019, 2020, and 2021; and

(2) 10 bonus points in CY 2022.

(C) Verify opioid treatment agreement measure. Subject to paragraph (e)(3) of this section, for at least one unique patient for whom a Schedule II opioid was electronically prescribed by the eligible hospital or CAH using CEHRT during the EHR reporting period, if the total duration of the patient's Schedule II opioid prescriptions is at least 30 cumulative days within a 6-month look-back period, the eligible hospital or CAH seeks to identify the existence of a signed opioid treatment agreement and incorporates it into the patient's electronic health record using CEHRT. This measure is worth 5 bonus points in CY 2019.

(iv) Exclusions in accordance with paragraph (e)(2) of this section and redistribution of points. An exclusion claimed under paragraph (e)(5)(v) of this section will redistribute 10 points in CY 2019 and CY 2020 equally among the measures associated with the health information exchange objective under paragraph (e)(6) of this section.

(v) Exclusion in accordance with paragraph (e)(2) of this section. For the EHR reporting periods in CY 2019 through CY 2022, any eligible hospital or CAH that does not have an internal pharmacy that can accept electronic prescriptions and there are no pharmacies that accept electronic prescriptions within 10 miles at the start of the eligible hospital or CAH's EHR reporting period may be excluded from the measure specified in paragraph (e)(5)(iii)(A) of this section.

(6) Health information exchange—(i) Objective. The eligible hospital or CAH provides a summary of care record when transitioning or referring their patient to another setting of care, receives or retrieves a summary of care record upon the receipt of a transition or referral or upon the first patient encounter with a new patient, and incorporates summary of care information from other providers into their EHR using the functions of CEHRT.

(ii) Measures. For CYs 2019, 2020, and 2021, eligible hospitals and CAHs must meet both of the measures specified in paragraphs (e)(6)(ii)(A) and (B) of this section (each worth up to 20 points). For CY 2022, eligible hospitals and CAHs either must meet both of the measures specified in paragraphs (e)(6)(ii)(A) and (B) of this section (each worth up to 20 points) or must meet the measure specified in paragraph (e)(6)(ii)(C) of this section (worth 40 points).

(A) Support electronic referral loops by sending health information measure: Subject to paragraph (e)(3) of this section, for at least one transition of care or referral, the eligible hospital or CAH that transitions or refers its patient to another setting of care or provider of care—

(1) Creates a summary of care record using CEHRT; and

(2) Electronically exchanges the summary of care record.

(B) Support electronic referral loops by receiving and reconciling health information measure. Subject to paragraph (e)(3) of this section, for at least one electronic summary of care record received using CEHRT for patient encounters during the EHR reporting period for which an eligible hospital or CAH was the receiving party of a transition of care or referral, or for patient encounters during the EHR reporting period in which the eligible hospital or CAH has never before encountered the patient, the eligible hospital or CAH conducts clinical information reconciliation for medication, medication allergy, and current problem list using CEHRT.

(C) Health information exchange (HIE) bi-directional exchange measure. Subject to paragraph (e)(3) of this section, the eligible hospital or CAH must attest to the following:

(1) Participating in an HIE in order to enable secure, bi-directional exchange of information to occur for all unique patients discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23), and all unique patient records stored or maintained in the EHR for these departments, during the EHR reporting period in accordance with applicable law and policy.

(2) Participating in an HIE that is capable of exchanging information across a broad network of unaffiliated exchange partners including those using disparate EHRs, and not engaging in exclusionary behavior when determining exchange partners.

(3) Using the functions of CEHRT to support bi-directional exchange with an HIE.

(iii) Exclusions in accordance with paragraph (e)(2) of this section. Any eligible hospital or CAH that is unable to implement the support electronic referral loops by receiving and incorporating health information measure under paragraph (e)(6)(ii)(B) of this section for an EHR reporting period in 2019 may be excluded from that measure. Claiming the exclusion will redistribute 20 points to the support electronic referral loops by sending health information measure under paragraph (e)(6)(ii)(A) of this section.

(7) Provider to patient exchange—(i) Objective. The eligible hospital or CAH provides patients (or patient-authorized representative) with timely electronic access to their health information.

(ii) Provide patients electronic access to their health information measure. Eligible hospitals and CAHs must meet the following measure, and could receive up to 40 points for this objective for CY 2019 through CY 2022. For at least one unique patient discharged from the eligible hospital or CAH inpatient or emergency department (POS 21 or 23) all of the following:

(A) The patient (or patient-authorized representative) is provided timely access to view online, download, and transmit his or her health information.

(B) The eligible hospital or CAH ensures the patient's health information is available for the patient (or patient-authorized representative) to access using any application of their choice that is configured to meet the technical specifications of the API in the eligible hospital or CAH's CEHRT.

(8) Public health and clinical data exchange.—(i) Objective. The eligible hospital or CAH is in active engagement with a public health agency (PHA) or clinical data registry (CDR) to submit electronic public health data in a meaningful way using CEHRT, except where prohibited, and in accordance with applicable law and practice.

(ii) Measures. For CYs 2019, 2020, and 2021, eligible hospitals and CAHs could receive a total of 10 points for the objective under paragraph (e)(8)(i) of this section. In order to meet the objective under paragraph (e)(8)(i) of this section, an eligible hospital or CAH must meet any two measures specified in paragraphs (e)(8)(ii)(A) through (F) of this section. For CY 2022, eligible hospitals and CAHs could receive a total of 15 points for the objective under paragraph (e)(8)(i) of this section. In order to meet the objective under paragraph (e)(8)(i) of this section and receive 10 points, an eligible hospital or CAH must meet each of the four measures specified in paragraphs (e)(8)(ii)(A), (B), (C), and (F) of this section. An eligible hospital or CAH receives a bonus of 5 points for this objective if they meet one of the measures specified in paragraph (e)(8)(ii)(D) or (E).

(A) Syndromic surveillance reporting measure. For CYs 2019, 2020, and 2021, the eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data from an urgent care setting. For CY 2022, the eligible hospital or CAH is in active engagement with a public health agency to submit syndromic surveillance data from an emergency department setting (POS 23).

(B) Immunization registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit immunization data and receive immunization forecasts and histories from the public health immunization registry/immunization information system (IIS).

(C) Electronic case reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit case reporting of reportable conditions.

(D) Public health registry reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit data to public health registries.

(E) Clinical data registry reporting measure. The eligible hospital or CAH is in active engagement to submit data to a clinical data registry.

(F) Electronic reportable laboratory result reporting measure. The eligible hospital or CAH is in active engagement with a public health agency to submit electronic reportable laboratory results.

(iii) Exclusions in accordance with paragraph (e)(2) of this section. For CYs 2019, 2020, and 2021, if an exclusion is claimed under paragraphs (e)(8)(iii)(A) through (F) of this section for each of the two measures selected for reporting, the 10 points for the objective specified in paragraph (e)(8)(i) of this section will be redistributed to the provide patients electronic access to their health information measure under paragraph (e)(7)(ii) of this section. For CY 2022, if an exclusion is claimed under paragraphs (e)(8)(iii)(A) through (F) of this section for each of the four measures required for reporting, the 10 points for the objective specified in paragraph (e)(8)(i) of this section will be redistributed to the provide patients electronic access to their health information measure under paragraph (e)(7)(ii) of this section.

(A) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the syndromic surveillance reporting measure specified in paragraph (e)(8)(ii)(A) of this section if the eligible hospital or CAH—

(1) For CYs 2019, 2020 and 2021, does not have an emergency or urgent care department.

(2) For CY 2022, does not have an emergency department.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive syndromic surveillance data from eligible hospitals or CAHs as of 6 months prior to the start of the EHR reporting period.

(B) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from to the immunization registry reporting measure specified in paragraph (e)(8)(ii)(B) of this section if the eligible hospital or CAH—

(1) Does not administer any immunizations to any of the populations for which data is collected by its jurisdiction's immunization registry or immunization information system during the EHR reporting period.

(2) Operates in a jurisdiction for which no immunization registry or immunization information system is capable of accepting the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no immunization registry or immunization information system has declared readiness to receive immunization data as of 6 months prior to the start of the EHR reporting period.

(C) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic case reporting measure specified in paragraph (e)(8)(ii)(C) of this section if the eligible hospital or CAH—

(1) Does not treat or diagnose any reportable diseases for which data is collected by their jurisdiction's reportable disease system during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency is capable of receiving electronic case reporting data in the specific standards required to meet the CEHRT definition at the start of their EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic case reporting data as of 6 months prior to the start of the EHR reporting period.

(D)(1) For CYs 2019, 2020, and 2021, any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the public health registry reporting measure specified in paragraph (e)(8)(ii)(D) of this section if the eligible hospital or CAH:

(i) Does not diagnose or directly treat any disease or condition associated with a public health registry in its jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no public health agency is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no public health registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(2) For CY 2022, the exclusions specified in paragraph (D)(1) of this paragraph are no longer available.

(E)(1) For CYs 2019, 2020, and 2021, any eligible hospital or CAH meeting at least one of the following criteria may be excluded from the clinical data registry reporting measure specified in paragraph (e)(8)(ii)(E) of this section if the eligible hospital or CAH:

(i) Does not diagnose or directly treat any disease or condition associated with a clinical data registry in their jurisdiction during the EHR reporting period.

(ii) Operates in a jurisdiction for which no clinical data registry is capable of accepting electronic registry transactions in the specific standards required to meet the CEHRT definition at the start of the EHR reporting period.

(iii) Operates in a jurisdiction where no clinical data registry for which the eligible hospital or CAH is eligible has declared readiness to receive electronic registry transactions as of 6 months prior to the start of the EHR reporting period.

(2) For CY 2022, the exclusions specified in paragraph (E)(1) of this paragraph are no longer available.

(F) Any eligible hospital or CAH meeting one or more of the following criteria may be excluded from the electronic reportable laboratory result reporting measure specified in paragraph (e)(8)(ii)(F) of this section if the eligible hospital or CAH—

(1) Does not perform or order laboratory tests that are reportable in its jurisdiction during the EHR reporting period.

(2) Operates in a jurisdiction for which no public health agency that is capable of accepting the specific ELR standards required to meet the CEHRT definition at the start of the EHR reporting period.

(3) Operates in a jurisdiction where no public health agency has declared readiness to receive electronic reportable laboratory results from an eligible hospital or CAH as of 6 months prior to the start of the EHR reporting period.

(f) Stage 3 objectives and measures for eligible hospitals and CAHs attesting to CMS for 2023 and subsequent years—(1) General rule. (i) Except as specified in paragraph (f)(2) of this section, eligible hospitals and CAHs must do all of the following as part of meeting the definition of a meaningful EHR user under § 495.4:

(A) Meet all objectives and associated measures selected by CMS under section 1886(n)(3) of the Act for an EHR reporting period.

(B) In 2023 and 2024, earn a total score of at least 60 points.

(C) In 2025 earn a total score of at least 70 points.

(D) In 2026 and subsequent years, earn a total score of at least 80 points.

(ii) The numerator and denominator of the measures increment based on actions occurring during the EHR reporting period selected by the eligible hospital or CAH, unless otherwise indicated.

(2) Exclusion for nonapplicable measures. (i) Exclusion of a particular measure. An eligible hospital or CAH may exclude a particular measure that includes an option for exclusion if the eligible hospital or CAH meets the following requirements:

(A) Meets the criteria in the applicable measure that would permit the exclusion.

(B) Attests to the exclusion.

(ii) Distribution of points for nonapplicable measures. For eligible hospitals or CAHs that claim such exclusion, the points assigned to the excluded measure are distributed to other measures as specified by CMS for an EHR reporting period.

(3) Beginning with the EHR reporting period in CY 2026, if certain circumstances occur that impact CMS's assessment of the performance of eligible hospitals and CAHs on a measure selected as described in paragraph (f)(1)(i)(A) of this section, CMS may, in its sole discretion, suppress the affected measure by excluding it from CMS' assessment of performance while allocating the maximum points available or providing full credit for the affected measure as long as the affected measure is reported, resulting in a suppressed measure contributing to the Medicare Promoting Interoperability Program objective score in paragraph (f)(1)(i)(D) of this section; or excluding it from the determination of a meaningful EHR user if the affected measure is not scored. CMS determines whether certain circumstances exist warranting suppression of a measure based on CMS' consideration of one or more of the following factors:

(i) The nature, breadth, and duration of the circumstance's effect on eligible hospitals' and CAHs' ability to fulfill the measure requirement.

(ii) The availability of certified health IT modules to fulfill the measure.

(iii) The circumstance affects the measure such that calculating the measure score would lead to misleading or inaccurate results, which may include performance or compliance.

(iv) Out-of-date or conflicting technical standards.

(v) Technical and operational capacity of required partners.

(vi) Other factors as determined by CMS.

[81 FR 79884, Nov. 14, 2016, as amended at 82 FR 38517, August 14, 2017; 82 FR 46143, Oct. 4, 2017; 83 FR 41707, Aug. 17, 2018; 83 FR 60096, Nov. 23, 2018; 84 FR 42616, Aug. 16, 2019; 85 FR 59026, Sept. 18, 2020; 86 FR 45522, Aug. 13, 2021; 87 FR 49410, Aug. 10, 2022; 89 FR 69914, Aug. 28, 2024; 89 FR 80131, Oct. 2, 2024; 90 FR 50021, Nov. 5, 2025]

§ 495.40 Demonstration of meaningful use criteria.

(a) Demonstration by EPs. An EP must demonstrate that he or she satisfies each of the applicable objectives and associated measures under § 495.20, § 495.22 or § 495.24, supports information exchange and the prevention of health information blocking, and engages in activities related to supporting providers with the performance of CEHRT:

(1) For CY 2011—(i) Attestation. Attest, through a secure mechanism, in a manner specified by CMS (or for a Medicaid EP, in a manner specified by the State), that during the EHR reporting period, the EP—

(A) Used certified EHR technology, and specify the technology used;

(B) Satisfied the required objectives and associated measures under § 495.20 or § 495.24;

(C) Must specify the EHR reporting period and provide the result of each applicable measure for all patients seen during the EHR reporting period for which a selected measure is applicable;

(ii) Additional requirements for Medicaid EPs. For Medicaid EPs, if, in accordance with §§ 495.316 and 495.332, CMS has approved a State's revised definition for meaningful use, in addition to meeting paragraphs (a)(1)(i) through (ii) of this section, the EP must also demonstrate meeting the State revised definition using the method approved by CMS; and

(iii) Exception for Medicaid EPs. If a Medicaid EP has adopted, implemented or upgraded certified EHR technology in the first payment year, the EP need not demonstrate meaningful use until the second payment year, as described in § 495.20 or §§ 495.24 and 495.40.

(2) For CY 2012 and subsequent years—

(i) Attestation. Attest, through a secure mechanism, in a manner specified by CMS (or for a Medicaid EP, in a manner specified by the State) that during the EHR reporting period, the EP—

(A) Used certified EHR technology and specify the technology used.

(B) For calendar years before 2015, satisfied the required objectives and associated measures under § 495.20 for the EP's stage of meaningful use.

(C) Must specify the EHR reporting period and provide the result of each applicable measure for all patients seen during the EHR reporting period for which a selected measure is applicable.

(D) For 2014 only, if the EP uses one of the options specified in § 495.20(a)(4) or (h)(3), the EP must attest that he or she is unable to fully implement 2014 Edition certified EHR technology for an EHR reporting period in 2014 due to delays in 2014 Edition certified EHR technology availability.

(E) For CYs 2015 through 2016, satisfied the required objectives and associated measures under § 495.22(e) for meaningful use.

(F) For CY 2017 and CY 2018: An EP that has successfully demonstrated it is a meaningful EHR user in any prior year may satisfy either the objectives and measures specified in § 495.22(e) for meaningful use or the objectives and measures specified in § 495.24(d) for meaningful use; an EP that has never successfully demonstrated it is a meaningful EHR user in any prior year must satisfy the objectives and measures specified in § 495.22(e) for meaningful use.

(G) For CY 2019 and subsequent years, satisfied the required objectives and associated measures under § 495.24(d) for meaningful use.

(H) Supporting providers with the performance of CEHRT (SPPC). To engage in activities related to supporting providers with the performance of CEHRT, the EP—

(1) Must attest that he or she:

(i) Acknowledges the requirement to cooperate in good faith with ONC direct review of his or her health information technology certified under the ONC Health IT Certification Program if a request to assist in ONC direct review is received; and

(ii) If requested, cooperated in good faith with ONC direct review of his or her health information technology certified under the ONC Health IT Certification Program as authorized by 45 CFR part 170, subpart E, to the extent that such technology meets (or can be used to meet) the definition of CEHRT, including by permitting timely access to such technology and demonstrating its capabilities as implemented and used by the EP in the field.

(2) Optionally, may also attest that he or she:

(i) Acknowledges the option to cooperate in good faith with ONC-ACB surveillance of his or her health information technology certified under the ONC Health IT Certification Program if a request to assist in ONC-ACB surveillance is received; and

(ii) If requested, cooperated in good faith with ONC-ACB surveillance of his or her health information technology certified under the ONC Health IT Certification Program as authorized by 45 CFR part 170, subpart E, to the extent that such technology meets (or can be used to meet) the definition of CEHRT, including by permitting timely access to such technology and demonstrating capabilities as implemented and used by the EP in the field.

(I) Support for health information exchange and the prevention of information blocking. For an EHR reporting period in CY 2017 and subsequent years, the EP must attest that he or she—

(1) Did not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of certified EHR technology.

(2) Implemented technologies, standards, policies, practices, and agreements reasonably calculated to ensure, to the greatest extent practicable and permitted by law, that the certified EHR technology was, at all relevant times—

(i) Connected in accordance with applicable law;

(ii) Compliant with all standards applicable to the exchange of information, including the standards, implementation specifications, and certification criteria adopted at 45 CFR part 170;

(iii) Implemented in a manner that allowed for timely access by patients to their electronic health information; and

(iv) Implemented in a manner that allowed for the timely, secure, and trusted bi-directional exchange of structured electronic health information with other health care providers (as defined by 42 U.S.C. 300jj(3)), including unaffiliated providers, and with disparate certified EHR technology and vendors.

(3) Responded in good faith and in a timely manner to requests to retrieve or exchange electronic health information, including from patients, health care providers (as defined by 42 U.S.C. 300jj(3)), and other persons, regardless of the requestor's affiliation or technology vendor.

(ii) Reporting clinical quality information. Successfully report the clinical quality measures selected by CMS to CMS or the States, as applicable, in the form and manner specified by CMS or the States, as applicable.

(iii) Additional requirements for Medicaid EPs. For Medicaid EPs, if, in accordance with §§ 495.316 and 495.332, CMS has approved a State's additional criteria for meaningful use, in addition to meeting paragraphs (a)(2)(i) through (iii), the EP must also demonstrate meeting such additional criteria using the method approved by CMS.

(iv) Exception for Medicaid EPs. If a Medicaid EP has adopted, implemented, or upgrade certified EHR technology in the first payment year, the EP need not demonstrate that it is a meaningful EHR user until the second payment year, as described in § 495.20 or §§ 495.24 and 495.40.

(v) Exception for Medicare EPs for 2012 and 2013—Participation in the Physician Quality Reporting System-Medicare EHR Incentive Pilot. To satisfy the clinical quality measure reporting requirements of meaningful use, aside from attestation, an EP participating in the Physician Quality Reporting System may also participate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot through one of the following methods:

(A) Submission of data extracted from the EP's certified EHR technology through a Physician Quality Reporting System qualified EHR data submission vendor; or

(B) Submission of data extracted from the EP's certified EHR technology, which must also be through a Physician Quality Reporting System qualified EHR.

(3) For all CYs, an EP who practices in multiple physical locations, not all of which have certified EHR technology available, will demonstrate meaningful use using only the locations where the EP has certified EHR technology available. (See also § 495.4 regarding the definition of meaningful EHR user).

(b) Demonstration by eligible hospitals and CAHs. An eligible hospital or CAH must demonstrate that it satisfies each of the applicable objectives and associated measures under § 495.20, § 495.22, or § 495.24; supports health information exchange and the prevention of health information blocking or does not take actions to limit or restrict the compatibility or interoperability of CEHRT, as applicable for the EHR reporting period; and engages in activities related to supporting providers with the performance of CEHRT.

(1) For FY 2011—

(i) Attestation. Attest, through a secure mechanism, in a manner specified by CMS (or for a Medicaid eligible hospital, in a manner specified by the State), that during the EHR reporting period, the eligible hospital or CAH—

(A) Used certified EHR and specify the technology used.

(B) Satisfied the required objectives and associated measures under § 495.20 or § 495.24.

(C) Must specify the EHR reporting period and provide the result of each applicable measure for all patients admitted to the inpatient or emergency department (POS 21 or 23) of the hospital during the EHR reporting period for which a selected measure is applicable.

(ii) Additional requirements for Medicaid eligible hospitals. For Medicaid eligible hospitals, if, in accordance with §§ 495.316 and 495.332, CMS has approved a State's revised definition for meaningful use, in addition to meeting paragraphs (b)(1)(i) through (ii) of this section, the eligible hospital must also demonstrate meeting the State's revised definition using the method approved by CMS.

(iii) Exception for Medicaid eligible hospitals. If a Medicaid eligible hospital has adopted, implemented or upgraded certified EHR technology in the first payment year, the eligible hospital need not demonstrate meaningful use until the second payment year, as described in § 495.20 or §§ 495.24 and 495.40.

(2) For FY 2012 and subsequent years—

(i) Attestation. Attest, through a secure mechanism, in a manner specified by CMS (or for a Medicaid eligible hospital, in a manner specified by the State), that during the EHR reporting period, the eligible hospital or CAH—

(A) Used certified EHR and specify the technology used;

(B) For fiscal years before 2015, satisfied the required objectives and associated measures under § 495.20 for the eligible hospital or CAH's stage of meaningful use.

(C) Must specify the EHR reporting period and provide the result of each applicable measure for all patients admitted to the inpatient or emergency department (POS 21 or 23) of the hospital during the EHR reporting period for which a selected measure is applicable.

(D) For 2014 only, if the eligible hospital or CAH uses one of the options specified in § 495.20(b)(4) or (h)(3), it must attest that it is unable to fully implement 2014 Edition certified EHR technology for an EHR reporting period in 2014 due to delays in 2014 Edition certified EHR technology availability.

(E) For CYs 2015 through 2016, satisfied the required objectives and associated measures under § 495.22(e) for meaningful use.

(F) For CY 2017 and CY 2018:

(1) For an eligible hospital or CAH attesting to CMS: An eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year may satisfy either the objectives and measures specified in § 495.22(f) for meaningful use or the objectives and measures specified in § 495.24(c) for meaningful use; an eligible hospital or CAH that has never successfully demonstrated it is a meaningful EHR user in any prior year must satisfy the objectives and measures specified in § 495.22(f) for meaningful use.

(2) For an eligible hospital or CAH attesting to a State for the Medicaid EHR Incentive Program: An eligible hospital or CAH that has successfully demonstrated it is a meaningful EHR user in any prior year may satisfy either the objectives and measures specified in § 495.22(e) for meaningful use or the objectives and measures specified in § 495.24(d) for meaningful use; an eligible hospital or CAH that has never successfully demonstrated it is a meaningful EHR user in any prior year must satisfy the objectives and measures specified in § 495.22(e) for meaningful use.

(G) For CY 2019:

(1) For an eligible hospital or CAH attesting to CMS, satisfied the required objectives and associated measures under § 495.24(c) for meaningful use.

(2) For an eligible hospital or CAH attesting to a State for the Medicaid EHR Incentive Program, satisfied the required objectives and associated measures under § 495.24(d) for meaningful use.

(H) For CY 2024 and subsequent years, for an eligible hospital or CAH attesting to CMS, satisfied the required objectives and associated measures for meaningful use as defined by CMS.

(I) Supporting providers with the performance of CEHRT (SPPC). Through CY 2026, to engage in activities related to supporting providers with the performance of CEHRT, the eligible hospital or CAH—

(1) Must attest that it:

(i) Acknowledges the requirement to cooperate in good faith with ONC direct review of his or her health information technology certified under the ONC Health IT Certification Program if a request to assist in ONC direct review is received; and

(ii) If requested, cooperated in good faith with ONC direct review of its health information technology certified under the ONC Health IT Certification Program as authorized by 45 CFR part 170, subpart E, to the extent that such technology meets (or can be used to meet) the definition of CEHRT, including by permitting timely access to such technology and demonstrating its capabilities as implemented and used by the eligible hospital or CAH in the field.

(2) Optionally, may attest that it:

(i) Acknowledges the option to cooperate in good faith with ONC-ACB surveillance of his or her health information technology certified under the ONC Health IT Certification Program if a request to assist in ONC-ACB surveillance is received; and

(ii) If requested, cooperated in good faith with ONC-ACB surveillance of his or her health information technology certified under the ONC Health IT Certification Program as authorized by 45 CFR part 170, subpart E, to the extent that such technology meets (or can be used to meet) the definition of CEHRT, including by permitting timely access to such technology and demonstrating its capabilities as implemented and used by the eligible hospital or CAH in the field.

(J) Support for health information exchange and the prevention of information blocking. For an EHR reporting period in CYs 2017 through 2021, the eligible hospital or CAH must attest that it—

(1) Did not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of certified EHR technology.

(2) Implemented technologies, standards, policies, practices, and agreements reasonably calculated to ensure, to the greatest extent practicable and permitted by law, that the certified EHR technology was, at all relevant times—

(i) Connected in accordance with applicable law;

(ii) Compliant with all standards applicable to the exchange of information, including the standards, implementation specifications, and certification criteria adopted at 45 CFR part 170;

(iii) Implemented in a manner that allowed for timely access by patients to their electronic health information; and

(iv) Implemented in a manner that allowed for the timely, secure, and trusted bi-directional exchange of structured electronic health information with other health care providers (as defined by 42 U.S.C. 300jj(3)), including unaffiliated providers, and with disparate certified EHR technology and vendors.

(3) Responded in good faith and in a timely manner to requests to retrieve or exchange electronic health information, including from patients, health care providers (as defined by 42 U.S.C. 300jj(3)), and other persons, regardless of the requestor's affiliation or technology vendor.

(K) Actions to limit or restrict the compatibility or interoperability of CEHRT. For an EHR reporting period in CY 2022 and subsequent years, the eligible hospital or CAH must attest that it did not knowingly and willfully take action (such as to disable functionality) to limit or restrict the compatibility or interoperability of certified EHR technology.

(ii) Reporting clinical quality information. Successfully report the clinical quality measures selected by CMS to CMS or the States, as applicable, in the form and manner specified by CMS or the States, as applicable.

(iii) [Reserved]

(iv) Additional requirements for Medicaid eligible hospitals. For Medicaid eligible hospitals if, in accordance with §§ 495.316 and 495.332, CMS has approved a State's revised definition for meaningful use, in addition to meeting paragraphs (b)(2)(i) through (iii) of this section, the eligible hospital must also demonstrate meeting the State's revised definition using the method approved by CMS.

(v) Exception for Medicare EPs for 2012 and 2013—Participation in the Physician Quality Reporting System-Medicare EHR Incentive Pilot. To satisfy the clinical quality measure reporting requirements of meaningful use, aside from attestation, an EP participating in the Physician Quality Reporting System may also participate in the Physician Quality Reporting System-Medicare EHR Incentive Pilot through one of the following methods:

(A) Submission of data extracted from the EP's certified EHR technology through a Physician Quality Reporting System qualified EHR data submission vendor; or

(B) Submission of data extracted from the EP's certified EHR technology, which must also be through a Physician Quality Reporting System qualified EHR.

(vi) Exception for Medicare eligible hospitals and CAHs for FY 2012 and 2013—Participation in the Medicare EHR Incentive Program Electronic Reporting Pilot. In order to satisfy the clinical quality measure reporting requirements of meaningful use, aside from attestation, a Medicare eligible hospital or CAH may participate in the Medicare EHR Incentive Program Electronic Reporting Pilot.

(vii) Exception for dual-eligible eligible hospitals and CAHs beginning in CY 2019. (A) Beginning with the EHR reporting period in CY 2019, dual-eligible eligible hospitals and CAHs (those that are eligible for an incentive payment under Medicare for meaningful use of CEHRT and/or subject to the Medicare payment reduction for failing to demonstrate meaningful use, and are also eligible to earn a Medicaid incentive payment for meaningful use) must satisfy the requirements under paragraph (b)(2) of this section by attestation and reporting information to CMS, not to their respective state Medicaid agency.

(B) Dual-eligible eligible hospitals and CAHs that demonstrate meaningful use to their state Medicaid agency may only qualify for an incentive payment under Medicaid and will not qualify for an incentive payment under Medicare and/or avoid the Medicare payment reduction.

(c) Review of meaningful use. (1) CMS (and in the case of Medicaid EPs and eligible hospitals, States) may review an EP, eligible hospital or CAH's demonstration of meaningful use.

(2) All EPs, eligible hospitals, and CAHs must keep documentation supporting their demonstration of meaningful use for 6 years.

[75 FR 44565, July 28, 2010. Redesignated at 80 FR 62943, Oct. 16, 2015]

Editorial Note:For Federal Register citations affecting § 495.40, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.

§ 495.60 Participation requirements for EPs, eligible hospitals, and CAHs.

(a) An eligible hospital, CAH or EP must submit in a manner specified by CMS the following information in the first payment year:

(1) Name of the EP, eligible hospital or CAH.

(2) National Provider Identifier (NPI).

(3) Business address, business email address, and phone number.

(4) Such other information as specified by CMS.

(b) In addition to the information submitted under paragraph (a) of this section, an eligible hospital or CAH, must, in the first payment year, submit in a manner specified by CMS its CMS Certification Number (CCN) and its Taxpayer Identification Number (TIN).

(c) Subject to paragraph (f) of this section, in addition to the information submitted under paragraph (a) of this section, an EP must submit in a manner specified by CMS, the Taxpayer Identification Number (TIN) which may be the EP's Social Security Number (SSN) to which the EP's incentive payment should be made.

(d) In the event the information specified in paragraphs (a) through (c) of this section as previously submitted to CMS is no longer accurate, the EP, eligible hospital or CAH must provide updated information to CMS or the State on a timely basis in the manner specified by CMS or the State.

(e) An EP that qualifies as both a Medicaid EP and Medicare EP—

(1) Must notify CMS in the manner specified by CMS as to whether he or she elects to participate in the Medicare or the Medicaid EHR incentive program;

(2) After receiving at least one EHR incentive payment, may switch between the two EHR incentive programs only one time, and only for a payment year before 2015;

(3) Must, for each payment year, meet all of the applicable requirements, including applicable patient volume requirements, for the program in which he or she chooses to participate (Medicare or Medicaid);

(4) Is limited to receiving, in total, the maximum payments the EP would receive under the Medicaid EHR program, as described in subpart D of this part; and

(5) Is placed in the payment year the EP would have been in had the EP begun in and remained in the program to which he or she has switched. For example, an EP that begins receiving Medicaid incentive payments in 2011, and then switches to the Medicare program for 2012, is in his or her second payment year in 2012.

(f) Limitations on incentive payment reassignments. (1) EPs are permitted to reassign their incentive payments to their employer or to an entity with which they have a contractual arrangement allowing the employer or entity to bill and receive payment for the EP's covered professional services.

(2)(i) Assignments in Medicare must be consistent with Section 1842(b)(6)(A) of the Act and 42 CFR part 424 subpart F.

(ii) Medicaid EPs may also assign their incentive payments to a TIN for an entity promoting the adoption of EHR technology, consistent with subpart D of this part.

(3) Each EP may reassign the entire amount of the incentive payment to only one employer or entity.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54157, Sept. 4, 2012. Redesignated at 80 FR 62943, Oct. 16, 2015]

§ 495.100 Definitions.

In this subpart unless otherwise indicated—

Covered professional services means (as specified in section 1848(k)(3) of the Act) services furnished by an EP for which payment is made under, or is based on, the Medicare physician fee schedule.

Eligible hospital means a hospital subject to the prospective payment system specified in § 412.1(a)(1) of this chapter, excluding those hospitals specified in § 412.23 of this chapter, excluding those hospital units specified in § 412.25 of this chapter, and including Puerto Rico eligible hospitals unless otherwise indicated.

Eligible professional (EP) means a physician as defined in section 1861(r) of the Act, which includes, with certain limitations, all of the following types of professionals:

(1) A doctor of medicine or osteopathy.

(2) A doctor of dental surgery or medicine.

(3) A doctor of podiatric medicine.

(4) A doctor of optometry.

(5) A chiropractor.

Geographic health professional shortage area (HPSA) means a geographic area that is designated by the Secretary under section 332(a)(1)(A) of the PHS Act as of December 31 of the year prior to the payment year as having a shortage of health professionals.

Puerto Rico eligible hospital means a subsection (d) Puerto Rico hospital as defined in section 1886(d)(9)(A) of the Social Security Act.

Qualifying CAH means a CAH that is a meaningful EHR user for the EHR reporting period applicable to a payment year or payment adjustment year in which a cost reporting period begins.

Qualifying eligible professional (qualifying EP) means an EP who is a meaningful EHR user for the EHR reporting period applicable to a payment or payment adjustment year and who is not a hospital-based EP, as determined for that payment or payment adjustment year.

Qualifying hospital means an eligible hospital that is a meaningful EHR user for the EHR reporting period applicable to a payment or payment adjustment year.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54157, Sept. 4, 2012; 83 FR 41710, Aug. 17, 2018]

§ 495.102 Incentive payments to EPs.

(a) General rules. (1) Subject to paragraph (b) of this section, in addition to the amount otherwise paid under section 1848 of the Act, there must be paid to a qualifying EP (or to an employer or entity in the cases described in section 1842(b)(6)(A) of the Act) for a payment year an amount equal to 75 percent of the estimated allowed charges for covered professional services furnished by the EP during the payment year.

(2) For purposes of this paragraph (a) of this section, the estimated allowed charges for the qualifying EP's covered professional services during the payment year are determined based on claims submitted no later than 2 months after the end of the payment year, and, in the case of a qualifying EP who furnishes covered professional services in more than one practice, are determined based on claims submitted for the EP's covered professional services across all such practices.

(b) Limitations on amounts of incentive payments. (1) Except as otherwise provided in paragraphs (b)(2) and (c) of this section, the amount of the incentive payment under paragraph (a) of this section for each payment year is limited to the following amounts:

(i) For the first payment year, $15,000 (or, if the first payment year for such qualifying EP is 2011 or 2012, $18,000).

(ii) For the second payment year, $12,000.

(iii) For the third payment year, $8,000.

(iv) For the fourth payment year, $4,000.

(v) For the fifth payment year, $2,000.

(vi) For any succeeding payment year for such professional, $0.

(2)(i) If the first payment year for a qualifying EP is 2014, then the payment limit for a payment year for the qualifying EP is the same as the amount specified in paragraph (b)(1) of this section for such payment year for a qualifying EP whose first payment year is 2013.

(ii) If the first payment year for a qualifying EP is after 2014, then the payment limit specified in this paragraph for such EP for such year and any subsequent year is $0.

(c) Increase in incentive payment limit for EPs who predominantly furnish services in a geographic HPSA. In the case of a qualifying EP who furnishes more than 50 percent of his or her covered professional services during the payment year in a geographic HPSA that is designated as of December 31 of the prior year, the incentive payment limit determined under paragraph (b) of this section is to be increased by 10 percent.

(d) Payment adjustment effective in CY 2015 and subsequent years for nonqualifying EPs. (1) Subject to paragraphs (d)(3) and (4) of this section, for CY 2015 through the end of CY 2018, for covered professional services furnished by an EP who is not hospital-based, and who is not a qualifying EP by virtue of not being a meaningful EHR user (for the EHR reporting period applicable to the payment adjustment year), the payment amount for such services is equal to the product of the applicable percent specified in paragraph (d)(2) of this section and the Medicare physician fee schedule amount for such services.

(2) Applicable percent. Applicable percent is as follows:

(i) For 2015, 99 percent if the EP is not subject to the payment adjustment for an EP who is not a successful electronic prescriber under section 1848(a)(5) of the Act, or 98 percent if the EP is subject to the payment adjustment for an EP who is not a successful electronic prescriber under section 1848(a)(5) of the Act).

(ii) For 2016, 98 percent.

(iii) For 2017, 97 percent.

(iv) For 2018, 97 percent, except as provided in paragraph (d)(3) of this section.

(3) Decrease in applicable percent in certain circumstances. In CY 2018, if the Secretary finds that the proportion of EPs who are meaningful EHR users is less than 75 percent, the applicable percent must be decreased by 1 percentage point for EPs from the applicable percent in the preceding year.

(4) Exceptions. The Secretary may, on a case-by-case basis, exempt an EP from the application of the payment adjustment under paragraph (d)(1) of this section if the Secretary determines that compliance with the requirement for being a meaningful EHR user would result in a significant hardship for the EP. To be considered for an exception, an EP must submit, in the manner specified by CMS, an application demonstrating that it meets one or more of the criteria in this paragraph (d)(4) unless otherwise specified in the criteria. The Secretary's determination to grant an EP an exemption may be renewed on an annual basis, provided that in no case may an EP be granted an exemption for more than 5 years.

(i) During any 90-day period from the beginning of the year that is 2 years before the payment adjustment year to July 1 of the year preceding the payment adjustment year, or a later date specified by CMS, the EP was located in an area without sufficient Internet access to comply with the meaningful use objectives requiring internet connectivity, and faced insurmountable barriers to obtaining such internet connectivity. Applications requesting this exception must be submitted no later than July 1 of the year before the applicable payment adjustment year, or a later date specified by CMS.

(ii) The EP has been practicing for less than 2 years.

(iii)(A) During the calendar year that is 2 calendar years before the payment adjustment year, the EP that has previously demonstrated meaningful use faces extreme and uncontrollable circumstances that prevent it from becoming a meaningful EHR user. Applications requesting this exception must be submitted no later than July 1 of the year before the applicable payment adjustment year, or a later date specified by CMS.

(B) During the calendar year preceding the payment adjustment year, the EP that has not previously demonstrated meaningful use faces extreme and uncontrollable circumstances that prevent it from becoming a meaningful EHR user. Applications requesting this exception must be submitted by July 1 of the year before the applicable payment adjustment year, or a later date specified by CMS.

(iv) An EP may request an exception through an application submitted by July 1 of the year before the applicable payment adjustment year, or a later date specified by CMS due to difficulty in meeting meaningful use based on any one of the following during the period that begins 2 calendar years before the payment adjustment year through the application deadline:

(A) The EP practices at multiple locations and can demonstrate inability to control the availability of Certified EHR Technology at one such practice location or a combination of practice locations, and where the location or locations constitute more than 50 percent of their patient encounters.

(B) The EP can demonstrate difficulty in meeting meaningful use on the basis of lack of face-to-face or telemedicine interaction with patients and lack of need for follow up with patients.

(C) The EP has a primary specialty listed in PECOS as anesthesiology, radiology or pathology 6 months prior to the first day of the payment adjustments that would otherwise apply. Such an EP may be deemed to qualify for this exception, subject to the 5-year limit that applies to all exceptions under this paragraph.

(v) For the 2018 payment adjustment only, an EP who has not successfully demonstrated meaningful use in a prior year, intends to attest to meaningful use for an EHR reporting period in 2017 by October 1, 2017 to avoid the 2018 payment adjustment, and intends to transition to the Merit-Based Incentive Payment System (MIPS) and report on measures specified for the advancing care information performance category under the MIPS in 2017. The EP must explain in the application why demonstrating meaningful use for an EHR reporting period in 2017 would result in a significant hardship. Applications requesting this exception must be submitted no later than October 1, 2017, or a later date specified by CMS.

(5) Exception for decertified EHR technology. The Secretary shall exempt an EP from the application of the payment adjustment for CY 2018 under paragraph (d)(1) of this section if the Secretary determines that compliance with the requirement for being a meaningful EHR user is not possible because the certified EHR technology used by the EP has been decertified under ONC's Health IT Certification Program. To be considered for an exception, an EP must submit, in the manner specified by CMS, an application demonstrating that the certified EHR technology was decertified during the 12-month period preceding the applicable EHR reporting period for the CY 2018 payment adjustment year, or during the applicable EHR reporting period for the CY 2018 payment adjustment year, and that the EP made a good faith effort to obtain another certified EHR technology for that EHR reporting period. Applications requesting this exception must be submitted no later than October 1, 2017, or a later date specified by CMS.

(6) Payment adjustments not applicable to hospital-based EPs. No payment adjustment under paragraphs (d)(1) through (3) of this section may be made in the case of a hospital-based eligible professional, as defined in § 495.4.

(7) Payment adjustments not applicable to ambulatory surgical center-based EPs. For the CY 2017 and CY 2018 payment adjustment years, no payment adjustment under paragraphs (d)(1) through (3) of this section may be made in the case of an ambulatory surgical center-based eligible professional, as defined in § 495.4.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54157, Sept. 4, 2012; 77 FR 54157, Sept. 4, 2012; 79 FR 68009, Nov. 13, 2014; 81 FR 77557, Nov. 4, 2016; 81 FR 79892, Nov. 14, 2016; 82 FR 38518, Aug. 14, 2017]

§ 495.104 Incentive payments to eligible hospitals.

(a) General rule. A qualifying hospital (as defined in this subpart) must receive the special incentive payment as determined under the formulas described in paragraph (c) of this section for the period specified in paragraph (b) of this section.

(b) Transition periods. Subject to paragraph (d) of this section and the payment formula specified in paragraph (c) of this section, qualifying hospitals may receive incentive payments during transition periods which comprise the following fiscal years:

(1) Hospitals whose first payment year is FY 2011 may receive such payments for FYs 2011 through 2014.

(2) Hospitals whose first payment year is FY 2012 may receive such payments for FYs 2012 through 2015.

(3) Hospitals whose first payment year is FY 2013 may receive such payments for FYs 2013 through 2016.

(4) Hospitals whose first payment year is FY 2014 may receive such payments for FY 2014 through 2016.

(5) Hospitals whose first payment year is FY 2015 may receive such payments for FY 2015 through 2016.

(6) Puerto Rico eligible hospitals whose first payment year is FY 2016 may receive such payments for FYs 2016 through 2019.

(7) Puerto Rico eligible hospitals whose first payment year is FY 2017 may receive such payments for FYs 2017 through 2020.

(8) Puerto Rico eligible hospitals whose first payment year is FY 2018 may receive such payments for FYs 2018 through 2021.

(9) Puerto Rico eligible hospitals whose first payment year is FY 2019 may receive such payments for FYs 2019 through 2021.

(10) Puerto Rico eligible hospitals whose first payment year is FY 2020 may receive such payments for FYs 2020 through 2021.

(c) Payment methodology. (1) The incentive payment for each payment year is calculated as the product of the following:

(i) The initial amount determined under paragraph (c)(3) of this section.

(ii) The Medicare share fraction determined under paragraph (c)(4) of this section.

(iii) The transition factor determined under paragraph (c)(5) of this section.

(2) Interim and final payments. CMS uses data on hospital acute care inpatient discharges, Medicare Part A acute care inpatient bed-days, Medicare Part C acute care inpatient bed-days, and total acute care inpatient bed-days from the latest submitted 12-month hospital cost report as the basis for making preliminary incentive payments. Final payments are determined at the time of settling the first 12-month hospital cost report for the hospital fiscal year that begins on or after the first day of the payment year, and settled on the basis of data from that cost reporting period. In cases where there is no 12-month hospital cost report period beginning on or after the first day of the payment year, final payments may be determined and settled on the basis of data from the most recently submitted 12-month hospital cost report.

(3) Initial amount. The initial amount is equal to one of the following:

(i) For each hospital with 1,149 acute care inpatient discharges or fewer, $2,000,000.

(ii) For each hospital with at least 1,150 but no more than 23,000 acute care inpatient discharges, $2,000,000 + [$200 × (n − 1,149)], where n is the number of discharges for the hospital.

(iii) For each hospital with more than 23,000 acute care inpatient discharges, $6,370,200.

(4) Medicare share fraction—(i) General. (A) CMS determines the Medicare share fraction for an eligible hospital by using the number of Medicare Part A, Medicare Part C, and total acute care inpatient-bed-days using data from the Medicare cost report as specified by CMS.

(B) CMS computes the denominator of the Medicare share fraction using the charity care charges reported on the hospital's Medicare cost report.

(ii) The Medicare share fraction is the ratio of—

(A) A numerator which is the sum of—

(1) The number of inpatient-bed-days which are attributable to individuals with respect to whom payment may be made under Part A, including individuals enrolled in section 1876 Medicare cost plans; and

(2) The number of inpatient-bed-days which are attributable to individuals who are enrolled with a Medicare Advantage organization (as defined in § 422.2 of this chapter).

(B) A denominator which is the product of—

(1) The total number of acute care inpatient-bed-days; and

(2) The total amount of the eligible hospital's charges, not including any charges that are attributable to charity care, divided by the estimated total amount of the hospitals charges.

(5) Transition factor. For purposes of the payment formula, the transition factor is as follows:

(i) For hospitals whose first payment year is FY 2011—

(A) 1 for FY 2011;

(B) 3/4 for FY 2012;

(C) 1/2 for FY 2013; and

(D) 1/4 for FY 2014.

(ii) For hospitals whose first payment year is FY 2012—

(A) 1 for FY 2012;

(B) 3/4 for FY 2013;

(C) 1/2 for FY 2014; and

(D) 1/4 for FY 2015;

(iii) For hospitals whose first payment year is FY 2013—

(A) 1 for FY 2013;

(B) 3/4 for FY 2014;

(C) 1/2 for FY 2015; and

(D) 1/4 for FY 2016.

(iv) For hospitals whose first payment year is FY 2014—

(A) 3/4 for FY 2014;

(B) 1/2 for FY 2015; and

(C) 1/4 for FY 2016.

(v) For hospitals whose first payment year is FY 2015—

(A) 1/2 for FY 2015; and

(B) 1/4 for FY 2016.

(vi) For Puerto Rico eligible hospitals whose first payment year is FY 2016—

(A) 1 for FY 2016;

(B) 3/4 for FY 2017;

(C) 1/2 for FY 2018; and

(D) 1/4 for FY 2019.

(vii) For Puerto Rico eligible hospitals whose first payment year is FY 2017—

(A) 1 for FY 2017;

(B) 3/4 for FY 2018;

(C) 1/2 for FY 2019; and

(D) 1/4 for FY 2020;

(viii) For Puerto Rico eligible hospitals whose first payment year is FY 2018—

(A) 1 for FY 2018;

(B) 3/4 for FY 2019;

(C) 1/2 for FY 2020; and

(D) 1/4 for FY 2021.

(ix) For Puerto Rico eligible hospitals whose first payment year is FY 2019—

(A) 3/4 for FY 2019;

(B) 1/2 for FY 2020; and

(C) 1/4 for FY 2021.

(x) For Puerto Rico eligible hospitals whose first payment year is FY 2020—

(A) 1/2 for FY 2020; and

(B) 1/4 for FY 2021.

(d) No incentive payment for nonqualifying hospitals. After the first payment year, an eligible hospital will not receive an incentive payment for any payment year during which it is not a qualifying hospital.

[75 FR 44565, July 28, 2010, as amended at 78 FR 75200, Dec. 10, 2013; 83 FR 41710, Aug. 17, 2018; 85 FR 59027, Sept. 18, 2020]

§ 495.106 Incentive payments to CAHs.

(a) Definitions. In this section, unless otherwise indicated—

Payment year means a Federal fiscal year beginning after FY 2010 but before FY 2016.

Qualifying CAH means a CAH that would meet the definition of a meaningful EHR user at § 495.4, if it were an eligible hospital.

Reasonable costs incurred for the purchase of certified EHR technology for a qualifying CAH means the reasonable acquisition costs incurred for the purchase of depreciable assets as described in part 413 subpart G of this chapter, such as computers and associated hardware and software, necessary to administer certified EHR technology as defined in § 495.4, excluding any depreciation and interest expenses associated with the acquisition.

(b) General rule. A qualifying CAH receives an incentive payment for its reasonable costs incurred for the purchase of certified EHR technology, as defined in paragraph (a) of this section, in the manner described in paragraph (c) of this section for a cost reporting period beginning during a payment year as defined in paragraph (a) of this section.

(c) Payment methodology—(1) Payment amount. A qualifying CAH receives an incentive payment amount equal to the product of its reasonable costs incurred for the purchase of certified EHR technology and the Medicare share percentage.

(2) Calculation of reasonable costs. CMS or its Medicare contractor computes a qualifying CAH's reasonable costs incurred for the purchase of certified EHR technology, as defined in paragraph (a) of this section, as the sum of—

(i) The reasonable costs incurred for the purchase of certified EHR technology during the cost reporting period that begins in a payment year; and

(ii) Any reasonable costs incurred for the purchase of certified EHR technology in cost reporting periods beginning in years prior to the payment year which have not been fully depreciated as of the cost reporting period beginning in the payment year.

(3) Medicare share percentage. Notwithstanding the percentage applicable under § 413.70(a)(1) of this chapter, the Medicare share percentage equals the lesser of—

(i) 100 percent; or

(ii) The sum of the Medicare share fraction for the CAH as calculated under § 495.104(c)(4) of this subpart and 20 percentage points.

(d) Incentive payments made to CAHs. (1) The amount of the incentive payment made to a qualifying CAH under this section represents the expensing and payment of the reasonable costs computed in paragraph (c) of this section in a single payment year and, as specified in § 413.70(a)(5) of this chapter, such payment is made in lieu of payment that would have been made under § 413.70(a)(1) of this chapter for the reasonable costs of the purchase of certified EHR technology including depreciation and interest expenses associated with the acquisition.

(2) The amount of the incentive payment made to a qualifying CAH under this section is paid through a prompt interim payment for the applicable payment year after—

(i) The CAH submits the necessary documentation, as specified by CMS or its Medicare contractors, to support the computation of the incentive payment amount under this section; and

(ii) CMS or its Medicare contractor reviews such documentation and determines the interim amount of the incentive payment.

(3) The interim incentive payment made under this paragraph is subject to a reconciliation process as specified by CMS and the final incentive payment as determined by CMS or its Medicare contractor is considered payment in full for the reasonable costs incurred for the purchase of certified EHR technology in a single payment year.

(4) In no case may an incentive payment be made with respect to a cost reporting period beginning during a payment year before FY 2011 or after FY 2015 and in no case may a CAH receive an incentive payment under this section with respect to more than 4 consecutive payment years.

(e) Reductions in payment to CAHs. For cost reporting periods beginning in FY 2015, if a CAH is not a qualifying CAH for a payment adjustment year, then the payment for inpatient services furnished by a CAH under § 413.70(a) of this chapter is adjusted by the applicable percentage described in § 413.70(a)(6) of this chapter unless otherwise exempt from such adjustment.

(f) Administrative or judicial review. There is no administrative or judicial review under sections 1869 or 1878 of the Act, or otherwise, of the—

(1) Methodology and standards for determining the amount of payment, the reasonable cost, and adjustments described in this section including selection of periods for determining, and making estimates or using proxies of, inpatient-bed-days, hospital charges, charity charges, and the Medicare share percentage as described in this section;

(2) Methodology and standards for determining if a CAH is a qualifying CAH under this section;

(3) Specification of EHR reporting periods, cost reporting periods, payment years, and fiscal years used to compute the CAH incentive payment as specified in this section; and

(4) Identification of the reasonable costs used to compute the CAH incentive payment under paragraph (c) of this section including any reconciliation of the CAH incentive payment amount made under paragraph (d) of this section.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54158, Sept. 4, 2012]

§ 495.108 Posting of required information.

(a) CMS posts, on its Internet Web site, the following information regarding EPs, eligible hospitals, and CAHs receiving an incentive payment under subparts B and C of this part:

(1) Name.

(2) Business addressee.

(3) Business phone number.

(4) Such other information as specified by CMS.

(b) CMS posts, on its Internet Web site, the following information for qualifying MA organizations that receive an incentive payment under subpart C of this part—

(1) The information specified in paragraph (a) of this section for each of the qualifying MA organization's MA plan information; and

(2) The information specified in paragraph (a) of this section for each of the qualifying MA organization's MA EPs and MA-affiliated eligible hospitals.

§ 495.110 Preclusion on administrative and judicial review.

There is no administrative or judicial review under sections 1869 or 1878 of the Act, or otherwise, of the following:

(a) For EPs—

(1) The methodology and standards for determining EP incentive payment amounts;

(2) The methodology and standards for determining the payment adjustments that apply to EPs beginning with 2015;

(3) The methodology and standards for determining whether an EP is a meaningful EHR user, including—

(i) The selection of clinical quality measures; and

(ii) The means of demonstrating meaningful EHR use.

(4) The methodology and standards for determining the hardship exception to the payment adjustments;

(5) The methodology and standards for determining whether an EP is hospital-based; and

(6) The specification of the EHR reporting period, as well as whether payment will be made only once, in a single consolidated payment, or in periodic installments.

(b) For eligible hospitals—

(1) The methodology and standards for determining the incentive payment amounts made to eligible hospitals, including—

(i) The estimates or proxies for determining discharges, inpatient-bed-days, hospital charges, charity charges, and Medicare share; and

(ii) The period used to determine such estimate or proxy;

(2) The methodology and standards for determining the payment adjustments that apply to eligible hospitals beginning with FY 2015;

(3) The methodology and standards for determining whether an eligible hospital is a meaningful EHR user, including—

(i) The selection of clinical quality measures; and

(ii) The means of demonstrating meaningful EHR use.

(4) The methodology and standards for determining the hardship exception to the payment adjustments; and

(5) The specification of the EHR reporting period, as well as whether payment will be made only once, in a single consolidated payment, or in periodic installments.

§ 495.200 Definitions.

As used in this subpart:

First payment year means with respect to—

(1) Covered professional services furnished by a qualifying MA EP, the first calendar year for which an incentive payment is made for such services under this subsection to a qualifying MA organization.

(2) Qualifying MA-affiliated eligible hospitals, the first fiscal year for which an incentive payment is made for qualifying MA-affiliated eligible hospitals under this section to a qualifying MA organization.

Inpatient-bed-days is defined in the same manner and is used in the same manner as that term is defined and used for purposes of implementing section 4201(a) of the American Recovery and Reinvestment Act of 2009 with respect to the Medicare FFS hospital EHR incentive program in § 495.104 of this part.

MA payment adjustment year means—

(1) Except as provided in paragraph (2) of this definition, for qualifying MA organizations that receive an MA EHR incentive payment for at least 1 payment year, calendar years beginning with CY 2015.

(2) For qualifying MA organizations that receive an MA EHR incentive payment for a qualifying MA-affiliated eligible hospital in Puerto Rico for at least 1 payment year, and that have not previously received an MA EHR incentive payment for a qualifying MA-affiliated eligible hospital not in Puerto Rico, calendar years beginning with CY 2022.

(3) For MA-affiliated eligible hospitals, the applicable EHR reporting period for purposes of determining whether the MA organization is subject to a payment adjustment is the Federal fiscal year ending in the MA payment adjustment year.

(4) For MA EPs, the applicable EHR reporting period for purposes of determining whether the MA organization is subject to a payment adjustment is the calendar year concurrent with the payment adjustment year.

Patient care services means health care services for which payment would be made under, or for which payment would be based on, the fee schedule established under Medicare Part B if they were furnished by an EP to a Medicare beneficiary.

Payment year means—

(1) For a qualifying MA EP, a calendar year beginning with CY 2011 and ending with CY 2016; and

(2) For an eligible hospital, a Federal fiscal year beginning with FY 2011 and ending with FY 2016; and

(3) For an eligible hospital in Puerto Rico, a Federal fiscal year beginning with FY 2016 and ending with FY 2021.

Potentially qualifying MA EPs and potentially qualifying MA-affiliated eligible hospitals are defined for purposes of this subpart in § 495.202(a)(4).

Qualifying MA-affiliated eligible hospital means an eligible hospital under section 1886(n)(6) of the Act that is under common corporate governance with a qualifying MA organization, for which at least two thirds of the Medicare hospital discharges (or bed-days) are of (or for) Medicare individuals enrolled under MA plans, and that is a meaningful user of certified EHR technology as defined by § 495.4 of this part. In the case of a hospital for which at least one-third of whose Medicare bed-days for the year are covered under Part A rather than Part C, payment for that payment year must only be made under section 1886(n) of the Act and not under this section.

Qualifying MA EP means all of the following:

(1) A physician (as described in section 1861(r) of the Act), including a doctor of medicine or osteopathy who is either of the following:

(i) Employed by a qualifying MA organization.

(ii) Employed by, or is a partner of, an entity that through a contract with a qualifying MA organization furnishes at least 80 percent of the entity's Medicare patient care services to enrollees of such organization.

(2) Furnishes at least 80 percent of his or her professional services covered under Title XVIII to enrollees of the qualifying MA organization.

(3) Furnishes, on average, at least 20 hours per week of patient care services to enrollees of the qualifying MA organization during the EHR reporting period.

(4) Is a meaningful user of certified EHR technology in accordance with § 495.4 of this part.

(5) Is not a “hospital-based EP” (as defined in § 495.4 of this part) and in determining whether 90 percent or more of his or her covered professional services were furnished in a hospital setting, only covered professional services furnished to MA plan enrollees of the qualifying MA organization, in lieu of FFS patients, will be considered.

Qualifying MA organization means a MA organization that is organized as a health maintenance organization (HMO) as defined in section 2791(b)(3) of the Public Health Service (PHS) Act which includes a Federally qualified HMO, an organization recognized as an HMO under State law, or a similar organization regulated for solvency under State law in the same manner and to the same extent as an HMO.

Second, third, fourth, and fifth payment year means with respect to incentive payments for qualifying—

(1) MA EPs to a qualifying MA organization, each successive calendar year immediately following the first payment year for the qualifying MA organization. The first payment year and each successive year immediately following the first payment year, for the qualifying MA organizations, through 2016, is the same for all qualifying MA EPs with respect to any specific qualifying MA organization.

(2) MA-affiliated eligible hospitals to a qualifying MA organization, each successive fiscal year immediately following the first payment year for the qualifying MA organization.

Under common corporate governance means that a qualifying MA organization and a qualifying MA-affiliated eligible hospital have a common parent corporation, that one is a subsidiary of the other, or that the organization and the hospital have a common board of directors.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54158, Sept. 4, 2012; 83 FR 41711, Aug. 17, 2018]

§ 495.202 Identification of qualifying MA organizations, MA-EPs and MA-affiliated eligible hospitals.

(a) Identification of qualifying MA organizations. (1) Beginning with bids due in June 2011 (for plan year 2012), MA organizations seeking reimbursement for qualifying MA EPs and qualifying MA-affiliated eligible hospitals under the MA EHR incentive program are required to identify themselves to CMS in a form and manner specified by CMS, as part of submissions of initial bids under section 1854(a)(1)(A) of the Act.

(2) Qualifying MA organizations offering MA HMO plans, absent evidence to the contrary, are deemed to meet the definition of HMO in 42 U.S.C. 300gg-91(b)(3)—section 2791(b)(3) of the PHS Act.

(3) Qualifying MA organizations offering MA plan types other than HMOs, must attest to the fact that they meet the definition of HMO in 42 U.S.C. 300gg-91(b)(3)—section 2791(b)(3) of the PHS Act.

(4) Beginning with bids due in June 2014 (for plan year 2015), all MA organizations with potentially qualifying MA EPs or potentially qualifying MA-affiliated eligible hospitals under the MA EHR incentive program must identify themselves to CMS in a form and manner specified by CMS, as part of submissions of initial bids under section 1854(a)(1)(A) of the Act. “Potentially qualifying MA EPs” and “potentially qualifying MA-affiliated eligible hospitals” are those EPs and hospitals that meet the respective definitions of “qualifying MA EP” and “qualifying MA-affiliated eligible hospital” in § 495.200 but who (or which) are not meaningful users of certified EHR technology.

(b) Identification of qualifying MA EPs and qualifying MA-affiliated eligible hospitals. (1) A qualifying MA organization, as part of its initial bid starting with plan year 2012, must make a preliminary identification of MA EPs and MA-affiliated eligible hospitals that the MA organization believes will be qualifying MA EPs and MA-affiliated eligible hospitals for which the organization is seeking incentive payments for the current plan year.

(2) A qualifying MA organization must provide CMS with the following for each MA EP or eligible hospital when reporting under either paragraph (b)(1) or (4) of this section:

(i) The MA EP's or MA-affiliated eligible hospital's name.

(ii) The address of the MA EP's practice or MA-affiliated eligible hospital's location.

(iii) NPI or CCN.

(iv) An attestation by MA organization specifying that the MA EP or MA-affiliated eligible hospital meets the eligibility criteria.

(3) When reporting under either paragraph (b)(1) or (4) of this section for purposes of receiving an incentive payment, a qualifying MA organization must also indicate whether more than 50 percent of the covered Medicare professional services being furnished by a qualifying MA EP to MA plan enrollees of the MA organization are being furnished in a designated geographic HPSA (as defined in § 495.100 of this part).

(4) Final identification of qualifying and potentially qualifying, as applicable, MA EPs and MA-affiliated eligible hospitals must be made within 2 months of the close of the payment year or the EHR reporting period that applies to the payment adjustment year as defined in § 495.200.

(5) Beginning plan year 2015 and for subsequent plan years, all qualifying MA organizations, as part of their initial bids in June for the following plan year must—

(i) Identify all MA EPs and MA-affiliated eligible hospitals of the MA organization that the MA organization believes will be either qualifying or potentially qualifying;

(ii) Include information specified in paragraph (b)(2)(i) through (iii) of this section for each professional or hospital; and

(iii) Include an attestation that each professional and hospital either meets or does not meet the EHR incentive payment eligibility criteria.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54158, Sept. 4, 2012]

§ 495.204 Incentive payments to qualifying MA organizations for qualifying MA-EPs and qualifying MA-affiliated eligible hospitals.

(a) General rule. A qualifying MA organization receives an incentive payment for its qualifying MA-EPs and its qualifying MA-eligible hospitals. The incentive payment amount paid to a qualifying MA organization for a—

(1) Qualifying MA-EP is the amount determined under paragraph (b) of this section; and

(2) Qualifying MA-eligible hospital is the amount determined under paragraph (c) of this section.

(b) Amount payable to qualifying MA organization for qualifying MA EPs. (1) CMS substitutes an amount determined to be equivalent to the amount computed under § 495.102 of this part.

(2) The qualifying MA organization must report to CMS within 2 months of the close of the calendar year, the aggregate annual amount of revenue attributable to providing services that would otherwise be covered as professional services under Part B received by each qualifying MA EP for enrollees in MA plans of the MA organization in the payment year.

(3) CMS calculates the incentive amount for the MA organization for each qualifying MA EP as an amount equal to 75 percent of the reported annual revenue specified in paragraph (b)(2) of this section, up to the maximum amounts specified under section 1848(o)(1)(B) of the Act.

(4) CMS requires the qualifying MA organization to develop a methodological proposal for estimating the portion of each qualifying MA EP's salary or revenue attributable to providing services that would otherwise be covered as professional services under Part B to MA plan enrollees of the MA organization in the payment year. The methodological proposal—

(i) Must be approved by CMS; and

(ii) May include an additional amount related to overhead, where appropriate, estimated to account for the MA-enrollee related Part B practice costs of the qualifying MA EP.

(iii) Methodological proposals must be submitted to CMS by June of the payment year and must be auditable by an independent third-party. CMS will review and approve or disapprove such proposals in a timely manner.

(5) For qualifying MA EPs who are not salaried, qualifying MA organizations may obtain attestations from such qualifying MA EPs (or from entities that the MA EPs are employed by or with which they have a partnership interest) as to the amount of compensation received by such EPs for MA plan enrollees of the MA organization. The organizations may submit to CMS compensation information for each such MA EP based on such attestations.

(6) For qualifying MA EPs who are not salaried, qualified MA organizations may have qualifying MA EPs (or from entities that the MA EPs are employed by or with which they have a partnership interest) send MA organization compensation information directly to CMS. CMS will use the information provided in this subparagraph or paragraph (b)(5) of this section for no other purpose than to compute the amount of EHR incentive payment due the MA organization.

(c) Amount payable to qualifying MA organization for qualifying MA-affiliated eligible hospitals. (1)(i) CMS substitutes an amount determined to be equivalent to the amount computed under § 495.104, to the extent data are not available to compute payments for qualifying MA-affiliated eligible hospitals under the Medicare FFS EHR hospital incentive program.

(ii) CMS uses the same methodology and defines “inpatient-bed-days”and other terms as used under the Medicare FFS EHR hospital incentive program in § 495.104 of this part in computing amounts due qualifying MA organizations for MA-affiliated eligible hospitals.

(2) To the extent data are available, qualifying MA organizations must receive hospital incentive payments through their affiliated hospitals under the Medicare FFS EHR hospital incentive program, rather than through the MA EHR hospital incentive program.

(d) Payment to qualifying MA organizations. CMS makes payment to qualifying MA organizations for qualifying MA EPs only under the MA EHR incentive program and not under the Medicare FFS EHR incentive program to the extent an EP has earned less than the maximum incentive payment for the same period under the Medicare FFS EHR incentive program.

(e) Potential increase in incentive payment for furnishing services in a geographic HPSA. In the case of a qualifying MA EP who furnishes more than 50 percent of his or her covered professional services to MA plan enrollees of the qualifying MA organization during a payment year in a geographic HPSA, the maximum amounts referred to in paragraph (b)(3) of this section are increased by 10 percent.

(f) Payment review under MA. To ensure the accuracy of the incentive payments, CMS conducts selected compliance reviews of qualifying MA organizations to ensure that EPs and eligible hospitals for which such qualifying organizations received incentive payments were meaningful EHR users in accordance with § 422.504 of this chapter.

(1) The reviews include validation of the status of the organization as a qualifying MA organization, verification of meaningful use and review of data used to calculate incentive payments.

(2) MA organizations are required to maintain evidence of their qualification to receive incentive payments and the data necessary to accurately calculate incentive payments.

(3) Documents and records must be maintained for 6 years from the date such payments are made with respect to a given payment year.

(4) Payments that result from incorrect or fraudulent attestations, cost data, or any other submission required to establish eligibility or to qualify for such payment, will be recouped by CMS from the MA organization.

(5) If an MA EP, or entity that employs an MA EP, or in which an MA EP has a partnership interest, MA-affiliated eligible hospital, or other party contracting with the MA organization, fails to comply with an audit request to produce applicable documents or data, CMS recoups all or a portion of the incentive payment, based on the lack of applicable documents or data.

(g) Coordination of payment with FFS or Medicaid EHR incentive programs. (1) If, after payment is made to an MA organization for an MA EP, it is determined that the MA EP is eligible for the full incentive payment under the Medicare FFS EHR Incentive Program or has received a payment under the Medicaid EHR Incentive Program, CMS recoups amounts applicable to the given MA EP from the MA organization's monthly MA payment, or otherwise recoups the applicable amounts.

(2) If, after payment is made to an MA organization for an MA-affiliated eligible hospital, it is determined that the hospital is ineligible for the incentive payment under the MA EHR Incentive Program, or has received a payment under the Medicare FFS EHR Incentive Program, or if it is determined that all or part of the payment should not have been made on behalf of the MA-affiliated eligible hospital, CMS recoups amounts applicable to the given MA-affiliated eligible hospital from the MA organization's monthly MA payment, or otherwise recoups the applicable amounts.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54158, Sept. 4, 2012]

§ 495.206 Timeframe for payment to qualifying MA organizations.

(a) CMS makes payment to qualifying MA organizations for qualifying MA EPs under the MA EHR incentive program after computing incentive payments due under the Medicare FFS EHR incentive program according to § 495.102.

(b) Payments to qualifying MA organizations for qualifying MA-affiliated eligible hospitals under common corporate governance are made under the Medicare FFS EHR incentive program, following the timeline in specified in § 495.104 of this part. To the extent sufficient data do not exist to pay qualifying MA-affiliated eligible hospitals under common corporate governance under the Medicare FFS EHR incentive program, payment is made under the MA EHR incentive program, following the same timeline in § 495.104 of this part.

§ 495.208 Avoiding duplicate payment.

(a) CMS requires a qualifying MA organization that registers MA EPs for the purpose of participating in the MA EHR Incentive Program to notify each of the MA EPs for which it is claiming an incentive payment that the MA organization intends to claim, or has claimed, the MA EP for the current plan year under the MA EHR Incentive Program.

(b) The notice must make clear that the MA EP may still directly receive an EHR incentive payment if the MA EP is entitled to a full incentive payment under the FFS portion of the EHR Incentive Program, or if the MA EP registered to participate under the Medicaid portion of the EHR Incentive Program and is entitled to payment under that program—in both of which cases no payment would be made for the EP under the MA EHR incentive program.

(c) An attestation by the qualifying MA organization that the qualifying MA organization provided notice to its MA EPs in accordance with this section must be required at the time that meaningful use attestations are due with respect to MA EPs for the payment year.

(d) Unless a qualifying MA EP is entitled to a maximum payment for a year under the Medicare FFS EHR incentive program, payment for such an individual is only made under the MA EHR incentive program to a qualifying MA organization.

(e) Payment to qualifying MA organizations for a qualifying MA-affiliated eligible hospital under common governance only occurs under the MA EHR incentive program to the extent that sufficient data does not exist to pay such hospital under the Medicare FFS hospital incentive program under § 495.104 of this part. In no event are EHR incentive payments made for a hospital for a payment year under this section to the extent they have been made for the same hospital for the same payment year under § 495.104 of this part.

(f) Each qualifying MA organization must ensure that all potentially qualifying MA EPs are enumerated through the NPI system and that other identifying information required under § 495.202(b) is provided to CMS.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54159, Sept. 4, 2012]

§ 495.210 Meaningful EHR user attestation.

(a) Qualifying MA organizations are required to attest, in a form and manner specified by CMS, that each qualifying MA EP and qualifying MA-affiliated eligible hospitals is a meaningful EHR user.

(b) Qualifying MA organizations are required to attest within 2 months after the close of a calendar year whether each qualifying MA EP is a meaningful EHR user.

(c) Qualifying MA organizations are required to attest within 2 months after close of the FY whether each qualifying MA-affiliated eligible hospital is a meaningful EHR user.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54159, Sept. 4, 2012]

§ 495.211 Payment adjustments effective for 2015 and subsequent MA payment years with respect to MA EPs and MA-affiliated eligible hospitals.

(a) In general. Beginning for MA payment adjustment year 2015, payment adjustments set forth in this section are made to prospective payments (issued under section 1853(a)(1)(A) of the Act) of qualifying MA organizations that previously received incentive payments under the MA EHR Incentive Program, if all or a portion of the MA-EPs and MA-affiliated eligible hospitals that would meet the definition of qualifying MA-EPs or qualifying MA-affiliated eligible hospitals (but for their demonstration of meaningful use) are not meaningful EHR users.

(b) Adjustment based on payment adjustment year. The payment adjustment is calculated based on the payment adjustment year.

(c) Separate application of adjustments for MA EPs and MA-affiliated eligible hospitals. The payment adjustments identified in paragraphs (d) and (e) of this section are applied separately. Paragraph (d) of this section applies only to qualifying MA organizations that received payment for any MA payment year for qualifying MA EPs under § 495.204. Paragraph (e) of this section applies only to qualifying MA organizations that received payment for any MA payment year for qualifying MA-affiliated eligible hospitals under § 495.204.

(d) Payment adjustments effective for 2015 and subsequent years with respect to MA EPs. (1) For payment adjustment year 2015, and subsequent payment adjustment years, if a qualifying MA EP is not a meaningful EHR user during the payment adjustment year, CMS—

(i) Determines a payment adjustment based on data from the payment adjustment year; and

(ii) Collects the payment adjustment owed by adjusting a subsequent year's prospective payment or payments (issued under section 1853(a)(1)(A) of the Act), or by otherwise collecting the payment adjustment, if, in the year of collection, the MA organization does not have an MA contract with CMS.

(2) Beginning for payment adjustment year 2015, a qualifying MA organization that previously received incentive payments must, for each payment adjustment year, report to CMS the following:

[the total number of potentially qualifying MA EPs]/[(the total number of potentially qualifying MA EPs) + (the total number of qualifying MA EPs)].

(3) The monthly prospective payment amount paid under section 1853(a)(1)(A) of the Act for the payment adjustment year is adjusted by the product of—

(i) The percent calculated in accordance with paragraph (d)(2) of this section;

(ii) The Medicare Physician Expenditure Proportion percent, which is CMS's estimate of proportion of expenditures under Parts A and B that are not attributable to Part C that are attributable to expenditures for physicians' services, adjusted for the proportion of expenditures that are provided by EPs that are neither qualifying nor potentially qualifying MA EPs with respect to a qualifying MA organization; and

(iii) The applicable percent identified in paragraph (d)(4) of this section.

(4) Applicable percent. The applicable percent is as follows:

(i) For 2015, 1 percent;

(ii) For 2016, 2 percent;

(iii) For 2017, 3 percent.

(iv) For 2018, 3 percent, except, in the case described in paragraph (d)(4)(vi) of this section, 4 percent.

(v) For 2019 and each subsequent year, 3 percent, except, in the case described in paragraph (d)(4)(vi) of this section, the percent from the prior year plus 1 percent. In no case will the applicable percent be higher than 5 percent.

(vi) Beginning with payment adjustment year 2018, if the percentage in paragraph (d)(2) of this section is more than 25 percent, the applicable percent is increased in accordance with paragraphs (d)(4)(iv) and (v) of this section.

(e) Payment adjustments effective for 2015 and subsequent years with respect to MA-affiliated eligible hospitals. (1)(i) The payment adjustment set forth in this paragraph (e) applies if a qualifying MA organization that previously received an incentive payment (or a potentially qualifying MA-affiliated eligible hospital on behalf of its qualifying MA organization) attests that a qualifying MA-affiliated eligible hospital is not a meaningful EHR user for a payment adjustment year.

(ii) The payment adjustment is calculated by multiplying the qualifying MA organization's monthly prospective payment for the payment adjustment year under section 1853(a)(1)(A) of the Act by the percent set forth in paragraph (e)(2) of this section.

(2) The percent set forth in this paragraph (e) is the product of—

(i) The percentage point reduction to the applicable percentage increase in the market basket index for the relevant Federal fiscal year as a result of § 412.64(d)(3) of this chapter;

(ii) The Medicare Hospital Expenditure Proportion percent specified in paragraph (e)(3) of this section; and

(iii) The percent of qualifying and potentially qualifying MA-affiliated eligible hospitals that are not meaningful EHR users. Qualifying MA organizations are required to report to CMS

[the number of potentially qualifying MA-affiliated eligible hospitals] / [(the total number of potentially qualifying MA-affiliated eligible hospitals) + (the total number of qualifying MA-affiliated eligible hospitals)].

(3) The Medicare Hospital Expenditure Proportion for a year is the Secretary's estimate of expenditures under Parts A and B that are not attributable to Part C, that are attributable to expenditures for inpatient hospital services, adjusted for the proportion of expenditures that are provided by hospitals that are neither qualifying nor potentially qualifying MA-affiliated eligible hospitals with respect to a qualifying MA organization.

(4) For MA payment adjustment years prior to 2022, subsection (d) Puerto Rico hospitals are neither potentially qualifying MA-affiliated eligible hospitals nor qualifying MA-affiliated eligible hospitals for purposes of applying the payment adjustments under paragraph (e) of this section.

[77 FR 54159, Sept. 4, 2012, as amended at 83 FR 41711, Aug. 17, 2018]

§ 495.212 Limitation on review.

(a) There is no administrative or judicial review under section 1869 or 1878 of the Act, or otherwise of the methodology and standards for determining payment amounts and payment adjustments under the MA EHR EP incentive program. This includes provisions related to duplication of payment avoidance and rules developed related to the fixed schedule for application of limitation on incentive payments for all qualifying MA EPs related to a specific qualifying MA organization. It also includes the methodology and standards developed for determining qualifying MA EPs and the methodology and standards for determining a meaningful EHR user, including the means of demonstrating meaningful use and the selection of measures.

(b) There is no administrative or judicial review under sections 1869 or 1878 of the Act, or otherwise, of the methodology and standards for determining payment amounts and payment adjustments under the MA EHR hospital incentive program. This includes provisions related to duplication of payment avoidance. It also includes the methodology and standards developed for determining qualifying MA-affiliated eligible hospitals and the methodology and standards for determining a meaningful EHR user, including the means of demonstrating meaningful use and the selection of measures.

§ 495.300 Basis and purpose.

This subpart implements section 4201 of the American Reinvestment and Recovery Act of 2009 and sections 1903(a)(3)(F) and 1903(t) of the Act, which authorize States, at their option, to provide for incentive payments to Medicaid providers for adopting, implementing, or upgrading certified EHR technology or for meaningful use of such technology. This subpart also provides enhanced Federal financial participation (FFP) to States to administer these incentive payments.

§ 495.302 Definitions.

As used in this subpart—

Acceptance documents mean written evidence of satisfactory completion of an approved phase of work or contract and acceptance thereof by the State agency.

Acquisition means to acquire health information technology (HIT) equipment or services for the purpose of implementation and administration under this part from commercial sources or from State or local government resources.

Acute care hospital means a health care facility—

(1) Where the average length of patient stay is 25 days or fewer; and

(2) With a CMS certification number (previously known as the Medicare provider number) that has the last four digits in the series 0001-0879 or 1300-1399

Adopt, implement or upgrade means—

(1) Acquire, purchase, or secure access to certified EHR technology capable of meeting meaningful use requirements;

(2) Install or commence utilization of certified EHR technology capable of meeting meaningful use requirements; or

(3) Expand the available functionality of certified EHR technology capable of meeting meaningful use requirements at the practice site, including staffing, maintenance, and training, or upgrade from existing EHR technology to certified EHR technology per the ONC EHR certification criteria.

(4) For payment year 2014, the references to “certified EHR technology” in paragraphs (1) through (3) of this definition are deemed to be references to paragraph (2) of the definition of “Certified EHR Technology” under 45 CFR 170.102 (that is, the definition of “Certified EHR Technology” for FY and CY 2015 and subsequent years).

Children's hospital means a separately certified children's hospital, either freestanding or hospital-within-hospital that—

(1) Has a CMS certification number (CCN), (previously known as the Medicare provider number), that has the last 4 digits in the series 3300-3399; or

(2) Does not have a CCN but has been provided an alternative number by CMS for purposes of enrollment in the Medicaid EHR Incentive Program as a children's hospital and;

(3) Predominantly treats individuals under 21 years of age.

Entities promoting the adoption of certified electronic health record technology means the State-designated entities that are promoting the adoption of certified EHR technology by enabling oversight of the business, operational and legal issues involved in the adoption and implementation of certified EHR technology or by enabling the exchange and use of electronic clinical and administrative data between participating providers, in a secure manner, including maintaining the physical and organizational relationship integral to the adoption of certified EHR technology by eligible providers.

Health information technology planning advance planning document (HIT PAPD) means a plan of action that requests FFP and approval to accomplish the planning necessary for a State agency to determine the need for and plan the acquisition of HIT equipment or services or both and to acquire information necessary to prepare a HIT implementation advanced planning document or request for proposal to implement the State Medicaid HIT plan.

HIT implementation advance planning document (HIT IAPD) means a plan of action that requests FFP and approval to acquire and implement the proposed State Medicaid HIT plan services or equipment or both.

Medicaid information technology architecture (MITA) is both an initiative and a framework. It is a national framework to support improved systems development and health care management for the Medicaid enterprise. It is an initiative to establish national guidelines for technologies and processes that enable improved program administration for the Medicaid enterprise. The MITA initiative includes an architecture framework, models, processes, and planning guidelines for enabling State Medicaid enterprises to meet common objectives with the framework while supporting unique local needs.

Medicaid management information system (MMIS) means a mechanized claims processing and information retrieval system—referred to as Medicaid Management Information Systems (MMIS)—that meets specified requirements and that the Department has found (among other things) is compatible with the claims processing and information retrieval systems used in the administration of the Medicare program. The objectives of the MMIS are to include claims processing and retrieval of utilization and management information necessary for program administration and audit and must coordinate with other mechanized systems and subsystems that perform other functions, such as eligibility determination.

Needy individuals mean individuals that meet one of following:

(1) Received medical assistance from Medicaid or the Children's Health Insurance Program. (or a Medicaid or CHIP demonstration project approved under section 1115 of the Act).

(2) Were furnished uncompensated care by the provider.

(3) Were furnished services at either no cost or reduced cost based on a sliding scale determined by the individuals' ability to pay.

Patient volume means the minimum participation threshold (as described at § 495.304(c) through (e)) that is estimated through a numerator and denominator, consistent with the SMHP, and that meets the requirements of § 495.306.

Practices predominantly means an EP for whom the clinical location for over 50 percent of his or her total patient encounters over a period of 6 months (within the most recent calendar year or, as an optional State alternative beginning for payment year 2013, within the 12-month period preceding attestation)occurs at a federally qualified health center or rural health clinic.

Service oriented architecture or service component based architecture means organizing and developing information technology capabilities as collaborating services that interact with each other based on open standards.

State Medicaid health information technology plan (SMHP) means a document that describes the State's current and future HIT activities.

State self-assessment means a process that a State uses to review its strategic goals and objectives, measure its current business processes and capabilities against the (MITA) business capabilities and ultimately develops target capabilities to transform its Medicaid enterprise to be consistent with the MITA principles.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54160, Sept. 4, 2012; 79 FR 52933, Sept. 4, 2014]

§ 495.304 Medicaid provider scope and eligibility.

(a) General rule. The following Medicaid providers are eligible to participate in the HIT incentives program:

(1) Medicaid EPs.

(2) Acute care hospitals.

(3) Children's hospitals.

(b) Medicaid EP. The Medicaid professional eligible for an EHR incentive payment is limited to the following when consistent with the scope of practice regulations, as applicable for each professional (§§ 440.50, 440.60, 440.100; §§ 440.165, and 440.166):

(1) A physician.

(2) A dentist.

(3) A certified nurse-midwife.

(4) A nurse practitioner.

(5) A physician assistant practicing in a Federally qualified health center (FQHC) led by a physician assistant or a rural health clinic (RHC), that is so led by a physician assistant.

(c) Additional requirements for the Medicaid EP. To qualify for an EHR incentive payment, a Medicaid EP must, for each year for which the EP seeks an EHR incentive payment, not be hospital-based as defined at § 495.4 of this subpart, and meet one of the following criteria:

(1) Have a minimum 30 percent patient volume attributable to individuals enrolled in a Medicaid program.

(2) Have a minimum 20 percent patient volume attributable to individuals enrolled in a Medicaid program, and be a pediatrician.

(3) Practice predominantly in a FQHC or RHC and have a minimum 30 percent patient volume attributable to needy individuals, as defined at § 495.302.

(d) Exception. The hospital-based exclusion in paragraph (c) of this section does not apply to the Medicaid-EP qualifying based on practicing predominantly at a FQHC or RHC.

(e) Additional requirement for the eligible hospital. To be eligible for an EHR incentive payment for each year for which the eligible hospital seeks an EHR incentive payment, the eligible hospital must meet the following criteria:

(1) An acute care hospital must have at least a 10 percent Medicaid patient volume for each year for which the hospital seeks an EHR incentive payment.

(2) A children's hospital is exempt from meeting a patient volume threshold.

(f) Further patient volume requirements for the Medicaid EP. For payment year 2013 and all subsequent payment years, at least one clinical location used in the calculation of patient volume must have Certified EHR Technology—

(1) During the payment year for which the EP attests to having adopted, implemented or upgraded Certified EHR Technology (for the first payment year); or

(2) During the payment year for which the EP attests it is a meaningful EHR user.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54160, Sept. 4, 2012]

§ 495.306 Establishing patient volume.

(a) General rule. A Medicaid provider must annually meet patient volume requirements of § 495.304, as these requirements are established through the State's SMHP in accordance with the remainder of this section.

(b) State option(s) through SMHP. (1) A State must submit through the SMHP the option or options it has selected for measuring patient volume.

(2)(i) A State must select the method described in either paragraph (c) or paragraph (d) of this section (or both methods).

(ii) Under paragraphs (c)(1)(i), (c)(2)(i), (c)(3)(i), (d)(1)(i), and (d)(2)(i) of this section, States may choose whether to allow eligible providers to calculate total Medicaid or total needy individual patient encounters in any representative continuous 90-day period in the 12 months preceding the EP or eligible hospital's attestation or based upon a representative, continuous 90-day period in the calendar year preceding the payment year for which the EP or eligible hospital is attesting.

(3) In addition, or as an alternative to the method selected in paragraph (b)(2) of this section, a State may select the method described in paragraph (g) of this section.

(c) Methodology, patient encounter—(1) EPs. To calculate Medicaid patient volume, an EP must divide:

(i) The total Medicaid patient encounters in any representative, continuous 90-day period in the calendar year preceding the EP's payment year, or in the 12 months before the EP's attestation; by

(ii) The total patient encounters in the same 90-day period.

(2) Eligible hospitals. To calculate Medicaid patient volume, an eligible hospital must divide—

(i) The total Medicaid encounters in any representative, continuous 90-day period in the fiscal year preceding the hospitals' payment year or in the 12 months before the hospital's attestation; by

(ii) The total encounters in the same 90-day period.

(3) Needy individual patient volume. To calculate needy individual patient volume, an EP must divide—

(i) The total needy individual patient encounters in any representative, continuous 90-day period in the calendar year preceding the EP's payment year, or in the 12 months before the EP's attestation; by

(ii) The total patient encounters in the same 90-day period.

(d) Methodology, patient panel—(1) EPs. To calculate Medicaid patient volume, an EP must divide:

(i)(A) The total Medicaid patients assigned to the EP's panel in any representative, continuous 90-day period in either the calendar year preceding the EP's payment year, or the 12 months before the EP's attestation when at least one Medicaid encounter took place with the individual in the 24 months before the beginning of the 90-day period; plus

(B) Unduplicated Medicaid encounters in the same 90-day period; by

(ii)(A) The total patients assigned to the provider in that same 90-day period with at least one encounter taking place with the patient during the 24 months before the beginning of the 90-day period; plus

(B) All unduplicated patient encounters in the same 90-day period.

(2) Needy individual patient volume. To calculate needy individual patient volume an EP must divide—

(i)(A) The total Needy Individual patients assigned to the EP's panel in any representative, continuous 90-day period in the either the calendar year preceding the EP's payment year, or the 12 months before the EP's attestation when at least one Needy Individual encounter took place with the individual in the 24 months before the beginning of the same 90-day period; plus

(B) Unduplicated Needy Individual encounters in the same 90-day period, by

(ii)(A) The total patients assigned to the provider in that same 90-day period with at least one encounter taking place with the patient during the 24 months before the beginning of the 90-day period, plus

(B) All unduplicated patient encounters in the same 90-day period.

(e) For purposes of this section, the following rules apply:

(1) A Medicaid encounter means services rendered to an individual on any one day where:

(i) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid for part or all of the service.

(ii) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid all or part of the individual's premiums, co-payments, and cost-sharing.

(iii) The individual was enrolled in a Medicaid program (or a Medicaid demonstration project approved under section 1115 of the Act) at the time the billable service was provided.

(2) For purposes of calculating hospital patient volume, both of the following definitions in paragraphs (e)(2)(i) and (e)(2)(ii) of this section may apply:

(i) A Medicaid encounter means services rendered to an individual per inpatient discharge when any of the following occur:

(A) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid for part or all of the service.

(B) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid all or part of the individual's premiums, co-payments, and/or cost-sharing.

(C) The individual was enrolled in a Medicaid program (or a Medicaid demonstration project approved under section 1115 of the Act) at the time the billable service was provided.

(ii) A Medicaid encounter means services rendered in an emergency department on any 1 day if any of the following occur:

(A) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid for part or all of the service.

(B) Medicaid (or a Medicaid demonstration project approved under section 1115 of the Act) paid all or part of the individual's premiums, co-payments, and cost-sharing.

(C) The individual was enrolled in a Medicaid program (or a Medicaid demonstration project approved under section 1115 of the Act) at the time the billable service was provided.

(3) For purposes of calculating needy individual patient volume, a needy patient encounter means services rendered to an individual on any 1 day if any of the following occur:

(i) Medicaid or CHIP (or a Medicaid or CHIP demonstration project approved under section 1115 of the Act) paid for part or all of the service.

(ii) Medicaid or CHIP (or a Medicaid or CHIP demonstration project approved under section 1115 of the Act) paid all or part of the individual's premiums, co-payments, or cost-sharing.

(iii) The individual was enrolled in a Medicaid program (or a Medicaid demonstration project approved under section 1115 of the Act) at the time the billable service was provided.

(iv) The services were furnished at no cost; and calculated consistent with § 495.310(h).

(v) The services were paid for at a reduced cost based on a sliding scale determined by the individual's ability to pay.

(f) Exception. A children's hospital is not required to meet Medicaid patient volume requirements.

(g) Establishing an alternative methodology. A State may submit to CMS for review and approval through the SMHP an alternative from the options included in paragraphs (c) and (d) of this section, so long as it meets the following requirements:

(1) It is submitted consistent with all rules governing the SMHP at § 495.332.

(2) Has an auditable data source.

(3) Has received input from the relevant stakeholder group.

(4) It does not result, in the aggregate, in fewer providers becoming eligible than the methodologies in either paragraphs (c) and (d) of this section.

(h) Group practices. Clinics or group practices will be permitted to calculate patient volume at the group practice/clinic level, but only in accordance with all of the following limitations:

(1) The clinic or group practice's patient volume is appropriate as a patient volume methodology calculation for the EP.

(2) There is an auditable data source to support the clinic's or group practice's patient volume determination.

(3) All EPs in the group practice or clinic must use the same methodology for the payment year.

(4) The clinic or group practice uses the entire practice or clinic's patient volume and does not limit patient volume in any way.

(5) If an EP works inside and outside of the clinic or practice, then the patient volume calculation includes only those encounters associated with the clinic or group practice, and not the EP's outside encounters.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54160, Sept. 4, 2012]

§ 495.308 Net average allowable costs as the basis for determining the incentive payment.

(a) The first year of payment. (1) The incentive is intended to offset the costs associated with the initial adoption, implementation or upgrade of certified electronic health records technology.

(2) The maximum net average allowable costs for the first year are $25,000.

(b) Subsequent payment years. (1) The incentive is intended to offset maintenance and operation of certified EHR technology.

(2) The maximum net average allowable costs for each subsequent year are $10,000.

§ 495.310 Medicaid provider incentive payments.

(a) Rules for Medicaid EPs. The Medicaid EP's incentive payments are subject to all of the following limitations:

(1) First payment year. (i) For the first payment year, payment under this subpart may not exceed 85 percent of the maximum threshold of $25,000, which equals $21,250.

(ii) [Reserved]

(iii) An EP may not begin receiving payments any later than CY 2016.

(2) Subsequent annual payment years.

(i) For subsequent payment years, payment may not exceed 85 percent of the maximum threshold of $10,000, which equals $8,500.

(ii) [Reserved]

(iii) Payments after the first payment year may continue for a maximum of 5 years.

(iv) Medicaid EPs may receive payments on a non-consecutive, annual basis.

(v) No payments may be made after CY 2021.

(3) Maximum incentives. In no case may a Medicaid EP participate for more than a total of 6 years, and in no case will the maximum incentive over a 6-year period exceed $63,750.

(4) Limitation. For a Medicaid EP who is a pediatrician described in paragraph (b) of this section payment is limited as follows:

(i) The maximum payment in the first payment year is further reduced by two-thirds, which equals $14,167.

(ii) The maximum payment in subsequent payment years is further reduced by two-thirds, which equals $5,667.

(iii) In no case will the maximum incentive payment to a pediatrician under this limitation exceed $42,500 over a 6-year period.

(b) Optional exception for pediatricians. A pediatrician described in this paragraph is a Medicaid EP who does not meet the 30 percent patient volume requirements described in §§ 495.304 and 495.306, but who meets the 20 percent patient volume requirements described in such sections.

(c) Limitation to only one EHR incentive program. An EP may only receive an incentive payment from either Medicare or Medicaid in a payment year, but not both.

(d) Exception for EPs to switch programs. An EP may change his or her EHR incentive payment program election once, consistent with § 495.60.

(e) Limitation to one State only. A Medicaid EP or eligible hospital may receive an incentive payment from only one State in a payment year.

(f) Incentive payments to hospitals. Incentive payments to an eligible hospital under this subpart are subject to all of the following conditions:

(1) The payment is provided over a minimum of a 3-year period and maximum of a 6-year period.

(2) The total incentive payment received over all payment years of the program is not greater than the aggregate EHR incentive amount, as calculated under paragraph (g) of this section.

(3) No single incentive payment for a payment year may exceed 50 percent of the aggregate EHR hospital incentive amount calculated under paragraph (g) of this section for an individual hospital.

(4) No incentive payments over a 2-year period may exceed 90 percent of the aggregate EHR hospital incentive amount calculated under paragraph (g) of this section for an individual hospital.

(5) No hospital may begin receiving incentive payments for any year after FY 2016, and after FY 2016, a hospital may not receive an incentive payment unless it received an incentive payment in the prior fiscal year.

(6) Prior to FY 2016, payments can be made to an eligible hospital on a non-consecutive, annual basis for the fiscal year.

(7) A multi-site hospital with one CMS Certification Number is considered one hospital for purposes of calculating payment.

(8) The aggregate EHR hospital incentive amount calculated under paragraph (g) of this section is determined by the State from which the eligible hospital receives its first payment year incentive. If a hospital receives incentive payments from other States in subsequent years, total incentive payments received over all payment years of the program can be no greater than the aggregate EHR incentive amount calculated by the initial State.

(g) Calculation of the aggregate EHR hospital incentive amount. The aggregate EHR hospital incentive amount is calculated as the product of the (overall EHR amount) times (the Medicaid Share).

(1) Overall EHR amount. The overall EHR amount for an eligible hospital is based upon a theoretical 4 years of payment the hospital would receive based, for each of such 4 years, upon the product of the following:

(i) Initial amount. The initial amount is equal to the sum of—

(A) The base amount which is set at $2,000,000 for each of the theoretical 4 years; plus

(B) The discharge-related amount for the most recent continuous 12-month period selected by the State, but ending before the federal fiscal year that serves as the first payment year. The discharge-related amount is the sum of the following, with acute-care inpatient discharges over the 12-month period and based upon the total acute-care inpatient discharges for the eligible hospital (regardless of any source of payment):

(1) For the first through 1,149th acute-care inpatient discharge, $0.

(2) For the 1,150th through the 23,000th acute-care inpatient discharge, $200.

(3) For any acute-care inpatient discharge greater than the 23,000th, $0.

(C) For purposes of calculating the discharge-related amount under paragraph (g)(1)(i)(B) of this section, for the last 3 of the theoretical 4 years of payment, acute-care inpatient discharges are assumed to increase by the provider's average annual rate of growth for the most recent 3 years for which data are available per year. Negative rates of growth must be applied as such.

(ii) Medicare share. The Medicare share, which equals 1.

(iii) Transition factor. The transition factor which equals as follows:

(A) For the first of the theoretical 4 years, 1.

(B) For the second of the theoretical 4 years, 3/4.

(C) For the third of the theoretical 4 years, 1/2.

(D) For the fourth of the theoretical 4 years, 1/4.

(2) Medicaid share. The Medicaid share specified under this paragraph for an eligible hospital is equal to a fraction—

(i) The numerator of which is the sum (for the 12-month period selected by the State and with respect to the eligible hospital) of—

(A) The estimated number of acute-care inpatient-bed-days which are attributable to Medicaid individuals; and

(B) The estimated number of acute-care inpatient-bed-days which are attributable to individuals who are enrolled in a managed care organization, a pre-paid inpatient health plan, or a pre-paid ambulatory health plan under part 438 of this chapter; and

(ii) The denominator of which is the product of—

(A) The estimated total number of acute-care inpatient-bed-days with respect to the eligible hospital during such period; and

(B) The estimated total amount of the eligible hospital's charges during such period, not including any charges that are attributable to charity care, divided by the estimated total amount of the hospital's charges during such period.

(iii) In computing acute-care inpatient-bed-days under paragraph (g)(2)(i) of this section, a State may not include estimated acute-care inpatient-bed-days attributable to individuals with respect to whom payment may be made under Medicare Part A, or acute-care inpatient-bed-days attributable to individuals who are enrolled with a Medicare Advantage organization under Medicare Part C.

(h) Approximate proxy for charity care. If the State determines that an eligible provider's data are not available on charity care necessary to calculate the portion of the formula specified in paragraph (g)(2)(ii)(B) of this section, the State may use that provider's data on uncompensated care to determine an appropriate proxy for charity care, but must include a downward adjustment to eliminate bad debt from uncompensated care data. The State must use auditable data sources.

(i) Deeming. In the absence of the data necessary, with respect to an eligible hospital the amount described in paragraph (g)(2)(ii)(B) of this section must be deemed to be 1. In the absence of data, with respect to an eligible hospital, necessary to compute the amount described in paragraph (g)(2)(i)(B) of this section, the amount under such clause must be deemed to be 0.

(j) Dual eligibility for incentives payments. A hospital may receive incentive payments from both Medicare and Medicaid if it meets all eligibility criteria in the payment year.

(k) Payments to State-designated entities. Payments to entities promoting the adoption of certified EHR technology as designated by the State must meet the following requirements:

(1) A Medicaid EP may reassign his or her incentive payment to an entity promoting the adoption of certified EHR technology, as defined in § 495.302, and as designated by the State, only under the following conditions:

(i) The State has established a method to designate entities promoting the adoption of EHR technology that comports with the Federal definition in § 495.302.

(ii) The State publishes and makes available to all EPs a voluntary mechanism for reassigning annual payments and includes information about the verification mechanism the State will use to ensure that the reassignment is voluntary and that no more than 5 percent of the annual payment is retained by the entity for costs not related to certified EHR technology.

(2) [Reserved]

[75 FR 44565, July 28, 2010, as amended at 77 FR 54161, Sept. 4, 2012; 80 FR 62954, Oct. 16, 2015]

§ 495.312 Process for payments.

(a) General rule. States must have a process for making payments consistent with the requirements in subparts A and D of this part.

(b) Reporting data consistent with this subpart. In order to receive a payment under this part, a provider must report the required data under subpart A and this subpart within the EHR reporting period described in § 495.4.

(c) State's role. (1) Except as specified in paragraph (c)(2) of this section, the State determines the provider's eligibility for the EHR incentive payment under subparts A and D of this part and approves, processes, and makes timely payments using a process approved by CMS.

(2) At the State's option, CMS conducts the audits and handles any subsequent appeals, of whether eligible hospitals are meaningful EHR users on the States' behalf.

(d) State disbursement. The State disburses an incentive payment to the provider based on the criteria described in subpart A and this subpart.

(e) Timeframes. Payments are disbursed consistent with the following timeframes for each type of Medicaid eligible provider:

(1) Medicaid EPs. States disburse payments consistent with the calendar year on a rolling basis following verification of eligibility for the payment year.

(2) Medicaid eligible hospitals. States disburse payments consistent with the Federal fiscal year on a rolling basis following verification of eligibility for the payment year.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54162, Sept. 4, 2012]

§ 495.314 Activities required to receive an incentive payment.

(a) First payment year. (1) In the first payment year, to receive an incentive payment, the Medicaid EP or eligible hospital must meet one of the following:

(i) Demonstrate that during the payment year, it has adopted, implemented, or upgraded certified EHR technology, as defined in § 495.302.

(ii) Demonstrate that during the EHR reporting period for a payment year, it is a meaningful EHR user as defined in § 495.4.

(2) A provider may notify the State of its non-binding intention to participate in the incentives program prior to having fulfilled all of the eligibility criteria.

(b) Subsequent payment years. (1) In the second, third, fourth, fifth, and sixth payment years, to receive an incentive payment, the Medicaid EP or eligible hospital must demonstrate that during the EHR reporting period for the applicable payment year, it is a meaningful EHR user, as defined in § 495.4.

(2) The automated reporting of the clinical quality measures will be accomplished using certified EHR technology interoperable with the system designated by the State to receive the data.

§ 495.316 State monitoring and reporting regarding activities required to receive an incentive payment.

(a) Subject to § 495.332 the State is responsible for tracking and verifying the activities necessary for a Medicaid EP or eligible hospital to receive an incentive payment for each payment year, as described in § 495.314.

(b) Subject to § 495.332, the State must submit a State Medicaid HIT Plan to CMS that includes—

(1) A detailed plan for monitoring, verifying and periodic auditing of the requirements for receiving incentive payments, as described in § 495.314; and

(2) A description of the how the State will collect and report on provider meaningful use of certified EHR technology.

(c) Subject to §§ 495.332 and 495.352, the State is required to submit to CMS annual reports, in the manner prescribed by CMS, on the following:

(1) Provider adoption, implementation, or upgrade of certified EHR technology activities and payments; and

(2) Aggregated, de-identified meaningful use data.

(d)(1) The annual report described in paragraph (c) of this section must include, but is not limited to the following:

(i) The number and type of providers who qualified for an incentive payment on the basis of having adopted, implemented, or upgraded certified EHR technology.

(ii) Aggregated data tables representing the provider adoption, implementation, or upgrade of certified EHR technology.

(iii) The number and type of providers who qualified for an incentive payment on the basis of demonstrating that they are meaningful users of certified EHR technology;

(iv) Aggregated data tables representing the provider's clinical quality measures data; and

(v) A description and quantitative data on how its incentive payment program addressed individuals with unique needs such as children.

(2)(i) Subject to § 495.332, the State may propose a revised definition for Stage 1 of meaningful use of certified EHR technology, subject to CMS prior approval, but only with respect to the following objectives:

(A) Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research or outreach.

(B) Capability to submit electronic data to immunization registries or immunization information systems and actual submission except where prohibited, and according to applicable law and practice.

(C) Capability to submit electronic data on reportable (as required by State or local law) lab results to public health agencies and actual submission except where prohibited according to applicable law and practice.

(D) Capability to submit electronic syndromic surveillance data to public health agencies and actual submission except where prohibited and according to applicable law and practice.

(ii) Subject to § 495.332, the State may propose a revised definition for Stage 2 of meaningful use of certified EHR technology, subject to CMS prior approval, but only with respect to the following objectives:

(A) Generate lists of patients by specific conditions to use for quality improvement, reduction of disparities, research, or outreach.

(B) Capability to submit electronic data to immunization registries or immunization information systems, except where prohibited, and in accordance with applicable law and practice.

(C) Capability to submit electronic reportable laboratory results to public health agencies, except where prohibited, and in accordance with applicable law and practice.

(D) Capability to provide electronic syndromic surveillance data to public health agencies, except where prohibited, and in accordance with applicable law and practice.

(E) Capability to identify and report cancer cases to a public health central cancer registry, except where prohibited, and in accordance with applicable law and practice.

(F) Capability to identify and report specific cases to a specialized registry (other than a cancer registry), except where prohibited, and in accordance with applicable law and practice.

(iii) Subject to § 495.332, the State may propose a revised definition for Stage 3 of meaningful use of CEHRT, subject to CMS prior approval, but only with respect to the public health and clinical data registry reporting objective described in § 495.24(d)(8).

(e) State failure to submit the required reports to CMS may result in discontinued or disallowed funding.

(f) Each State must submit to CMS the annual report described in paragraph (c) of this section within 60 days of the end of the second quarter of the Federal fiscal year.

(g) The State must, on a quarterly basis and in the manner prescribed by CMS, submit a report(s) on the following:

(1) The State and payment year to which the quarterly report pertains.

(2) Subject to paragraph (h)(2) of this section, provider-level attestation data for each eligible hospital that attests to demonstrating meaningful use for each payment year beginning with 2013 and ending after 2018.

(3) Subject to paragraph (h)(2) of this section, provider-level attestation data for each eligible EP that attests to demonstrating meaningful use for each payment year beginning with 2013 and ending after 2016.

(h)(1) Subject to paragraph (h)(2) of this section, the quarterly report described in paragraph (g) of this section must include the following for each EP and eligible hospital:

(i) The payment year number.

(ii) The provider's National Provider Identifier or CCN, as appropriate.

(iii) Attestation submission date.

(iv) The state qualification.

(v) The state qualification date, which is the beginning date of the provider's EHR reporting period for which it demonstrated meaningful use.

(vi) The State disqualification, if applicable.

(vii) The State disqualification date, which is the beginning date of the provider's EHR reporting period to which the provider attested but for which it did not demonstrate meaningful use, if applicable.

(2) The quarterly report described in paragraph (g) of this section is not required to include information on EPs who are eligible for the Medicaid EHR incentive program on the basis of being a nurse practitioner, certified nurse-midwife or physician assistant.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54162, Sept. 4, 2012; 80 FR 62954, Oct. 16, 2015; 81 FR 77557, Nov. 4, 2016; 83 FR 41711, Aug. 17, 2018]

§ 495.318 State responsibilities for receiving FFP.

In order to be provided FFP under section 1903(a)(3)(F) of the Act, a State must demonstrate to the satisfaction of HHS, that the State is—

(a) Using the funds provided for the purposes of administering incentive payments to providers under this program, including tracking of meaningful use by Medicaid providers of EHR technology;

(b) Conducting adequate oversight of the program, including routine tracking of meaningful use attestations and reporting mechanisms; and

(c) Is pursuing initiatives to encourage the adoption of certified EHR technology to promote health care quality and the exchange of health care information, subject to applicable laws and regulations governing such exchange.

§ 495.320 FFP for payments to Medicaid providers.

Subject to the requirements outlined in this subpart, FFP is available at 100 percent of State expenditures for payments to Medicaid eligible providers to encourage the adoption and meaningful use of certified EHR technology.

§ 495.322 FFP for reasonable administrative expenses.

(a) Subject to prior approval conditions at § 495.324, FFP is available at 90 percent in State expenditures for administrative activities in support of implementing incentive payments to Medicaid eligible providers.

(b) FFP available under paragraph (a) of this section is available only for expenditures incurred on or before September 30, 2022, except for expenditures related to audit and appeal activities required under this subpart, which must be incurred on or before September 30, 2023.

[83 FR 41711, Aug. 17, 2018]

§ 495.324 Prior approval conditions.

(a) A State must obtain prior written approval as specified in paragraph (b) of this section, when the State plans to initiate planning and implementation activities in support of Medicaid provider incentive payments encouraging the adoption and meaningful use of certified EHR technology with proposed Federal financial participation.

(b) To receive 90 percent match, each State must receive prior approval for all of the following:

(1) The HIT advance planning document and the implementation advance planning document.

(2) For the acquisition solicitation documents and any contract that a State may utilize to complete activities under this subpart, unless specifically exempted by the Department of Health and Human Services, prior to release of the acquisition solicitation documents or prior to execution of the contract, when the contract is anticipated to or will exceed $500,000.

(3) For contract amendments, unless specifically exempted by the Department of Health and Human Services, prior to execution of the contract amendment, involving contract cost increases exceeding $500,000 or contract time extensions of more than 60 days.

(4) The State Medicaid HIT plan.

(c) Failure to submit any of the information specified in paragraph (b) of this section to the satisfaction of HHS may result in disapproval or suspension of project funding.

(d) A State must obtain prior written approval from HHS of its justification for a sole source acquisition, when it plans to acquire noncompetitively from a nongovernmental source HIT equipment or services, with proposed FFP under this subpart if the total State and Federal acquisition cost is more than $500,000.

[75 FR 44565, July 28, 2010, as amended at 83 FR 41711, Aug. 17, 2018]

§ 495.326 Disallowance of FFP.

If the HHS finds that any acquisition approved or modified under the provisions of this subpart fails to comply with the criteria, requirements, and other undertakings described in the approved HIT planning advance planning document and HIT implementation advance planning document to the detriment of the proper and efficient operation of the Medicaid program, payment of FFP may be disallowed. In the case of a suspension of approval of a HIT planning advance planning document and HIT implementation advance planning document, suspension would occur in the same manner as 45 CFR 205.37(c) and 307.40(a).

§ 495.328 Request for reconsideration of adverse determination.

If CMS disapproves a State request for any elements of a State's advance planning document or State Medicaid HIT Plan under this subpart, or determines that requirements are met for approval on a date later than the date requested, the decision notice includes the following:

(a) The finding of fact upon which the determination was made.

(b) The procedures for appeal of the determination in the form of a request for reconsideration.

§ 495.330 Termination of FFP for failure to provide access to information.

(a) HHS terminates FFP at any time if the Medicaid agency fails to provide State and Federal representatives with full access to records relating to HIT planning and implementation efforts, and the systems used to interoperate with electronic HIT, including on-site inspection.

(b) The Department may request such access at any time to determine whether the conditions in this subpart are being met.

§ 495.332 State Medicaid health information technology (HIT) plan requirements.

Each State Medicaid HIT plan must include all of the following elements:

(a) State systems. For State systems, interoperability, and the current and future visions:

(1) A baseline assessment of the current HIT landscape environment in the State including the inventory of existing HIT in the State. The assessment must include a comprehensive—

(i) Description of the HIT “as-is” landscape;

(ii) Description of the HIT “to-be” landscape; and

(iii) HIT roadmap and strategic plan for the next 5 years.

(2) A description of how the State Medicaid HIT plan will be planned, designed, developed and implemented, including how it will be implemented in accordance with the Medicaid Information Technology Architecture (MITA) principles as described in the Medicaid Information Technology Framework 2.0. The MITA initiative—

(i) Establishes national guidelines for technologies and processes that enable improved program administration for the Medicaid enterprise;

(ii) Includes business, information and technology architectures that provide an overall framework for interoperability, as well as processes and planning guidelines for enabling State Medicaid enterprises to meet common objectives within the framework while supporting unique local needs; and

(iii) Is important to the design and development of State EHR incentive payment systems.

(3) A description of how intrastate systems, including the Medicaid Management Information System (MMIS) and other automated mechanized claims processing and information retrieval systems—

(i) Have been considered in developing a HIT solution; and

(ii) A plan that incorporates the design, development, and implementation phases for interoperability of such State systems with a description of how any planned systems enhancements support overall State and Medicaid goals.

(4) A description of data-sharing components of HIT solutions.

(5) A description of how each State will promote secure data exchange, where permissible under the Health Insurance Portability and Accountability Act (HIPAA) and other requirements included in ARRA.

(6) A description of how each State will promote the use of data and technical standards to enhance data consistency and data sharing through common data-access mechanisms.

(7) A description of how each State will support integration of clinical and administrative data.

(8) A description of the process in place for ensuring improvements in health outcomes, clinical quality, or efficiency resulting from the adoption of certified EHR technology by beneficiaries of Medicaid incentive payments and a methodology for verifying such information.

(9) A description of the process in place for ensuring that any certified EHR technology used as the basis for a payment incentive to Medicaid providers is compatible with State or Federal administrative management systems, including the MMIS or other automated claims processing system or information retrieval system and a methodology for verifying such information.

(10) A description of how each State will adopt national data standards for health and data exchange and open standards for technical solutions as they become available.

(11) A description of how the State intends to address the needs of underserved and vulnerable populations such as children, individuals with chronic conditions, Title IV-E foster care children, individuals in long-term care settings and the aged, blind, and disabled. This description must address the following:

(i) Person centered goals and objectives and shared decision-making;

(ii) Coordination of care across multiple service providers, funding sources, settings, and patient conditions—

(iii) Universal design to ensure access by people with disabilities and older Americans; and

(iv) Institutional discharge planning and diversion activities that are tied to community based service availability.

(b) Eligibility. For eligibility, a description of the process in place for all of the following:

(1) For ensuring that each EP and eligible hospital meets all provider enrollment eligibility criteria upon enrollment and re-enrollment to the Medicaid EHR payment incentive program.

(2) For ensuring patient volume consistent with the criteria in §§ 495.304 and 495.306 for each EP who practices predominantly in a FQHC or RHC and for each Medicaid EP who is a physician, pediatrician, nurse practitioner, certified nurse midwife or dentist and a methodology in place used to verify such information.

(3) For ensuring that the EP or eligible hospital is a provider who meets patient volume consistent with the criteria in §§ 495.304 and 495.306 and a methodology in place used to verify such information.

(4) For ensuring that each Medicaid EP is not hospital-based and a methodology in place used to verify such information.

(5) To ensure that a hospital eligible for incentive payments has demonstrated an average length of stay of 25 days or less and a methodology for verifying such information.

(6) For ensuring that at least one clinical location used for the calculation of the EP's patient volume has Certified EHR Technology during the payment year for which the EP is attesting.

(c) Monitoring and validation. Subject to paragraph (g) of this section, for monitoring and validation of information States must include the following:

(1) A description of the process in place for ensuring that, because of CMS' and the States' oversight responsibilities, all provider information for attestations including meaningful use, efforts to adopt, implement, or upgrade and any information added to the CMS Single Provider Repository including all information related to patient volume, NPI, Tax identification number (TIN), are all true and accurate and that any concealment or falsification of a material fact related to the attestation may result in prosecution under Federal and State laws and a methodology in place used to verify such information.

(2) A description of the process in place for ensuring that the EP or eligible hospital is eligible to receive an incentive payment consistent with the criteria outlined in § 495.314 and a methodology in place used to verify such information.

(3) A description of the process in place for capturing attestations from each EP or eligible hospital that they have meaningfully used certified EHR technology during the EHR reporting period, and that they have adopted, implemented, or upgraded certified EHR technology and a description of the methodology in place used to verify such information.

(4) A description of the process in place for capturing clinical quality data from each EP or eligible hospital and a description of the methodology in place used to verify such information.

(5) A description of the process in place for monitoring the compliance of providers coming onto the program with different requirements depending upon their participation year and a methodology for verifying such information.

(6) A list of the specific actions planned to implement the EHR incentive program, including a description and organizational charts for workgroups within State government including external partners.

(7) A description of the process in place to ensure that no amounts higher than 100 percent of FFP will be claimed by the State for reimbursement of expenditures for State payments to Medicaid eligible providers for the certified EHR technology incentive payment program and a methodology for verifying such information.

(8) A description of the process in place to ensure that no amounts higher than 90 percent of FFP will be claimed by the State for administrative expenses in administering the certified EHR technology incentive payment program and a methodology for verifying such information.

(9) A description of the process and methodology for ensuring and verifying the following:

(i) Amounts received under section 1903(a)(3)(F) of the Act with respect to payments to a Medicaid EP or eligible hospital are paid directly to such provider (or to an employer or facility to which such provider has assigned payments) without any deduction or rebate.

(ii) All incentive payment reassignments to an entity promoting the adoption of certified EHR technology, as designated by the State, are voluntary for the Medicaid EP involved.

(iii) Entities promoting the adoption of certified EHR technology do not retain more than 5 percent of such payments for costs not related to certified EHR technology (and support services including maintenance and training) that is for, or is necessary for the operation of, such technology.

(10) A description of the process in place for ensuring that each Medicaid EP or eligible hospital that collects an EHR payment incentive has collected a payment incentive from only one State even if the provider is licensed to practice in multiple States and a methodology for verifying such information.

(11)(i) A description of the process in place for ensuring that each EP or eligible hospital that wishes to participate in the EHR incentive payment program will receive a NPI; and

(ii) A description of how the NPI will be used to coordinate with the CMS so that the EP will choose only one program from which to receive the incentive payment and the hospital payments are tracked accordingly.

(12) A description of the process in place for ensuring that each EP or eligible hospital who wishes to participate in the EHR incentive payment program will provide a TIN to the State for purposes of the incentive payment.

(d) Payments. For payments, States must provide descriptions of the following processes that are in place:

(1) The process in place for ensuring that there is no duplication of Medicare and Medicaid incentive payments to EPs and a methodology for verifying such information.

(2) The process in place to ensure that any existing fiscal relationships with providers to disburse the incentive payments through Medicaid managed care plans does not result in payments that exceed 105 percent of the capitation rate, in order to comply with the Medicaid managed care incentive payment rules at § 438.6(b)(2) of this chapter and a methodology for verifying such information.

(3) The process in place to ensure that only appropriate funding sources are used to make Medicaid EHR incentive payments and the methodology for verifying such information.

(4) The process in place and the methodology for verifying that information is available in order to ensure that Medicaid EHR incentive payments are made for no more than a total of 6 years; that no EP or eligible hospital begins receiving payments after 2016; that incentive payments cease after 2021; and that an eligible hospital does not receive incentive payments after FY 2016 unless the hospital received an incentive payment in the prior fiscal year.

(5) The process in place to ensure that Medicaid EHR incentive payments are not paid at amounts higher than 85 percent of the net average allowable cost of certified EHR technology and the yearly maximum allowable payment thresholds and a methodology for verifying such information.

(6) The process in place to ensure that all hospital calculations and hospital payment incentives are made consistent with the requirements of this part and a methodology for verifying such information.

(7) The process in place to provide for the timely and accurate payment of incentive payments to EPs and eligible hospitals, including the timeframe specified by the State to meet the timely payment requirement.

(8) The process in place and a methodology for verifying such information to provide that any monies that have been paid inappropriately as an improper payment or otherwise not in compliance with this subpart will be recouped and FFP will be repaid.

(e) For combating fraud and abuse and for provider appeals. (1) A description of the process in place for a provider to appeal consistent with the criteria described in § 495.370 and a methodology for verifying the following related to the EHR incentives payment program:

(i) Incentive payments.

(ii) Provider eligibility determinations.

(iii) Demonstration of efforts to adopt, implement or upgrade and meaningful use eligibility for incentive payments under this part.

(2) A description of the process in place, and a methodology for verifying such information, to address Federal laws and regulations designed to prevent fraud, waste, and abuse, including, but not limited to applicable provisions of Federal criminal law, the False Claims Act (32 U.S.C. 3729 et seq.), and the anti-kickback statute (section 1128B(b) of the Act).

(f) Optional—proposed alternatives. A State may choose to propose any of the following, but they must be included as an element in the State Medicaid HIT Plan for review and approval:

(1) An alternative methodology for measuring patient volume, consistent with § 495.306(g).

(2)(i) A revised definition of meaningful use of certified EHR technology consistent with §§ 495.4 and 495.316(d)(2) of this part.

(ii) Any revised definition of meaningful use may not require additional functionality beyond that of certified EHR technology and conform with CMS guidance on Stage 1. See also § 495.316(d)(2).

(3) An alternative date within CY 2021 by which all “EHR reporting periods” (as defined under § 495.4) for the CY 2021 payment year for Medicaid EPs demonstrating they are meaningful EHR users must end. The alternative date selected by the state must be earlier than October 31, 2021, and must not be any earlier than the day prior to the attestation deadline for Medicaid EPs attesting to that state.

(4) An alternative date within CY 2021 by which all clinical quality measure reporting periods for the CY 2021 payment year for Medicaid EPs demonstrating they are meaningful EHR users must end. The alternative date selected by the state must be earlier than October 31, 2021, and must not be any earlier than the day prior to the attestation deadline for Medicaid EPs attesting to that state.

(5) For the CY 2019 payment year and beyond, a state-specific listing of which clinical quality measures selected by CMS are considered to be high priority measures for purposes of Medicaid EP clinical quality measure reporting.

(g) Optional—signed agreement. At the State's option, the State may include a signed agreement indicating that the State does all of the following:

(1) Designates CMS to conduct all audits and appeals of eligible hospitals' meaningful use attestations.

(2) Is bound by the audit and appeal findings described in paragraph (g)(1) of this section.

(3) Performs any necessary recoupments if audits (and any subsequent appeals) described in paragraph (g)(1) of this section determine that an eligible hospital was not a meaningful EHR user.

(4) Is liable for any FFP granted to the State to pay eligible hospitals that, upon audit (and any subsequent appeal) are determined not to have been meaningful EHR users.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54162, Sept. 4, 2012; 81 FR 27901, May 6, 2016; 83 FR 60096, Nov. 23, 2018]

§ 495.334 [Reserved]

§ 495.336 Health information technology planning advance planning document requirements (HIT PAPD).

Each State's HIT PAPD must contain the following:

(a) A statement of need and objective which clearly state the purpose and objectives of the project to be accomplished and the necessity for the project.

(b) A project management plan which addresses the following:

(1) The planning project organization.

(2) Planning activities and deliverables.

(3) State and contractor resource needs.

(4) Planning project procurement activities and schedule.

(c) A specific budget for the planning of the project.

(d) An estimated total project cost and a prospective State and Federal cost distribution, including planning and implementation.

(e) A commitment to submit a HIT implementation advance planning document.

(f) A commitment to conduct and complete activities which will result in the production of the State Medicaid HIT plan that includes conduct of the following activities:

(1) A statewide HIT environmental baseline self-assessment.

(2) An assessment of desired HIT future environment.

(3) Development of benchmarks and transition strategies to move from the current environment to the desired future environment.

(g) A commitment to submit the plan to CMS for approval.

§ 495.338 Health information technology implementation advance planning document requirements (HIT IAPD).

Each State's HIT IAPD must contain the following:

(a) The results of the activities conducted as a result of the HIT planning advance planning document, including the approved state Medicaid HIT plan.

(b) A statement of needs and objectives.

(c) A statement of alternative considerations.

(d) A personnel resource statement indicating availability of qualified and adequate staff, including a project director to accomplish the project objectives.

(e) A detailed description of the nature and scope of the activities to be undertaken and the methods to be used to accomplish the project.

(f) The proposed activity schedule for the project.

(g) A proposed budget including a consideration of all HIT implementation advance planning document activity costs, including but not limited to the following:

(1) The cost to implement and administer incentive payments.

(2) Procurement or acquisition.

(3) State personnel.

(4) Contractor services.

(5) Hardware, software, and licensing.

(6) Equipment and supplies.

(7) Training and outreach.

(8) Travel.

(9) Administrative operations.

(10) Miscellaneous expenses for the project.

(h) An estimate of prospective cost distribution to the various State and Federal funding sources and the proposed procedures for distributing costs including:

(1) Planned annual payment amounts;

(2) Total of planned payment amounts; and

(3) Calendar year of each planned annual payment amount.

(4) A statement setting forth the security and interface requirements to be employed for all State HIT systems, and related systems, and the system failure and disaster recovery procedures available.

§ 495.340 As-needed HIT PAPD update and as-needed HIT IAPD update requirements.

Each State must submit a HIT PAPD update or a HIT IAPD no later than 60 days after the occurrence of project changes including but not limited to any of the following:

(a) A projected cost increase of $100,000 or more.

(b) A schedule extension of more than 60 days for major milestones.

(c) A significant change in planning approach or implementation approach, or scope of activities beyond that approved in the HIT planning advance planning document or the HIT implementation advance planning document.

(d) A change in implementation concept or a change to the scope of the project.

(e) A change to the approved cost allocation methodology.

§ 495.342 Annual HIT IAPD requirements.

Each State is required to submit the HIT IAPD Updates 12 months from the date of the last CMS approved HIT IAPD and must contain the following:

(a) A reference to the approved HIT PAPD/IAPD and all approved changes.

(b) A project activity status which reports the status of the past year's major project tasks and milestones, addressing the degree of completion and tasks/milestones remaining to be completed and discusses past and anticipated problems or delays in meeting target dates in the approved HIT technology PAPD/IAPD and approved changes to it.

(c) A report of all project deliverables completed in the past year and degree of completion for unfinished products.

(d) A project activity schedule for the remainder of the project.

(e) A project expenditure status which consists of a detailed accounting of all expenditures for project development over the past year and an explanation of the differences between projected expenses in the approved HIT PAPD/IAPD and actual expenditures for the past year.

(f) A report of any approved or anticipated changes to the allocation basis in the advance planning document's approved cost methodology.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54162, Sept. 4, 2012]

§ 495.344 Approval of the State Medicaid HIT plan, the HIT PAPD and update, the HIT IAPD and update, and the annual HIT IAPD.

HHS will not approve the State Medicaid HIT plan, HIT PAPD and update, HIT-IAPD and update, or annual IAPD if any of these documents do not include all of the information required under this subpart.

§ 495.346 Access to systems and records.

The State agency must allow HHS access to all records and systems operated by the State in support of this program, including cost records associated with approved administrative funding and incentive payments to Medicaid providers. State records related to contractors employed for the purpose of assisting with implementation or oversight activities or providing assistance, at such intervals as are deemed necessary by the Department to determine whether the conditions for approval are being met and to determine the efficiency, economy, and effectiveness of the program.

§ 495.348 Procurement standards.

(a) General rule. Procurements of HIT equipment and services are subject to the following procurement standards in paragraphs (b) through (f) of this section regardless of any conditions for prior approval. These standards—

(1) Include a requirement for maximum practical open and free competition regardless of whether the procurement is formally advertised or negotiated.

(2) Are established to ensure that such materials and services are obtained in a cost effective manner and in compliance with the provisions of applicable Federal statutes and executive orders.

(3) Apply when the cost of the procurement is treated as a direct cost of an award.

(b) Grantee responsibilities. The standards contained in this section do not relieve the Grantee of the contractual responsibilities arising under its contract(s).

(1) The grantee is the responsible authority, without recourse to the Departmental awarding agency, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of an award or other agreement. This includes disputes, claims, and protests of award, source evaluation or other matters of a contractual nature.

(2) Matters concerning violation of statute are to be referred to such Federal, State or local authority as may have proper jurisdiction.

(c) Codes of conduct. The grantee must maintain written standards of conduct governing the performance of its employees engaged in the award and administration of contracts.

(1) No employee, officer, or agent must participate in the selection, award, or administration of a contract supported by Federal funds if a real or apparent conflict of interest would be involved.

(2) Such a conflict would arise when the employee, officer, or agent, or any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in the firm selected for an award.

(3) The officers, employees, and agents of the grantee must neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to sub agreements.

(4) Grantees may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value.

(5) The standards of conduct provide for disciplinary actions to be applied for violations of such standards by officers, employers, or agents of the grantees.

(d) Competition. All procurement transactions must be conducted in a manner to provide, to the maximum extent practical, open and free competition.

(1) The grantee must be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade.

(2) In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft grant applications, or contract specifications, requirements, statements of work, invitations for bids and requests for proposals must be excluded from competing for such procurements.

(3) Awards must be made to the bidder or offer or whose bid or offer is responsive to the solicitation and is most advantageous to the grantee, price, quality, and other factors considered.

(4) Solicitations must clearly set forth all requirements that the bidder or offer or must fulfill in order for the bid or offer to be evaluated by the grantee.

(5) Any and all bids or offers may be rejected when it is in the grantee's interest to do so.

(e) Procurement procedures. All grantees must establish written procurement procedures. These procedures must provide, at a minimum, the following:

(1) Grantees avoid purchasing unnecessary items.

(2) When appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement for the grantee and the Federal government.

(3) Solicitations for goods and services provide for all of the following:

(i) A clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description must not contain features which unduly restrict competition.

(ii) Requirements which the bidder or offer must fulfill and all other factors to be used in evaluating bids or proposals.

(iii) A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards.

(iv) The specific features of brand name or equal descriptions that bidders are required to meet when such items are included in the solicitation.

(v) The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement.

(vi) Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient.

(4) Positive efforts must be made by grantees to utilize small businesses, minority-owned firms, and women's business enterprises, whenever possible. Grantees of Departmental awards must take all of the following steps to further this goal:

(i) Ensure that small businesses, minority-owned firms, and women's business enterprises are used to the fullest extent practicable.

(ii) Make information on forthcoming opportunities available and arrange time frames for purchases and contracts to encourage and facilitate participation by small businesses, minority-owned firms, and women's business enterprises.

(iii) Consider in the contract process whether firms competing for larger contracts intend to subcontract with small businesses, minority-owned firms, and women's business enterprises.

(iv) Encourage contracting with consortia of small businesses, minority-owned firms and women's business enterprises when a contract is too large for one of these firms to handle individually.

(v) Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce's Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms and women's business enterprises.

(5) The type of procuring instruments used (for example, fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) must be determined by the grantee but must be appropriate for the particular procurement and for promoting the best interest of the program or project involved.

(6) The “cost-plus-a-percentage-of-cost” or “percentage of construction cost” methods of contracting must not be used.

(7) Contracts must be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement.

(8) Consideration must be given to such matters as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources.

(9) In certain circumstances, contracts with certain parties are restricted by agencies' implementation of Executive Orders 12549 and 12689, “Debarment and Suspension” as described in 2 CFR part 376.

(10) Some form of cost or price analysis must be made and documented in the procurement files in connection with every procurement action.

(11) Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices, and similar indicia, together with discounts.

(12) Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability, and allowability.

(13) Procurement records and files for purchases in excess of the simplified acquisition threshold must include the following at a minimum:

(i) Basis for contractor selection.

(ii) Justification for lack of competition when competitive bids or offers are not obtained.

(iii) Basis for award cost or price.

(f) Contract administration. A system for contract administration must be maintained to ensure contractor conformance with the terms, conditions and specifications of the contract and to ensure adequate and timely follow up of all purchases. Grantees must evaluate contractor performance and document, as appropriate, whether contractors have met the terms, conditions, and specifications of the contract.

(g) Additional contract requirements. The grantee must include, in addition to provisions to define a sound and complete agreement, the following provisions in all contracts, which must also be applied to subcontracts:

(1) Contracts in excess of the simplified acquisition threshold must contain contractual provisions or conditions that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or breaches the contract terms, and provide for such remedial actions as may be appropriate.

(2) All contracts in excess of the simplified acquisition threshold (currently $100,000) must contain suitable provisions for termination by the grantee, including the manner by which termination must be effected and the basis for settlement.

(h) Conditions for default or termination. Such contracts must describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.

(i) Access to contract materials and staff. All negotiated contracts (except those for less than the simplified acquisition threshold) awarded by grantees must include a provision to the effect that the grantee, the Departmental awarding agency, the U.S. Comptroller General, or any of their duly authorized representatives, must have access to any books, documents, papers and records and staff of the contractor which are directly pertinent to a specific program for the purpose of making audits, examinations, excerpts and transcriptions.

§ 495.350 State Medicaid agency attestations.

(a) The State must provide assurances to HHS that amounts received with respect to sums expended that are attributable to payments to a Medicaid provider for the adoption of EHR are paid directly to such provider, or to an employer or facility to which such provider has assigned payments, without any deduction or rebate.

§ 495.352 Reporting requirements.

(a) Beginning with the first quarter of calendar year 2016, each State must submit to HHS on a quarterly basis a progress report, in the manner prescribed by HHS, documenting specific implementation and oversight activities performed during the quarter, including progress in implementing the State's approved Medicaid HIT plan.

(b) The quarterly progress reports must include, but need not be limited to providing, updates on the following:

(1) State system implementation dates.

(2) Provider outreach.

(3) Auditing.

(4) State-specific State Medicaid HIT Plan tasks.

(5) State staffing levels and changes.

(6) The number and type of providers that qualified for an incentive payment on the basis of having adopted, implemented or upgraded CEHRT and the amounts of incentive payments.

(7) The number and type of providers that qualified for an incentive payment on the basis of having demonstrated that they are meaningful users of CEHRT and the amounts of incentive payments.

(c) States must submit the quarterly progress reports described in this section within 30 days after the end of each federal fiscal year quarter.

[80 FR 62955, Oct. 16, 2015]

§ 495.354 Rules for charging equipment.

Equipment acquired under this subpart is subject to the public assistance program requirements concerning the computation of claims for Federal financial participation in accordance with the provisions of 45 CFR part 95, subpart G.

§ 495.356 Nondiscrimination requirements.

State agencies and any other beneficiaries or subbeneficiaries of Federal financial assistance provided under this subpart are subject to the nondiscrimination requirements in 45 CFR parts 80, 84, and 91.

(a) These regulations in 45 CFR parts 80, 84, and 91 prohibit individuals from being excluded from participation in, being denied the benefits of, or being otherwise subjected to discrimination under any program or activity which received Federal financial assistance.

(b) Specifically, 45 CFR part 80 prohibits discrimination on the basis of race, color, or national origin; 45 CFR part 84 prohibits discrimination on the basis of disability; and 45 CFR part 91 prohibits discrimination on the basis of age.

§ 495.358 Cost allocation plans.

State agencies that acquire HIT equipment and services under this subpart are subject to cost allocation plan requirements in 45 CFR part 95.

§ 495.360 Software and ownership rights.

(a) General rule. The State or local government must include a clause in all procurement instruments that provides that the State or local government will have all ownership rights in software or modifications thereof and associated documentation designed, developed or installed with FFP under this Subpart.

(b) Federal license. HHS reserves a royalty-free, non-exclusive, and irrevocable license to reproduce, publish or otherwise use and to authorize others to use for Federal government purposes, the software, modifications, and documentation designed, developed or installed with FFP under this Subpart.

(c) Proprietary software. Proprietary operating/vendor software packages such as software that is owned and licensed for use by third parties, which are provided at established catalog or market prices and sold or leased to the general public must not be subject to the ownership provisions in paragraphs (a) and (b) of this section.

(d) Limitation. Federal financial participation is not available for proprietary applications software developed specifically for the public assistance programs covered under this subpart.

§ 495.362 Retroactive approval of FFP with an effective date of February 18, 2009.

For administrative activities performed by a State, without obtaining prior approval, which are in support of planning for incentive payments to providers, a State may request consideration of FFP by recorded request in a HIT advance planning document or implementation advance planning document update. In such a consideration, the agency takes into consideration overall Federal interests which may include any of the following:

(a) The acquisition must not be before February 18, 2009.

(b) The acquisition must be reasonable, useful, and necessary.

(c) The acquisition must be attributable to payments for reasonable administrative expenses under section 1903(a)(3)(F)(ii) of the Act.

§ 495.364 Review and assessment of administrative activities and expenses of Medicaid provider health information technology adoption and operation.

(a) CMS conducts periodic reviews on an as needed basis to assess the State's progress described in its approved HIT planning advance planning document and health information technology implementation advance planning document.

(b) During planning, development, and implementation, these reviews will generally be limited to the overall progress, work performance, expenditure reports, project deliverables, and supporting documentation.

(c) CMS assesses the State's overall compliance with the approved advance planning document and provide technical assistance and information sharing from other State projects.

(d) CMS will, on a continuing basis, review, assess and inspect the planning, design, development, implementation, and operation of activities and payments for reasonable administrative expenses related to the administration of payment for Medicaid provider HIT adoption and operation payments to determine the extent to which such activities meet the following:

(1) All requirements of this subpart.

(2) The goals and objectives stated in the approved HIT implementation advance planning document and State Medicaid HIT plan.

(3) The schedule, budget, and other conditions of the approved HIT implementation advance planning document and State Medicaid HIT plan.

§ 495.366 Financial oversight and monitoring of expenditures.

(a) General rule. (1) The State must have a process in place to estimate expenditures for the Medicaid EHR payment incentive program using the Medicaid Budget Expenditure System.

(2) The State must have a process in place to report actual expenditures for the Medicaid EHR payment incentive program using the Medicaid Budget Expenditure System.

(3) The State must have an automated payment and information retrieval mechanized system, (Medicaid Management Information System) to make EHR payment incentives, to ensure Medicaid provider eligibility, to ensure the accuracy of payment incentives, and to identify potential improper payments.

(b) Provider eligibility as basis for making payment. Subject to § 495.332, the State must do all of the following:

(1) Collect and verify basic information on Medicaid providers to assure provider enrollment eligibility upon enrollment or re-enrollment to the Medicaid EHR payment incentive program.

(2) Collect and verify basic information on Medicaid providers to assure patient volume.

(3) Collect and verify basic information on Medicaid providers to assure that EPs are not hospital-based including the determination that substantially all health care services are not furnished in a hospital inpatient or emergency room setting.

(4) Collect and verify basic information on Medicaid providers to assure that EPs are practicing predominantly in a Federally-qualified health center or rural health clinic.

(5) Have a process in place to assure that Medicaid providers who wish to participate in the EHR incentive payment program has or will have a NPI and will choose only one program from which to receive the incentive payment using the NPI, a TIN, and CMS' national provider election database.

(c) Meaningful use and efforts to adopt, implement, or upgrade to certified electronic health record technology to make payment. Subject to § 495.312, 495.314, and § 495.332, the State must annually collect and verify information regarding the efforts to adopt, implement, or upgrade certified EHR technology and the meaningful use of said technology before making any payments to providers.

(d) Claiming Federal reimbursement for State expenditures. Subject to § 495.332, the State must do the following:

(1) Assure that State expenditures are claimed in accordance with, including but not limited to, applicable Federal laws, regulations, and policy guidance.

(2) Have a process in place to assure that expenditures for administering the Medicaid EHR incentive payment program will not be claimed at amounts higher than 90 percent of the cost of such administration.

(3) Have a process in place to assure that expenditures for payment of Medicaid EHR incentive payments will not be claimed at amounts higher than 100 percent of the cost of such payments to Medicaid providers.

(e) Improper Medicaid electronic health record payment incentives. (1) Subject to § 495.332, the State must have a process in place to assure that no duplicate Medicaid EHR payment incentives are paid between the Medicare and Medicaid programs, or paid by more than one State even if the provider is licensed to practice in multiple States, or paid within more than one area of a State.

(2) Subject to § 495.332, the State must have a process in place to assure that Medicaid EHR incentive payments are made without reduction or rebate, have been paid directly to an eligible provider or to an employer, a facility, or an eligible third-party entity to which the Medicaid eligible provider has assigned payments.

(3) Subject to § 495.332, the State must have a process in place to assure that that Medicaid EHR incentive payments are made for no more than 6 years; that no EP or eligible hospital begins receiving payments after 2016; that incentive payments cease after 2021; and that an eligible hospital does not receive incentive payments after FY 2016 unless the hospital received an incentive payment in the prior fiscal year.

(4) Subject to § 495.332, the State must have a process in place to assure that only appropriate funding sources are used to make Medicaid EHR incentive payments.

(5) Subject to § 495.332, the State must have a process in place to assure that Medicaid EHR incentive payments are not paid at amounts higher than 85 percent of the net average allowable cost of certified EHR technology and the yearly maximum allowable payment thresholds.

(6) Subject to § 495.332, the State must have a process in place to assure that for those entities promoting the adoption of EHR technology, the Medicaid EHR incentive payments are paid on a voluntary basis and that these entities do not retain more than 5 percent of such payments for costs not related to certified EHR technology.

(7) Subject to § 495.332, the State must have a process in place to assure that any existing fiscal relationships with providers to disburse the incentive through Medicaid managed care plans does not exceed 105 percent of the capitation rate, in order to comply with the Medicaid managed care incentive payment rules at § 438.6(b)(2) of this chapter and a methodology for verifying such information.

(8) The State must not request reimbursement for Federal financial participation unless all requirements of this subpart have been satisfied.

[75 FR 44565, July 28, 2010, as amended at 75 FR 81887, Dec. 29, 2010; 81 FR 27901, May 6, 2016]

§ 495.368 Combating fraud and abuse.

(a) General rule. (1) The State must comply with Federal requirements to—

(i) Ensure the qualifications of the providers who request Medicaid EHR incentive payments;

(ii) Detect improper payments; and

(iii) In accordance with § 455.15 and § 455.21 of this chapter, refer suspected cases of fraud and abuse to the Medicaid Fraud Control Unit.

(2) The State must take corrective action in the case of improper EHR payment incentives to Medicaid providers.

(b) Providers' statements regarding submission of documentation containing falsification or concealment of a material fact on EHR incentive payment documentation. For any forms on which a provider submits information necessary to the determination of eligibility to receive EHR payments, the State must obtain a statement that meets the following requirements:

(1) Is signed by the provider and contains the following statement: “This is to certify that the foregoing information is true, accurate, and complete. I understand that Medicaid EHR incentive payments submitted under this provider number will be from Federal funds, and that any falsification, or concealment of a material fact may be prosecuted under Federal and State laws.”

(2) Appears directly above the claimant's signature, or if it is printed on the reverse of the form, a reference to the statements must appear immediately preceding the provider's signature.

(3) Is resubmitted upon a change in provider representative.

(4) Is updated as needed.

(c) Overpayments. States must repay to CMS all Federal financial participation received by providers identified as an overpayment regardless of recoupment from such providers, within 60 days of discovery of the overpayment, in accordance with sections 1903(a)(1), (d)(2), and (d)(3) of the Act and part 433 subpart F of the regulations.

(d) Complying with Federal laws and regulations. States must comply with all Federal laws and regulations designed to prevent fraud, waste, and abuse, including, but not limited to applicable provisions of Federal criminal law, the False Claims Act (32 U.S.C. 3729 et seq.), and the anti-kickback statute (section 1128B(b) of the Act).

§ 495.370 Appeals process for a Medicaid provider receiving electronic health record incentive payments.

(a) The State must have a process in place consistent with the requirements established in § 447.253(e) of this chapter for a provider or entity to appeal the following issues related to the HIT incentives payment program:

(1) Incentive payments.

(2) Incentive payment amounts.

(3) Provider eligibility determinations.

(4) Demonstration of adopting, implementing, and upgrading, and meaningful use eligibility for incentives under this subpart.

(b) Subject to paragraph (a) of this section, the State's process must ensure the following:

(1) That the provider (whether an individual or an entity) has an opportunity to challenge the State's determination under this part by submitting documents or data or both to support the provider's claim.

(2) That such process employs methods for conducting an appeal that are consistent with the State's Administrative Procedure law(s).

(c) The State must provide that the provider (whether individual or entity) is also given any additional appeals rights that would otherwise be available under procedures established by the State.

(d) This section does not apply in the case that CMS conducts the audits and handles any subsequent appeals under § 495.312(c)(2) of this part.

[75 FR 44565, July 28, 2010, as amended at 77 FR 54161, Sept. 4, 2012]

§ 498.1 Statutory basis.

(a) Section 1866(h) of the Act provides for a hearing and for judicial review of the hearing for any institution or agency dissatisfied with a determination that it is not a provider, or with any determination described in section 1866(b)(2) of the Act.

(b) Section 1866(b)(2) of the Act lists determinations that serve as a basis for termination of a provider agreement.

(c) Sections 1128 (a) and (b) of the Act provide for exclusion of certain individuals or entities because of conviction of crimes related to their participation in Medicare and section 1128(f) provides for hearing and judicial review for exclusions.

(d) Section 1156 of the Act establishes certain obligations for practitioners and providers of health care services, and provides sanctions and penalties for those that fail to meet those obligations.

(e)-(f) [Reserved]

(g) Section 1866(j) of the Act provides for a hearing and judicial review for any provider or supplier whose application for enrollment or reenrollment in Medicare is denied or whose billing privileges are revoked.

(h) Section 1128A(c)(2) of the Act provides that the Secretary may not collect a civil money penalty until the affected entity has had notice and opportunity for a hearing.

(i) Section 1819(h) of the Act—

(1) Provides that, for SNFs found to be out of compliance with the requirements for participation, specified remedies may be imposed instead of, or in addition to, termination of the facility's Medicare provider agreement; and

(2) Makes certain provisions of section 1128A of the Act applicable to civil money penalties imposed on SNFs.

(j) Section 1891(e) of the Act provides that, for home health agencies (HHAs) found to be out of compliance with the conditions of participation, specified remedies may be imposed instead of, or in addition to, termination of the HHA's Medicare provider agreement.

(k) Section 1891(f) of the Act—

(1) Requires the Secretary to develop a range of such remedies; and

(2) Makes certain provisions of section 1128A of the Act applicable to civil money penalties imposed on HHAs.

(l) Section 1822 of the Act provides that for hospice programs that are no longer in compliance with the conditions of participation, the Secretary may develop remedies to be imposed instead of, or in addition to, termination of the hospice program's Medicare provider agreement.

[52 FR 22446, June 12, 1987, as amended at 59 FR 56251, Nov. 10, 1994; 61 FR 32349, June 24, 1996; 73 FR 36462, June 27, 2008; 86 FR 62431, Nov. 9, 2021]

§ 498.2 Definitions.

As used in this part—

Affected party means a provider, prospective provider, supplier, prospective supplier, or practitioner that is affected by an initial determination or by any subsequent determination or decision issued under this part, and “party” means the affected party or CMS, as appropriate. For provider or supplier enrollment appeals, an affected party includes CMS or a CMS contractor.

ALJ stands for Administrative Law Judge.

Departmental Appeals Board or Board means a Board established in the Office of the Secretary to provide impartial review of disputed decisions made by the operating components of the Department.

OIG stands for the Department's Office of the Inspector General.

Prospective provider means any of the entities specified in the definition of provider under this section that seeks to be approved for coverage of its services by Medicare or to have any facility or organization determined to be a department of the provider or provider-based entity under § 413.65 of this chapter.

Prospective supplier means any of the listed entities specified in the definition of supplier in this section that seek to be approved for coverage of its services by Medicare.

Provider means any of the following:

(1) Any of the following entities that have in effect an agreement to participate in Medicare:

(i) Hospital.

(ii) Transplant center.

(iii) Critical access hospital (CAH).

(iv) Skilled nursing facility (SNF).

(v) Comprehensive outpatient rehabilitation facility (CORF).

(vi) Home health agency (HHA).

(vii) Hospice.

(viii) Religious nonmedical health care institution (RNHCI).

(2) Any of the following entities that have in effect an agreement to participate in Medicare but only to furnish outpatient physical therapy or outpatient speech pathology services.

(i) Clinic.

(ii) Rehabilitation agency.

(iii) Public health agency.

(3) An entity that has in effect an agreement to participate in Medicare but only to furnish opioid use disorder treatment services.

Supplier means any of the following entities that have in effect an agreement to participate in Medicare:

(1) An independent laboratory.

(2) Supplier of durable medical equipment prosthetics, orthotics, or supplies (DMEPOS).

(3) Ambulance service provider.

(4) Independent diagnostic testing facility.

(5) Physician or other practitioner such as physician assistant.

(6) For purposes of this part, a physical therapist in private practice, an occupational therapist in private practice, or a speech-language pathologist.

(7) Supplier of portable X-ray services.

(8) Rural health clinic (RHC).

(9) Federally qualified health center (FQHC).

(10) Ambulatory surgical center (ASC).

(11) An entity approved by CMS to furnish outpatient diabetes self-management training.

(12) End-stage renal disease (ESRD) treatment facility that is approved by CMS as meeting the conditions for coverage of its services.

(13) A site approved by CMS to furnish intensive cardiac rehabilitation services.

[52 FR 22446, June 12, 1987]

Editorial Note:For Federal Register citations affecting § 498.2, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.

§ 498.3 Scope and applicability.

(a) Scope. (1) This part sets forth procedures for reviewing initial determinations that CMS makes with respect to the matters specified in paragraph (b) of this section, and that the OIG makes with respect to the matters specified in paragraph (c) of this section. It also specifies, in paragraph (d) of this section, administrative actions that are not subject to appeal under this part.

(2) The determinations listed in this section affect participation in the Medicare program. Many of the procedures of this part also apply to other determinations that do not affect participation in Medicare. Some examples follow:

(i) CMS's determination to terminate an NF's Medicaid provider agreement.

(ii) CMS's determination to cancel the approval of an ICF/IID under section 1910(b) of the Act.

(iii) CMS's determination, under the Clinical Laboratory Improvement Act (CLIA), to impose alternative sanctions or to suspend, limit, or revoke the certificate of a laboratory even though it does not participate in Medicare.

(iv) CMS's determination to impose sanctions on the individual who is the administrator of a NF for failure to comply with the requirements at § 483.75(r) of this chapter.

(3) The following parts of this chapter specify the applicability of the provisions of this part 498 to sanctions or remedies imposed on the indicated entities or individuals:

(i) Part 431, subpart D—for nursing facilities (NFs).

(ii) Part 488, subpart E (§ 488.330(e))—for SNFs and NFs.

(iii) Part 488, subpart E (§ 488.330(e)) and subpart F (§ 488.446)—for SNFs and NFs and their administrators.

(b) Initial determinations by CMS. CMS makes initial determinations with respect to the following matters:

(1) Whether a prospective provider qualifies as a provider.

(2) Whether a prospective department of a provider, remote location of a hospital, satellite facility, or provider-based entity qualifies for provider-based status under § 413.65 of this chapter, or whether such a facility or entity currently treated as a department of a provider, remote location of a hospital, satellite facility, or a provider-based entity no longer qualifies for that status under § 413.65 of this chapter.

(3) Whether an institution is a hospital qualified to elect to claim payment for all emergency hospital services furnished in a calendar year.

(4) Whether an institution continues to remain in compliance with the qualifications for claiming reimbursement for all emergency services furnished in a calendar year.

(5) Whether a prospective supplier meets the conditions for coverage of its services as those conditions are set forth elsewhere in this chapter.

(6) Whether the services of a supplier continue to meet the conditions for coverage.

(7) Whether a physical therapist in independent practice or a chiropractor meets the requirements for coverage of his or her services as set forth in subpart D of part 486 of this chapter and § 410.22 of this chapter, respectively.

(8) The termination of a provider agreement in accordance with § 489.53 of this chapter, or the termination of a rural health clinic agreement in accordance with § 405.2404 of this chapter, or the termination of a Federally qualified health center agreement in accordance with § 405.2436 of this chapter.

(9) CMS's cancellation, under section 1910(b) of the Act, of an ICF/IID's approval to participate in Medicaid.

(10) Whether, for purposes of rate setting and reimbursement, an ESRD treatment facility is considered to be hospital-based or independent.

(11) [Reserved]

(12) Whether a hospital, skilled nursing facility, home health agency, or hospice program meets or contimues to meet the advance directives requirements specified in subpart I of part 489 of this chapter.

(13) Except as provided at paragraph (d)(12) of this section for SNFs, NFs, HHAs, and hospice programs, the finding of noncompliance leading to the imposition of enforcement actions specified in § 488.406, § 488.820, or § 488.1170 of this chapter, but not the determination as to which sanction or remedy was imposed. The scope of review on the imposition of a civil money penalty is specified in § 488.438(e), § 488.845(h), or § 488.1195(h) of this chapter.

(14) The level of noncompliance found by CMS in a SNF, NF, HHA, or hospice program, but only if a successful challenge on this issue would affect—

(i) The range of civil money penalty amounts that CMS could collect (for SNFs or NFs, the scope of review during a hearing on imposition of a civil money penalty is set forth in § 488.438(e) of this chapter and for HHAs and hospice programs, the scope of review during a hearing on the imposition of a civil money penalty is set forth in §§ 488.845(h) and 488.1195(h) of this chapter); or

(ii) A finding of substandard quality of care that results in the loss of approval for a SNF or NF of its nurse aide training program.

(15) The effective date of a Medicare provider agreement or supplier approval.

(16) The finding of substandard quality of care that leads to the loss by a SNF or NF of the approval of its nurse aide training program.

(17)(i) Whether to deny or revoke a provider's or supplier's Medicare enrollment in accordance with § 424.530 or § 424.535 of this chapter;

(ii) Whether, under § 424.535(c)(2)(i) of this chapter, to add years to a provider's or supplier's existing reenrollment bar; or

(iii) Whether, under § 424.535(c)(3) of this chapter, an individual or entity other than the provider or supplier that is the subject of the second revocation was the actual subject of the first revocation.

(18) The level of noncompliance found by CMS with respect to the failure of an individual who is the administrator of a SNF to comply with the requirements at § 483.75(r) of this chapter, and the appropriate sanction to be imposed under § 488.446 of this chapter.

(19) Whether a physician or practitioner has failed to properly opt-out, failed to maintain opt-out, failed to timely renew opt-out, failed to privately contract, or failed to properly terminate opt-out.

(20) An individual or entity is to be included on the preclusion list as defined in § 422.2 or § 423.100 of this chapter.

(21) A denial of a DMEPOS accrediting organization's approval or re-approval under § 424.58(c)(4) or (d)(4) of this chapter, respectively.

(22) An involuntary termination of a DMEPOS accrediting organization's approved DMEPOS accreditation program under § 424.58(h)(1) of this chapter.

(c) Initial determinations by the OIG. The OIG makes initial determinations with respect to the following matters:

(1) The termination of a provider agreement in accordance with part 1001, subpart C of this title.

(2) The suspension, or exclusion from coverage and the denial of reimbursement for services furnished by a provider, practitioner, or supplier, because of fraud or abuse, or conviction of crimes related to participation in the program, in accordance with part 1001, subpart B of this title.

(3) The imposition of sanctions in accordance with part 1004 of this title.

(d) Administrative actions that are not initial determinations. Administrative actions that are not initial determination (and therefore not subject to appeal under this part) include but are not limited to the following:

(1) The finding that a provider or supplier determined to be in compliance with the conditions or requirements for participation or for coverage has deficiencies.

(2) The finding that a prospective provider does not meet the conditions of participation set forth elsewhere in this chapter, if the prospective provider is, nevertheless, approved for participation in Medicare on the basis of special access certification, as provided in subpart B of part 488 of this chapter.

(3) The refusal to enter into a provider agreement because the prospective provider is unable to give satisfactory assurance of compliance with the requirements of title XVIII of the Act.

(4) The finding that an entity that had its provider agreement terminated may not file another agreement because the reasons for terminating the previous agreement have not been removed or there is insufficient assurance that the reasons for the exclusion will not recur.

(5) The determination not to reinstate a suspended or excluded practitioner, provider, or supplier because the reason for the suspension or exclusion has not been removed, or there is insufficient assurance that the reason will not recur.

(6) The finding that the services of a laboratory are covered as hospital services or as physician's services, rather than as services of an independent laboratory, because the laboratory is not independent of the hospital or of the physician's office.

(7) The refusal to accept for filing an election to claim payment for all emergency hospital services furnished in a calendar year because the institution—

(i) Had previously charged an individual or other person for services furnished during that calendar year;

(ii) Submitted the election after the close of that calendar year; or

(iii) Had previously been notified of its failure to continue to comply.

(8) The finding that the reason for the revocation of a supplier's right to accept assignment has not been removed or there is insufficient assurance that the reason will not recur.

(9) The finding that a hospital accredited by the Joint Commission on Accreditation of Hospitals or the American Osteopathic Association is not in compliance with a condition of participation, and a finding that that hospital is no longer deemed to meet the conditions of participation.

(10) For a SNF, NF, HHA, or hospice program—

(i) The finding that the provider's deficiencies pose immediate jeopardy to the health or safety of the residents or patients;

(ii) Except as provided in paragraph (b)(13) of this section, a determination by CMS as to the provider's level of noncompliance; and

(iii) For SNFs and NFs, the imposition of State monitoring.

(11) The choice of alternative sanction or remedy to be imposed on a provider or supplier.

(12) The determination that the accreditation requirements of a national accreditation organization do not provide (or do not continue to provide) reasonable assurance that the entities accredited by the accreditation organization meet the applicable long-term care requirements, conditions for coverage, conditions of certification, conditions of participation, or CLIA condition level requirements.

(13) The determination that requirements imposed on a State's laboratories under the laws of that State do not provide (or do not continue to provide) reasonable assurance that laboratories licensed or approved by the State meet applicable CLIA requirements.

(14) The choice of alternative sanction or remedy to be imposed on a provider or supplier.

(15) A decision by the State survey agency as to when to conduct an initial survey of a prospective provider or supplier.

(e) Exclusion of civil rights issues. The procedures in this subpart do not apply to the adjudication of issues relating to a provider's compliance with civil rights requirements that are set forth in part 489 of this chapter. Those issues are handled through the Department's Office of Civil Rights.

[52 FR 22446, June 12, 1987]

Editorial Note:For Federal Register citations affecting § 498.3, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.

§ 498.4 NFs subject to appeals process in part 498.

A NF is considered a provider for purposes of this part when it has in effect an agreement to participate in Medicaid, including an agreement to participate in both Medicaid and Medicare and it is a—

(a) State-operated NF; or

(b) Non State-operated NF that is subject to compliance action as a result of—

(1) A validation survey by CMS; or

(2) CMS's review of the State's survey findings.

[59 FR 56252, Nov. 10, 1994]

§ 498.5 Appeal rights.

(a) Appeal rights of prospective providers. (1) Any prospective provider dissatisfied with an initial determination or revised initial determination that it does not qualify as a provider may request reconsideration in accordance with § 498.22(a).

(2) Any prospective provider dissatisfied with a reconsidered determination under paragraph (a)(1) of this section, or a revised reconsidered determination under § 498.30, is entitled to a hearing before an ALJ.

(b) Appeal rights of providers. Any provider dissatisfied with an initial determination to terminate its provider agreement is entitled to a hearing before an ALJ.

(c) Appeal rights of providers and prospective providers. Any provider or prospective provider dissatisfied with a hearing decision may request Departmental Appeals Board review, and has a right to seek judicial review of the Board's decision.

(d) Appeal rights of prospective suppliers. (1) Any prospective supplier dissatisfied with an initial determination or a revised initial determination that its services do not meet the conditions for coverage may request reconsideration in accordance with § 498.22(a).

(2) Any prospective supplier dissatisfied with a reconsidered determination under paragraph (d)(1) of this section, or a revised reconsidered determination under § 498.30, is entitled to a hearing before an ALJ.

(e) Appeal rights of suppliers. Any supplier dissatisfied with an initial determination that the services subject to the determination no longer meet the conditions for coverage, is entitled to a hearing before an ALJ.

(f) Appeal rights of suppliers and prospective suppliers. (1) Any supplier or prospective supplier dissatisfied with the hearing decision may request Departmental Appeals Board review of the ALJ's decision.

(2) A supplier or prospective supplier dissatisfied with an ALJ decision may request Board review, and has a right to seek judicial review of the Board's decision.

(g) Appeal rights for certain practitioners. A physical therapist in independent practice or a chiropractor dissatisfied with a determination that he or she does not meet the requirements for coverage of his or her services has the same appeal rights as suppliers have under paragraphs (d), (e) and (f) of this section.

(h) Appeal rights for nonparticipating hospitals that furnish emergency services. A nonparticipating hospital dissatisfied with a determination or decision that it does not qualify to elect to claim payment for all emergency services furnished during a calendar year has the same appeal rights that providers have under paragraph (a), (b), and (c) of this section.

(i) Appeal rights for suspended or excluded practitioners, providers, or suppliers. (1) Any practitioner, provider, or supplier who has been suspended, or whose services have been excluded from coverage in accordance with § 498.3(c)(2), or has been sanctioned in accordance with § 498.3(c)(3), is entitled to a hearing before an ALJ.

(2) Any suspended or excluded practitioner, provider, or supplier dissatisfied with a hearing decision may request Departmental Appeals Board review and has a right to seek judicial review of the Board's decision by filing an action in Federal district court.

(j) Appeal rights for Medicaid ICFs/IID terminated by CMS. (1) Any Medicaid ICF/IID that has had its approval cancelled by CMS in accordance with § 498.3(b)(8) has a right to a hearing before an ALJ, to request Departmental Appeals Board review of the hearing decision, and to seek judicial review of the Board's decision.

(2) The Medicaid agreement remains in effect until the period for requesting a hearing has expired or, if the facility requests a hearing, until a hearing decision is issued, unless CMS—

(i) Makes a written determination that continuation of provider status for the SNF or ICF constitutes an immediate and serious threat to the health and safety of patients and specifies the reasons for that determination; and

(ii) Certifies that the facility has been notified of its deficiencies and has failed to correct them.

(k) Appeal rights of NFs. Under the circumstances specified in § 431.153 (g) and (h) of this chapter, an NF has a right to a hearing before an ALJ, to request Board review of the hearing decision, and to seek judicial review of the Board's decision.

(l) Appeal rights related to provider enrollment. (1) Any prospective provider, an existing provider, prospective supplier or existing supplier dissatisfied with an initial determination or revised initial determination related to the denial or revocation of Medicare billing privileges may request reconsideration in accordance with § 498.22(a).

(2) CMS, a CMS contractor, any prospective provider, an existing provider, prospective supplier, or existing supplier dissatisfied with a reconsidered determination under paragraph (l)(1) of this section, or a revised reconsidered determination under § 498.30, is entitled to a hearing before an ALJ.

(3) CMS, a CMS contractor, any prospective provider, an existing provider, prospective supplier, or existing supplier dissatisfied with a hearing decision may request Board review, and any prospective provider, an existing provider, prospective supplier, or existing supplier has a right to seek judicial review of the Board's decision.

(4) Scope of review. For appeals of denials based on § 424.530(a)(10) of this chapter related to temporary moratoria, the scope of review will be limited to whether the temporary moratorium applies to the provider or supplier appealing the denial. The agency's basis for imposing a temporary moratorium is not subject to review.

(m) Appeal rights of an individual who is the administrator of a SNF or NF. An individual who is the administrator of a SNF or NF who is dissatisfied with the decision of CMS to impose sanctions authorized under § 488.446 of this chapter is entitled to a hearing before an ALJ, to request Board review of the hearing decision, and to seek judicial review of the Board's decision.

(n) Appeal rights of individuals and entities on preclusion list. (1)(i) Any individual or entity that is dissatisfied with an initial determination or revised initial determination that they are to be included on the preclusion list (as defined in § 422.2 or § 423.100 of this chapter) may request a reconsideration in accordance with § 498.22(a).

(ii)(A) If the individual's or entity's inclusion on the preclusion list is based on a Medicare revocation under § 424.535 of this chapter and the individual or entity receives contemporaneous notice of both actions, the individual or entity may request a joint reconsideration of both the preclusion list inclusion and the revocation in accordance with § 498.22(a).

(B) The individual or entity may not submit separate reconsideration requests under paragraph (n)(1)(ii)(A) of this section for inclusion on the preclusion list or a revocation if the individual or entity received contemporaneous notice of both actions.

(2) If CMS or the individual or entity under paragraph (n)(1) of this section is dissatisfied with a reconsidered determination under paragraph (n)(1) of this section, or a revised reconsidered determination under § 498.30, CMS or the individual or entity is entitled to a hearing before an ALJ.

(3) If CMS or the individual or entity under paragraph (n)(2) of this section is dissatisfied with a hearing decision as described in paragraph (n)(2) of this section, CMS or the individual or entity may request Board review and the individual or entity has a right to seek judicial review of the Board's decision.

[52 FR 22446, June 12, 1987, as amended at 57 FR 43925, Sept. 23, 1992; 59 FR 56252, Nov. 10, 1994; 61 FR 32350, June 24, 1996; 73 FR 36462, June 27, 2008; 76 FR 9512, Feb. 18, 2011; 76 FR 5970, Feb. 2, 2011; 78 FR 16805, Mar. 19, 2013; 79 FR 72533, Dec. 5, 2014; 83 FR 16757, Apr. 16, 2018; 84 FR 15844, Apr. 16, 2019]

§ 498.10 Appointment of representatives.

(a) An affected party may appoint as its representative anyone not disqualified or suspended from acting as a representative in proceedings before the Secretary or otherwise prohibited by law.

(b) If the representative appointed is not an attorney, the party must file written notice of the appointment with CMS, the ALJ, or the Departmental Appeals Board.

(c) If the representative appointed is an attorney, the attorney's statement that he or she has the authority to represent the party is sufficient.

§ 498.11 Authority of representatives.

(a) A representative appointed and qualified in accordance with § 498.10 may, on behalf of the represented party—

(1) Give and accept any notice or request pertinent to the proceedings set forth in this part;

(2) Present evidence and allegations as to facts and law in any proceedings affecting that party to the same extent as the party; and

(3) Obtain information to the same extent as the party.

(b) A notice or request may be sent to the affected party, to the party's representative, or to both. A notice or request sent to the representative has the same force and effect as if it had been sent to the party.

§ 498.13 Fees for services of representatives.

Fees for any services performed on behalf of an affected party by an attorney appointed and qualified in accordance with § 498.10 are not subject to the provisions of section 206 of Title II of the Act, which authorizes the Secretary to specify or limit those fees.

§ 498.15 Charge for transcripts.

A party that requests a transcript of prehearing or hearing proceedings or Board review must pay the actual or estimated cost of preparing the transcript unless, for good cause shown by that party, the payment is waived by the ALJ or the Departmental Appeals Board, as appropriate.

[52 FR 22446, June 12, 1987, as amended at 61 FR 51021, Sept. 30, 1996]

§ 498.17 Filing of briefs with the ALJ or Departmental Appeals Board, and opportunity for rebuttal.

(a) Filing of briefs and related documents. If a party files a brief or related document such as a written argument, contention, suggested finding of fact, conclusion of law, or any other written statement, it must submit an original and one copy to the ALJ or the Departmental Appeals Board, as appropriate. The material may be filed by mail or in person and must include a statement certifying that a copy has been furnished to the other party.

(b) Opportunity for rebuttal. (1) The other party will have 20 days from the date of mailing or personal service to submit any rebuttal statement or additional evidence. If a party submits a rebuttal statement or additional evidence, it must file an original and one copy with the ALJ or the Board and furnish a copy to the other party.

(2) The ALJ or the Board will grant an opportunity to reply to the rebuttal statement only if the party shows good cause.

§ 498.20 Notice and effect of initial determinations.

(a) Notice of initial determination—(1) General rule. CMS or the OIG, as appropriate, mails notice of an initial determination to the affected party, setting forth the basis or reasons for the determination, the effect of the determination, and the party's right to reconsideration, if applicable, or to a hearing.

(2) Special rules: Independent laboratories and suppliers of portable x-ray services. If CMS determines that an independent laboratory or a supplier of portable x-ray services no longer meets the conditions for coverage of some or all of its services, the notice—

(i) Specifies an effective date of termination of coverage that is at least 15 days after the date of the notice;

(ii) Is also sent to physicians, hospitals, and other parties that might use the services of the laboratory or supplier; and

(iii) In the case of laboratories, specifies the categories of laboratory tests that are no longer covered.

(3) Special rules: Nonparticipating hospitals that elect to claim payment for emergency services. If CMS determines that a nonparticipating hospital no longer qualifies to elect to claim payment for all emergency services furnished in a calendar year, the notice—

(i) States the calendar year to which the determination applies;

(ii) Specifies an effective date that is at least 5 days after the date of the notice; and

(iii) Specifies that the determination applies to services furnished, in the specified calendar year, to patients accepted (as inpatients or outpatients) on or after the effective date of the determination.

(4) Other special rules. Additional rules pertaining, for example, to content and timing of notice, notice to the public and to other entities, and time allowed for submittal of additional information, are set forth elsewhere in this chapter, as follows:

Part 405 Subpart X—for rural health clinics. Part 416—for ambulatory surgical centers. Part 489—for providers, when their provider agreements have been terminated. Part 1001, Subpart B—for excluded or suspended providers, suppliers, physicians, or practitioners. Part 1001, Subpart C—for providers, when their provider agreements are terminated by the OIG. Part 1004—for sanctioned providers and practitioners.

(b) Effect of initial determination. An initial determination is binding unless it is—

(1) Reconsidered in accordance with § 498.24;

(2) Reversed or modified by a hearing decision in accordance with § 498.78; or

(3) Revised in accordance with § 498.32 or § 498.100.

§ 498.22 Reconsideration.

(a) Right to reconsideration. CMS or one of its contractors reconsiders an initial determination that affects a prospective provider or supplier, or a hospital seeking to qualify to claim payment for all emergency hospital services furnished in a calendar year, if the affected party files a written request in accordance with paragraphs (b) and (c) of this section. For denial or revocation of enrollment, prospective providers and suppliers and providers and suppliers have a right to reconsideration.

(b) Request for reconsideration: Manner and timing. The affected party specified in paragraph (a) of this section, if dissatisfied with the initial determination may request reconsideration by filing the request—

(1) With CMS or with the State survey agency, or in the case of prospective supplier the entity specified in the notice of initial determination;

(2) Directly or through its legal representative or other authorized official; and

(3) Within 60 days from receipt of the notice of initial determination, unless the time is extended in accordance with paragraph (d) of this section. The date of receipt will be presumed to be 5 days after the date on the notice unless there is a showing that it was, in fact, received earlier or later.

(c) Content of request. The request for reconsideration must state the issues, or the findings of fact with which the affected party disagrees, and the reasons for disagreement.

(d) Extension of time to file a request for reconsideration. (1) If the affected party is unable to file the request within the 60 days specified in paragraph (b) of this section, it may file a written request with CMS, stating the reasons why the request was not filed timely.

(2) CMS will extend the time for filing a request for reconsideration if the affected party shows good cause for missing the deadline.

[52 FR 22446, June 12, 1987, as amended at 73 FR 36462, June 27, 2008]

§ 498.23 Withdrawal of request for reconsideration.

A request for reconsideration is considered withdrawn if the requestor files a written withdrawal request before CMS mails the notice of reconsidered determination, and CMS approves the withdrawal request.

§ 498.24 Reconsidered determination.

When a request for reconsideration has been properly filed in accordance with § 498.22, CMS—

(a) Receives written evidence and statements that are relevant and material to the matters at issue and are submitted within a reasonable time after the request for reconsideration;

(b) Considers the initial determination, the findings on which the initial determination was based, the evidence considered in making the initial determination, and any other written evidence submitted under paragraph (a) of this section, taking into account facts relating to the status of the prospective provider or supplier subsequent to the initial determination; and

(c) Makes a reconsidered determination, affirming or modifying the initial determination and the findings on which it was based.

§ 498.25 Notice and effect of reconsidered determination.

(a) Notice. (1) CMS mails notice of a reconsidered determination to the affected party.

(2) The notice gives the reasons for the determination.

(3) If the determination is adverse, the notice specifies the conditions or requirements of law or regulations that the affected party fails to meet, and informs the party of its right to a hearing.

(b) Effect. A reconsidered determination is binding unless—

(1) CMS or the OIG, as appropriate, further revises the revised determination; or

(2) The revised determination is reversed or modified by a hearing decision.

§ 498.30 Limitation on reopening.

An initial or reconsidered determination that a prospective provider is a provider or that a hospital qualifies to elect to claim payment for all emergency services furnished in a calendar year may not be reopened. CMS or the OIG, as appropriate, may on its own initiative, reopen any other initial or reconsidered determination, within 12 months after the date of notice of the initial determination.

§ 498.32 Notice and effect of reopening and revision.

(a) Notice. (1) CMS or the OIG, as appropriate, gives the affected party notice of reopening and of any revision of the reopened determination.

(2) The notice of revised determination states the basis or reason for the revised determination.

(3) If the determination is that a supplier or prospective supplier does not meet the conditions for coverage of its services, the notice specifies the conditions with respect to which the affected party fails to meet the requirements of law and regulations, and informs the party of its right to a hearing.

(b) Effect. A revised determination is binding unless

(1) The affected party requests a hearing before an ALJ; or

(2) CMS or the OIG further revises the revised determination.

§ 498.40 Request for hearing.

(a) Manner and timing of request. (1) An affected party entitled to a hearing under § 498.5 may file a request for a hearing with the ALJ office identified in the determination letter.

(2) The affected party or its legal representative or other authorized official must file the request in writing within 60 days from receipt of the notice of initial, reconsidered, or revised determination unless that period is extended in accordance with paragraph (c) of this section. (Presumed date of receipt is determined in accordance with § 498.22(b)(3)).

(b) Content of request for hearing. The request for hearing must—

(1) Identify the specific issues, and the findings of fact and conclusions of law with which the affected party disagrees; and

(2) Specify the basis for contending that the findings and conclusions are incorrect.

(c) Extension of time for filing a request for hearing. If the request was not filed within 60 days—

(1) The affected party or its legal representative or other authorized official may file with the ALJ a written request for extension of time stating the reasons why the request was not filed timely.

(2) For good cause shown, the ALJ may extend the time for filing the request for hearing.

[52 FR 22446, June 12, 1987, as amended at 73 FR 36462, June 27, 2008]

§ 498.42 Parties to the hearing.

The parties to the hearing are the affected party and CMS or the OIG, as appropriate.

§ 498.44 Designation of hearing official.

(a) The Secretary or his or her delegate designates an ALJ or a member or members of the Board to conduct hearings.

(b) If appropriate, the Secretary or the delegate may designate another ALJ or another member or other members of the Board to conduct the hearing.

(c) As used in this part, “ALJ” includes any ALJ of the Department of Health and Human Services or members of the Board who are designated to conduct a hearing.

[73 FR 36462, June 27, 2008]

§ 498.45 Disqualification of Administrative Law Judge.

(a) An ALJ may not conduct a hearing in a case in which he or she is prejudiced or partial to the affected party or has any interest in the matter pending for decision.

(b) A party that objects to the ALJ designated to conduct the hearing must give notice of its objections at the earliest opportunity.

(c) The ALJ will consider the objections and decide whether to withdraw or proceed with the hearing.

(1) If the ALJ withdraws, another will be designated to conduct the hearing.

(2) If the ALJ does not withdraw, the objecting party may, after the hearing, present its objections to the Departmental Appeals Board as reasons for changing, modifying, or reversing the ALJ's decision or providing a new hearing before another ALJ.

§ 498.47 Prehearing conference.

(a) At any time before the hearing, the ALJ may call a prehearing conference for the purpose of delineating the issues in controversy, identifying the evidence and witnesses to be presented at the hearing, and obtaining stipulations accordingly.

(b) On the request of either party or on his or her own motion, the ALJ may adjourn the prehearing conference and reconvene at a later date.

§ 498.48 Notice of prehearing conference.

(a) Timing of notice. The ALJ will fix a time and place for the prehearing conference and mail written notice to the parties at least 10 days before the scheduled date.

(b) Content of notice. The notice will inform the parties of the purpose of the conference and specify what issues are sought to be resolved, agreed to, or excluded.

(c) Additional issues. Issues other than those set forth in the notice of determination or the request for hearing may be considered at the prehearing conference if—

(1) Either party gives timely notice to that effect to the ALJ and the other party; or

(2) The ALJ raises the issues in the notice of prehearing conference or at the conference.

§ 498.49 Conduct of prehearing conference.

(a) The prehearing conference is open to the affected party or its representative, to the CMS or OIG representatives and their technical advisors, and to any other persons whose presence the ALJ considers necessary or proper.

(b) The ALJ may accept the agreement of the parties as to the following:

(1) Facts that are not in controversy.

(2) Questions that have been resolved favorably to the affected party after the determination in dispute.

(3) Remaining issues to be resolved.

(c) The ALJ may request the parties to indicate the following:

(1) The witnesses that will be present to testify at the hearing.

(2) The qualifications of those witnesses.

(3) The nature of other evidence to be submitted.

§ 498.50 Record, order, and effect of prehearing conference.

(a) Record of prehearing conference. (1) A record is made of all agreements and stipulations entered into at the prehearing conference.

(2) The record may be transcribed at the request of either party or the ALJ.

(b) Order and opportunity to object. (1) The ALJ issues an order setting forth the results of the prehearing conference, including the agreements made by the parties as to facts not in controversy, the matters to be considered at the hearing, and the issues to be resolved.

(2) Copies of the order are sent to all parties and the parties have 10 days to file objections to the order.

(3) After the 10 days have elapsed, the ALJ settles the order.

(c) Effect of prehearing conference. The agreements and stipulations entered into at the prehearing conference are binding on all parties, unless a party presents facts that, in the opinion of the ALJ, would make an agreement unreasonable or inequitable.

§ 498.52 Time and place of hearing.

(a) The ALJ fixes a time and place for the hearing and gives the parties written notice at least 10 days before the scheduled date.

(b) The notice informs the parties of the general and specific issues to be resolved at the hearing.

§ 498.53 Change in time and place of hearing.

(a) The ALJ may change the time and place for the hearing either on his or her own initiative or at the request of a party for good cause shown, or may adjourn or postpone the hearing.

(b) The ALJ may reopen the hearing for receipt of new evidence at any time before mailing the notice of hearing decision.

(c) The ALJ gives the parties reasonable notice of any change in time or place or any adjournment or reopening of the hearing.

§ 498.54 Joint hearings.

When two or more affected parties have requested hearings and the same or substantially similar matters are at issue, the ALJ may, if all parties agree, fix a single time and place for the prehearing conference or hearing and conduct all proceedings jointly. If joint hearings are held, a single record of the proceedings is made and a separate decision issued with respect to each affected party.

§ 498.56 Hearing on new issues.

(a) Basic rules. (1) Within the time limits specified in paragraph (b) of this section, the ALJ may, at the request of either party, or on his or her own motion, provide a hearing on new issues that impinge on the rights of the affected party.

(2) Except for provider or supplier enrollment appeals which are addressed in § 498.56(e), the ALJ may consider new issues even if CMS or the OIG has not made initial or reconsidered determinations on them, and even if they arose after the request for hearing was filed or after the prehearing conference.

(3) The ALJ may give notice of hearing on new issues at any time after the hearing request is filed and before the hearing record is closed.

(b) Time limits. The ALJ will not consider any issue that arose on or after any of the following dates:

(1) The effective date of the termination of a provider agreement.

(2) The date on which it is determined that a supplier no longer meets the conditions for coverage of its services.

(3) The effective date of the notice to a hospital of its failure to remain in compliance with the qualifications for claiming reimbursement for all emergency services furnished to Medicare beneficiaries during the calendar year.

(4) The effective date of the suspension, or of the exclusion from coverage of services furnished by a suspended or excluded practitioner, provider, or supplier.

(5) With respect to Medicaid SNFs or ICFs surveyed under section 1910(c) of the Act—

(i) The completion date of the survey or resurvey that is the basis for a proposed cancellation of approval; or

(ii) If approval was cancelled before the hearings, because of immediate and serious threat to patient health and safety, the effective date of cancellation.

(c) Notice and conduct of hearing on new issues. (1) Unless the affected party waives its right to appear and present evidence, notice of the time and place of hearing on any new issue will be given to the parties in accordance with § 498.52.

(2) After giving notice, the ALJ will, except as provided in paragraph (d) of this section, proceed to hearing on new issues in the same manner as on an issue raised in the request for hearing.

(d) Remand to CMS or the OIG. At the request of either party, or on his or her own motion, in lieu of a hearing under paragraph (c) of this section, the ALJ may remand the case to CMS or the OIG for consideration of the new issue and, if appropriate, a determination. If necessary, the ALJ may direct CMS or the OIG to return the case to the ALJ for further proceedings.

(e) Provider and supplier enrollment appeals: Good cause requirement—(1) Examination of any new documentary evidence. After a hearing is requested but before it is held, the ALJ will examine any new documentary evidence submitted to the ALJ by a provider or supplier to determine whether the provider or supplier has good cause for submitting the evidence for the first time at the ALJ level.

(2) Determining if good cause exists—(i) If good cause exists. If the ALJ finds that there is good cause for submitting new documentary evidence for the first time at the ALJ level, the ALJ must include evidence and may consider it in reaching a decision.

(ii) If good cause does not exist. If the ALJ determines that there was not good cause for submitting the evidence for the first time at the ALJ level, the ALJ must exclude the evidence from the proceeding and may not consider it in reaching a decision.

(2) Notification to all parties. As soon as possible, but no later than the start of the hearing, the ALJ must notify all parties of any evidence that is excluded from the hearing.

[52 FR 22446, June 12, 1987, as amended at 53 FR 31335, Aug. 18, 1988; 73 FR 36463, June 27, 2008]

§ 498.58 Subpoenas.

(a) Basis for issuance. The ALJ, upon his or her own motion or at the request of a party, may issue subpoenas if they are reasonably necessary for the full presentation of a case.

(b) Timing of request by a party. The party must file a written request for a subpoena with the ALJ at least 5 days before the date set for the hearing.

(c) Content of request. The request must:

(1) Identify the witnesses or documents to be produced;

(2) Describe their addresses or location with sufficient particularity to permit them to be found; and

(3) Specify the pertinent facts the party expects to establish by the witnesses or documents, and indicate why those facts could not be established without use of a subpoena.

(d) Method of issuance. Subpoenas are issued in the name of the Secretary, who pays the cost of issuance and the fees and mileage of any subpoenaed witnesses.

§ 498.60 Conduct of hearing.

(a) Participants in the hearing. The hearing is open to the parties and their representatives and technical advisors, and to any other persons whose presence the ALJ considers necessary or proper.

(b) Hearing procedures. (1) The ALJ inquires fully into all of the matters at issue, and receives in evidence the testimony of witnesses and any documents that are relevant and material.

(2) If the ALJ believes that there is relevant and material evidence available which has not been presented at the hearing, he may, at any time before mailing of notice of the decision, reopen the hearing to receive that evidence.

(3) The ALJ decides the order in which the evidence and the arguments of the parties are presented and the conduct of the hearing.

(c) Scope of review: Civil money penalty. In civil money penalty cases—

(1) The scope of review is as specified in §§ 488.438(e), 488.845(h), and 488.1195(g) of this chapter; and

(2) CMS' determination as to the level of noncompliance of a SNF, NF, HHA, or hospice program must be upheld unless it is clearly erroneous.

[52 FR 22446, June 12, 1987, as amended at 61 FR 32350, June 24, 1996; 79 FR 66118, Nov. 6, 2014; 86 FR 62431, Nov. 9, 2021]

§ 498.61 Evidence.

Evidence may be received at the hearing even though inadmissible under the rules of evidence applicable to court procedure. The ALJ rules on the admissibility of evidence.

[59 FR 56252, Nov. 10, 1994, as amended at 61 FR 32350, June 24, 1996]

§ 498.62 Witnesses.

Witnesses at the hearing testify under oath or affirmation. The representative of each party is permitted to examine his or her own witnesses subject to interrogation by the representative of the other party. The ALJ may ask any questions that he or she deems necessary. The ALJ rules upon any objection made by either party as to the propriety of any question.

§ 498.63 Oral and written summation.

The parties to a hearing are allowed a reasonable time to present oral summation and to file briefs or other written statements of proposed findings of fact and conclusions of law. Copies of any briefs or other written statements must be sent in accordance with § 498.17.

§ 498.64 Record of hearing.

A complete record of the proceedings at the hearing is made and transcribed in all cases.

§ 498.66 Waiver of right to appear and present evidence.

(a) Waiver procedures. (1) If an affected party wishes to waive its right to appear and present evidence at the hearing, it must file a written waiver with the ALJ.

(2) If the affected party wishes to withdraw a waiver, it may do so, for good cause, at any time before the ALJ mails notice of the hearing decision.

(b) Effect of waiver. If the affected party waives the right to appear and present evidence, the ALJ need not conduct an oral hearing except in one of the following circumstances:

(1) The ALJ believes that the testimony of the affected party or its representatives or other witnesses is necessary to clarify the facts at issue.

(2) CMS or the OIG shows good cause for requiring the presentation of oral evidence.

(c) Dismissal for failure to appear. If, despite the waiver, the ALJ sends notice of hearing and the affected party fails to appear, or to show good cause for the failure, the ALJ will dismiss the appeal in accordance with § 498.69.

(d) Hearing without oral testimony. When there is no oral testimony, the ALJ will—

(1) Make a record of the relevant written evidence that was considered in making the determination being appealed, and of any additional evidence submitted by the parties;

(2) Furnish to each party copies of the additional evidence submitted by the other party; and

(3) Give both parties a reasonable opportunity for rebuttal.

(e) Handling of briefs and related statements. If the parties submit briefs or other written statements of evidence or proposed findings of facts or conclusions of law, those documents will be handled in accordance with § 498.17.

§ 498.68 Dismissal of request for hearing.

(a) The ALJ may, at any time before mailing the notice of the decision, dismiss a hearing request if a party withdraws its request for a hearing or the affected party asks that its request be dismissed.

(b) An affected party may request a dismissal by filing a written notice with the ALJ.

§ 498.69 Dismissal for abandonment.

(a) The ALJ may dismiss a request for hearing if it is abandoned by the party that requested it.

(b) The ALJ may consider a request for hearing to be abandoned if the party or its representative—

(1) Fails to appear at the prehearing conference or hearing without having previously shown good cause for not appearing; and

(2) Fails to respond, within 10 days after the ALJ sends a “show cause” notice, with a showing of good cause.

§ 498.70 Dismissal for cause.

On his or her own motion, or on the motion of a party to the hearing, the ALJ may dismiss a hearing request either entirely or as to any stated issue, under any of the following circumstances:

(a) Res judicata. There has been a previous determination or decision with respect to the rights of the same affected party on the same facts and law pertinent to the same issue or issues which has become final either by judicial affirmance or, without judicial consideration, because the affected party did not timely request reconsideration, hearing, or review, or commence a civil action with respect to that determination or decision.

(b) No right to hearing. The party requesting a hearing is not a proper party or does not otherwise have a right to a hearing.

(c) Hearing request not timely filed. The affected party did not file a hearing request timely and the time for filing has not been extended.

§ 498.71 Notice and effect of dismissal and right to request review.

(a) Notice of the ALJ's dismissal action is mailed to the parties. The notice advises the affected party of its right to request that the dismissal be vacated as provided in § 498.72.

(b) The dismissal of a request for hearing is binding unless it is vacated by the ALJ or the Departmental Appeals Board.

§ 498.72 Vacating a dismissal of request for hearing.

An ALJ may vacate any dismissal of a request for hearing if a party files a request to that effect within 60 days from receipt of the notice of dismissal and shows good cause for vacating the dismissal. (Date of receipt is determined in accordance with § 498.22(b)(3).)

§ 498.74 Administrative Law Judge's decision.

(a) Timing, basis and content. As soon as practical after the close of the hearing, the ALJ issues a written decision in the case. The decision is based on the evidence of record and contains separate numbered findings of fact and conclusions of law.

(b) Notice and effect. A copy of the decision is mailed to the parties and is binding on them unless—

(1) A party requests review by the Departmental Appeals Board within the time period specified in § 498.82, and the Board reviews the case;

(2) The Departmental Appeals Board denies the request for review and the party seeks judicial review by filing an action in a United States District Court or, in the case of a civil money penalty, in a United States Court of Appeals;

(3) The decision is revised by an ALJ or the Departmental Appeals Board; or

(4) The decision is a recommended decision directed to the Board.

[52 FR 22446, June 12, 1987, as amended at 61 FR 32351, June 24, 1996]

§ 498.76 Removal of hearing to Departmental Appeals Board.

(a) At any time before the ALJ receives oral testimony, the Board may remove to itself any pending request for a hearing.

(b) Notice of removal is mailed to each party.

(c) The Board conducts the hearing in accordance with the rules that apply to ALJ hearings under this subpart.

§ 498.78 Remand by the Administrative Law Judge.

(a) If CMS requests a remand, the ALJ may remand any case properly before him or her to CMS.

(b) The ALJ may remand at any time before notice of hearing decision is mailed.

[52 FR 22446, June 12, 1987, as amended at 73 FR 36463, June 27, 2008]

§ 498.79 Timeframes for deciding an enrollment appeal before an ALJ.

When a request for an ALJ hearing is filed after CMS or a FFS contractor has denied an enrollment application, the ALJ must issue a decision, dismissal order or remand to CMS, as appropriate, no later than the end of the 180-day period beginning from the date the appeal was filed with an ALJ.

[73 FR 36463, June 27, 2008]

§ 498.80 Right to request Departmental Appeals Board review of Administrative Law Judge's decision or dismissal.

Either of the parties has a right to request Departmental Appeals Board review of the ALJ's decision or dismissal order, and the parties are so informed in the notice of the ALJ's action.

§ 498.82 Request for Departmental Appeals Board review.

(a) Manner and time of filing. (1) Any party that is dissatisfied with an ALJ's decision or dismissal of a hearing request, may file a written request for review by the Departmental Appeals Board.

(2) The requesting party or its representative or other authorized official must file the request with the OHA within 60 days from receipt of the notice of decision or dismissal, unless the Board, for good cause shown by the requesting party, extends the time for filing. The rules set forth in § 498.40(c) apply to extension of time for requesting Departmental Appeals Board review. (The date of receipt of notice is determined in accordance with § 498.22(c)(3).)

(b) Content of request for review. A request for review of an ALJ decision or dismissal must specify the issues, the findings of fact or conclusions of law with which the party disagrees, and the basis for contending that the findings and conclusions are incorrect.

§ 498.83 Departmental Appeals Board action on request for review.

(a) Request by CMS or the OIG. The Departmental Appeals Board may dismiss, deny, or grant a request made by CMS or the OIG for review of an ALJ decision or dismissal.

(b) Request by the affected party. The Board will grant the affected party's request for review unless it dismisses the request for one of the following reasons:

(1) The affected party requests dismissal of its request for review.

(2) The affected party did not file timely or show good cause for late filing.

(3) The affected party does not have a right to review.

(4) A previous determination or decision, based on the same facts and law, and regarding the same issue, has become final through judicial affirmance or because the affected party failed to timely request reconsideration, hearing, Board review, or judicial review, as appropriate.

(c) Effect of dismissal. The dismissal of a request for Departmental Appeals Board review is binding and not subject to further review.

(d) Review panel. If the Board grants a request for review of the ALJ's decision, the review will be conducted by a panel of at least two members of the Board, designated by the Chairperson or Deputy Chairperson, and one individual designated by the Secretary from the U.S Public Health Service.

§ 498.85 Procedures before the Departmental Appeals Board on review.

The parties are given, upon request, a reasonable opportunity to file briefs or other written statements as to fact and law, and to appear before the Departmental Appeals Board to present evidence or oral arguments. Copies of any brief or other written statement must be sent in accordance with § 498.17.

§ 498.86 Evidence admissible on review.

(a) Except for provider or supplier enrollment appeals, the Board may admit evidence into the record in addition to the evidence introduced at the ALJ hearing (or the documents considered by the ALJ if the hearing was waived) if the Board considers that the additional evidence is relevant and material to an issue before it.

(b) If it appears to the Board that additional relevant evidence is available, the Board will require that it be produced.

(c) Before additional evidence is admitted into the record—

(1) Notice is mailed to the parties (unless they have waived notice) stating that evidence will be received regarding specified issues; and

(2) The parties are given a reasonable time to comment and to present other evidence pertinent to the specified issues.

(d) If additional evidence is presented orally to the Board, a transcript is prepared and made available to any party upon request.

[52 FR 22446, June 12, 1987, as amended at 73 FR 36463, June 27, 2008]

§ 498.88 Decision or remand by the Departmental Appeals Board.

(a) When the Departmental Appeals Board reviews an ALJ's decision or order of dismissal, or receives a case remanded by a court, the Board may either issue a decision or remand the case to an ALJ for a hearing and decision or a recommended decision for final decision by the Board.

(b) In a remanded case, the ALJ initiates additional proceedings and takes other actions as directed by the Board in its order of remand, and may take other action not inconsistent with that order.

(c) Upon completion of all action called for by the remand order and any other consistent action, the ALJ promptly makes a decision or, as specified by the Board, certifies the case to the Board with a recommended decision.

(d) The parties have 20 days from the date of a notice of a recommended decision to submit to the Board any exception, objection, or comment on the findings of fact, conclusions of law, and recommended decision.

(e) After the 20-day period, the Board issues its decision adopting, modifying or rejecting the ALJ's recommended decision.

(f) If the Board does not remand the case to an ALJ, the following rules apply:

(1) The Board's decision—

(i) Is based upon the evidence in the hearing record and any further evidence that the Board receives during its review;

(ii) Is in writing and contains separate numbered findings of fact and conclusions of law; and

(iii) May modify, affirm, or reverse the ALJ's decision.

(2) A copy of the Board's decision is mailed to each party.

(g) When a request for Board review of a denial of an enrollment application is filed after an ALJ has issued a decision or dismissal order, the Board must issue a decision, dismissal order or remand to the ALJ, as appropriate, no later than 180 days after the appeal was received by the Board.

[52 FR 22446, June 12, 1987, as amended at 73 FR 36463, June 27, 2008]

§ 498.90 Effect of Departmental Appeals Board decision.

(a) General rule. The Board's decision is binding unless—

(1) The affected party has a right to judicial review and timely files a civil action in a United States District Court or, in the case of a civil money penalty, in a United States Court of Appeals; or

(2) The Board reopens and revises its decision in accordance with § 498.102.

(b) Right to judicial review. Section 498.5 specifies the circumstances under which an affected party has a right to seek judicial review.

(c) Special rules: Civil money penalty—(1) Finality of Board's decision. When CMS imposes a civil money penalty, notice of the Board's decision (or denial of review) is the final administrative action that initiates the 60-day period for seeking judicial review.

(2) Timing for collection of civil money penalty. For SNFs and NFs, the rules that apply are those set forth in subpart F of part 488 of this chapter.

[61 FR 32351, June 24, 1996]

§ 498.95 Extension of time for seeking judicial review.

(a) Any affected party that is dissatisfied with an Departmental Appeals Board decision and is entitled to judicial review must commence civil action within 60 days from receipt of the notice of the Board's decision (as determined under § 498.22(c)(3)), unless the Board extends the time in accordance with paragraph (c) of this section.

(b) The request for extension must be filed in writing with the Board before the 60-day period ends.

(c) For good cause shown, the Board may extend the time for commencing civil action.

§ 498.100 Basis, timing, and authority for reopening an ALJ or Board decision.

(a) Basis and timing for reopening. An ALJ of Departmental Appeals Board decision may be reopened, within 60 days from the date of the notice of decision, upon the motion of the ALJ or the Board or upon the petition of either party to the hearing.

(b) Authority to reopen. (1) A decision of the Departmental Appeals Board may be reopened only by the Departmental Appeals Board.

(2) A decision of an ALJ may be reopened by that ALJ, by another ALJ if that one is not available, or by the Departmental Appeals Board. For purposes of this paragraph, an ALJ is considered to be unavailable if the ALJ has died, terminated employment, or been transferred to another duty station, is on leave of absence, or is unable to conduct a hearing because of illness.

§ 498.102 Revision of reopened decision.

(a) Revision based on new evidence. If a reopened decision is to be revised on the basis of new evidence that was not included in the record of that decision, the ALJ or the Departmental Appeals Board—

(1) Notifies the parties of the proposed revision; and

(2) Unless the parties waive their right to hearing or appearance—

(i) Grants a hearing in the case of an ALJ revision; and

(ii) Grants opportunity to appear in the case of a Board revision.

(b) Basis for revised decision and right to review. (1) If a revised decision is necessary, the ALJ or the Departmental Appeals Board, as appropriate, renders it on the basis of the entire record.

(2) If the decision is revised by an ALJ, the Departmental Appeals Board may review that revised decision at the request of either party or on its own motion.

§ 498.103 Notice and effect of revised decision.

(a) Notice. The notice mailed to the parties states the basis or reason for the revised decision and informs them of their right to Departmental Appeals Board review of an ALJ revised decision, or to judicial review of a Board reviewed decision.

(b) Effect—(1) ALJ revised decision. An ALJ revised decision is binding unless it is reviewed by the Departmental Appeals Board.

(2) Departmental Appeals Board revised decision. A Board revised decision is binding unless a party files a civil action in a district court of the United States within the time frames specified in § 498.95.

§ 505.1 Basis and scope.

This part implements section 1016 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) which amends section 1897 of the Act. Section 1897 of the Act as amended by section 6045 of the Tsunami Relief Act of 2005 authorizes the Secretary to establish a loan program by which qualifying hospitals may apply for a loan for the capital costs of the health care infrastructure improvement projects. Section 1897 of the Act appropriates $142,000,000 for the loan program including program administration. The funds are available beginning July 1, 2004 through September 30, 2008. This part sets forth the criteria that CMS uses to select among qualifying hospitals.

§ 505.3 Definitions.

For purposes of this subpart, the following definitions apply:

Eligible project means the project of a qualifying hospital that is designed to improve the health care infrastructure of the hospital, including construction, renovation, or other capital improvements.

Entity is an entity described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax under section 501(a) of the code. An entity must also have at least one existing memorandum of understanding or affiliation agreement with a hospital located in the State in which the entity is located and retains clinical outpatient treatment for cancer on site as well as laboratory research, education, and outreach for cancer in the same facility.

Outreach programs mean formal cancer programs for teaching, diagnostic screening, therapy or treatment, prevention, or interventions to enhance the health and knowledge of their designated population(s).

Qualifying hospital means a hospital as defined at section 1861(e) of the Act (42 U.S,C. 1395x(e)) or an entity (as defined in this section) that is engaged in research in the causes, prevention, and treatment of cancer; and is either designated as a cancer center for the National Cancer Institute; or designated by the State legislature as the official cancer institute of the State before December 8, 2003.

Unique research resources means resources that are used for the purpose of discovering or testing options related to the causes, prevention, and treatment of cancer.

[70 FR 57374, Sept. 30, 2005, as amended at 71 FR 48143, Aug. 18, 2006]

§ 505.5 Loan criteria.

(a) Qualifying criteria. To qualify for the loan program, the applicant must meet the following conditions:

(1) Meet the definition of a “qualifying hospital” as set forth in § 505.3 of this part.

(2) Request a loan for the capital costs of an “eligible project” as defined in § 505.3 of this part. The capital costs for which a qualifying hospital may obtain a loan are limited to the reasonable costs incurred by the hospital, and capitalized on the Medicare cost report, for any facility or item of equipment that it has acquired the possession or use of at the time the loan funding is awarded.

(b) Selection criteria. In selecting loan beneficiaries, CMS prioritizes qualifying hospitals that meet the following criteria:

(1) The hospital is located in a State that, based on population density, is defined as a rural State. A rural State is one of ten States with the lowest population density. An applicant entity is required to be located in one of these ten States. The ten States are prioritized beginning with the State with the lowest population density. Population density is determined based on the most recent available U.S. Census Bureau data.

(2) The hospital is located in a State with multiple Indian tribes in the State. After prioritizing based on paragraph (b)(1) of this section, States are further prioritized based on the States with the most Indian tribes. The number of Indian tribes in a State is based on the most recent data available published in “Indian Entities Recognized and Eligible to Receive Services from the United State Bureau of Indian Affairs.” (68 FR 68180) published on December 5, 2003.

(c) CMS will send written notice to qualifying hospitals that have been selected to participate in the loan program under this part.

§ 505.7 Terms of the loan.

All loan beneficiaries must agree to the following loan terms:

(a) Loan obligation. An authorized official of a qualifying hospital must execute a promissory note, loan agreement, or a form approved by CMS and accompanied by any other documents CMS may designate. The loan beneficiary must provide required documentation in a timely manner.

(b) Schedule of loan. A loan beneficiary receives a lump sum distribution for which payment of principal and interest is deferred for 60 months beginning with the day of award notification from CMS. The loan repayment period is 20 years.

(c) Bankruptcy protection. In the event a loan beneficiary files for bankruptcy protection in a court of competent jurisdiction or otherwise proves to be insolvent, CMS may terminate the deferment period described in paragraph (b) of this section and require immediate payment of the loan. If a loan beneficiary should file for bankruptcy protection in a court of competent jurisdiction or should otherwise evidence insolvency after the deferment period we will require immediate repayment of the outstanding principal and interest due. Those payments may be deducted from any Medicare payments otherwise due that hospital.

(d) Loan forgiveness. CMS does not require a loan beneficiary to begin making payments of principal or interest at the end of the 60-month deferment period if it determines that the loan beneficiary meets the criteria for loan forgiveness under section 1897 of the Act, as determined by the Secretary.

(e) Default. If a loan beneficiary fails to make any payment in repayment of a loan under this subpart within 10 days of its due date, the loan beneficiary may be considered to have defaulted on the loan. Upon default, all principal and accrued interest become due immediately, and CMS may require immediate payment of any outstanding principal and interest due. Those payments may be deducted from any Medicare payments otherwise due that hospital.

(f) Loan repayment. The loan beneficiary must meet the following conditions:

(1) Make payments every month for 20 years until the loan, including interest payments, are paid in full.

(2) Pay interest on the unpaid principal until the full amount of principal has been paid.

(3) Pay interest at a yearly rate based upon the rate as fixed by the Secretary of the Treasury and set forth at 45 CFR 30.13(a).

(4) If a loan beneficiary fails to make any payment in repayment of a loan under this subpart within 10 days of its due date, that payment may be deducted from any Medicare payments otherwise due to the beneficiary.

(g) Interest rate and monthly payment charges. CMS calculates interest charges and payments consistent with § 405.378 of this chapter.

(h) Loan recipient's right to prepay. A loan beneficiary has the right to make payments of principal at any time before they are due. A loan beneficiary may make full prepayment or partial prepayment without paying any prepayment charge. If a prepayment is made, the loan beneficiary must provide written notice to CMS at CMS, Division of Accounting Operations, P.O. Box 75120, Baltimore, MD 21207-0520.

§ 505.9 State and local permits.

With respect to an eligible project, the provision of a loan under this part shall not—

(a) Relieve the beneficiary of the loan or any obligation to obtain any required State or local permit or approval with respect to the project.

(b) Limit the right of any unit of State or local government to approve or regulate any rate of return on private equity invested in the project.

(c) Supersede any State or local law (including any regulation) applicable to the construction or operation of the project.

§ 505.11 Loan application requirements and procedures.

(a) The loan application must be received by CMS no later than 5 p.m. e.d.t. on December 29, 2005.

(b) The requested information must be typed or clearly printed in ink and the loan beneficiary must mail or deliver an original copy of the loan to CMS. The loan application must contain the following information:

(1) Qualifying hospital's name and street address.

(2) Qualifying hospital's Medicare provider number.

(3) Name, title, and telephone number of a contact person submitting the application.

(4) Provide all appropriate supporting documentation for each answer made on the loan application.

§ 505.13 Conditions for loan forgiveness.

The Secretary may forgive a loan provided under this part if the qualifying hospital—

(a) Has been selected to participate in the loan program specified in § 505.5(c).

(b) Has established the following in accordance with a plan that meets the criteria specified in § 505.15:

(1) An outreach program for cancer prevention, early diagnosis, and treatment that provides services to a substantial majority of the residents of a State or region, including residents of rural areas;

(2) An outreach program for cancer prevention, early diagnosis, and treatment that provides services to multiple Indian tribes; and

(3) Unique research resources (such as population databases) or an affiliation with an entity that has unique research resources.

(c) Submits to CMS, within the timeframe specified by the Secretary, a—

(1) Written request for loan forgiveness; and

(2) Loan forgiveness plan that meets the criteria specified in § 505.15 of this subpart.

§ 505.15 Plan criteria for meeting the conditions for loan forgiveness.

The qualifying hospital requesting loan forgiveness must submit to CMS a plan specifying how it will develop, implement, or maintain an existing outreach program for cancer prevention, early diagnosis, and treatment for a substantial majority of the residents of a State or region, including residents of rural areas and for multiple Indian tribes and specifying how the qualifying hospital will establish or maintain existing unique research resources or an affiliation with an entity that has unique research resources.

(a) Outreach programs. The initial plan must specify how the hospital will establish or develop, implement, or maintain existing outreach programs. The plan must—

(1) Address cancer prevention for cancers that are prevalent in the designated populations or cancers that are targeted by the qualifying hospital, interventions, and goals for decreasing the targeted cancer rates during the loan deferment program; and

(2) Address early diagnosis of cancers that are prevalent in the designated populations or cancers that are targeted by the qualifying hospital, interventions, and goals for improving early diagnosis rates for the targeted cancer(s) during the loan deferment period;

(3) Address cancer treatment for cancers that are prevalent in the designated populations or cancers that are targeted by the qualifying hospital, interventions, and goals for improving cancer treatment rates for the targeted cancer(s) during the loan deferment; and

(4) Identify the measures that will be used to determine the qualifying hospital's annual progress in meeting the initial goals specified in paragraphs (a)(1) through (a)(3) of this section.

(b) Unique research resources. The plan must specify how the qualifying hospital will establish or maintain existing unique research resources or an affiliation with an entity that has unique research resources.

§ 505.17 Reporting requirements for meeting the conditions for loan forgiveness.

(a) Annual reporting requirements. On an annual basis, beginning one year from the date that CMS notified the qualifying hospital of the loan award, the qualifying hospital must submit a report to CMS that updates the plan specified in § 505.15 by—

(1) Describing the qualifying hospital's progress in meeting its initial plan goals;

(2) Describing any changes to the qualifying hospital's initial plan goals; and

(3) Including at least one measure used to track the qualifying hospital's progress in meeting its plan goals.

(b) Review of annual reports. CMS will review each qualifying hospital's annual report to provide the hospital with feedback regarding its loan forgiveness status. If CMS determines that the annual report shows that the qualifying hospital has fulfilled the conditions, plan criteria, and reporting requirements for loan forgiveness specified in §§ 505.13, 505.15, and 505.17, CMS will notify the qualifying hospital in writing that the loan is forgiven.

(c) Final annual reporting requirements. A qualifying hospital must submit its final report to CMS at least 6 months before the end of the loan deferment period specified in § 505.7(b).

§ 505.19 Approval or denial of loan forgiveness.

(a) Approval of loan forgiveness. If CMS determines that a qualifying hospital has met the conditions, plan criteria, and reporting requirements for loan forgiveness specified in §§ 505.13, 505.15, and 505.17, CMS will send a written notification of approval for loan forgiveness to the qualifying hospital by the earlier of—

(1) 30 days from the date of receipt of the annual report that shows the qualifying hospital has satisfied the requirements for loan forgiveness; or

(2) 90 days before the end of the loan deferment period defined in § 505.7(b).

(b) Denial of loan forgiveness. If CMS determines that a qualifying hospital has not met the conditions, plan criteria, or reporting requirements for loan forgiveness specified in § 505.13, § 505.15, or § 505.17 of this part, CMS will send a written notification of denial of loan forgiveness to the qualifying hospital at least 30 days before the end of the loan deferment period defined in § 505.7(b).

§ 510.1 Basis and scope.

(a) Basis. This part implements the test of the Comprehensive Care for Joint Replacement model under section 1115A of the Act. Except as specifically noted in this part, the regulations under this part must not be construed to affect the payment, coverage, program integrity, or other requirements (such as those in parts 412 and 482 of this chapter) that apply to providers and suppliers under this chapter.

(b) Scope. This part sets forth the following:

(1) The participants in the Comprehensive Care for Joint Replacement model.

(2) The episodes being tested in the model.

(3) The methodology for pricing and payment under the model.

(4) Quality performance standards and quality reporting requirements.

(5) Safeguards to ensure preservation of beneficiary choice and beneficiary notification.

§ 510.2 Definitions.

For the purposes of this part, the following definitions are applicable unless otherwise stated:

ACO means an accountable care organization, as defined at § 425.20 of this chapter, that participates in the Shared Savings Program and is not in Track 3.

ACO participant has the meaning set forth in § 425.20 of this chapter.

ACO provider/supplier has the meaning set forth in § 425.20 of this chapter.

Actual episode payment means the sum of standardized Medicare claims payments for the items and services that are included in the episode in accordance with § 510.200(b), excluding the items and services described in § 510.200(d).

Age bracket risk adjustment factor means the coefficient of risk associated with a patient's age bracket, calculated as described in § 510.301(a)(1).

Alignment payment means a payment from a CJR collaborator to a participant hospital under a sharing arrangement, for the sole purpose of sharing the participant hospital's responsibility for making repayments to Medicare.

Anchor hospitalization means the initial hospital stay upon admission for a lower extremity joint replacement, for which the institutional claim is billed through the IPPS. Anchor hospitalization also includes an inpatient hospital admission within 3 days after an outpatient Total Knee Arthroplasty (TKA) or Total Hip Arthroplasty (THA).

Anchor procedure means a TKA or THA procedure that is permitted and paid for by Medicare when performed in a hospital outpatient department (HOPD) and billed through the OPPS, except when the beneficiary is admitted to an inpatient hospital stay within 3 days after the TKA or THA.

Applicable discount factor means the discount percentage established by the participant hospital's quality category as determined in § 510.315 and that is applied to the episode benchmark price for purposes of determining a participant hospital's Medicare repayment in performance years 2 and 3.

Area means, as defined in § 400.200 of this chapter, the geographical area within the boundaries of a State, or a State or other jurisdiction, designated as constituting an area with respect to which a Professional Standards Review Organization or a Utilization and Quality Control Peer Review Organization has been or may be designated.

BPCI stands for the Bundled Payment for Care Improvement initiative.

BPCI Advanced stands for the Bundled Payments for Care Improvement Advanced Model.

CCN stands for CMS certification number.

CEC stands for Comprehensive ESRD Care Initiative.

CEHRT means certified electronic health record technology that meets the requirements of 45 CFR 170.102. .

CJR beneficiary means a beneficiary who meets the beneficiary inclusion criteria in § 510.205 and who is in a CJR episode.

CJR collaborator means an ACO or one of the following Medicare-enrolled individuals or entities that enters into a sharing arrangement:

(1) SNF.

(2) HHA.

(3) LTCH.

(4) IRF.

(5) Physician.

(6) Nonphysician practitioner.

(7) Therapist in private practice.

(8) CORF.

(9) Provider of outpatient therapy services.

(10) Physician Group Practice (PGP).

(11) Hospital.

(12) CAH.

(13) Non-Physician Provider Group Practice (NPPGP).

(14) Therapy Group Practice (TGP).

CJR-HCC condition count risk adjustment factor means the coefficient of risk associated with a patient's total number of CMS Hierarchical Condition Categories, calculated as described in § 510.301(a)(1).

CJR reconciliation report means the report prepared after each reconciliation that CMS provides to each participant hospital notifying the participant hospital of the outcome of the reconciliation.

Collaboration agent means an individual or entity that is not a CJR collaborator and that is either of the following:

(1) A member of a PGP, NPPGP, or TGP that has entered into a distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a CJR collaborator.

(2) An ACO participant or ACO provider/supplier that has entered into a distribution arrangement with the same ACO in which it is participating, and where the ACO is a CJR collaborator.

Composite quality score means a score computed for each participant hospital to summarize the hospital's level of quality performance and improvement on specified quality measures as described in § 510.315.

Core-based statistical area (CBSA) means a statistical geographic entity consisting of the county or counties associated with at least one core (urbanized area or urban cluster) of at least 10,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties containing the core.

CORF stands for comprehensive outpatient rehabilitation facility.

COVID-19 Diagnosis Code means any of the following ICD-10-CM diagnosis codes:

(1) B97.29;

(2) U07.1; or

(3) Any other ICD-10-CM diagnosis code that is recommended by the Centers for Disease Control and Prevention for the coding of a confirmed case of COVID-19.

Critical access hospital (CAH) means a hospital designated under subpart F of part 485 of this chapter.

Distribution arrangement means a financial arrangement between a CJR collaborator that is an ACO, PGP, NPPGP, or TGP and a collaboration agent for the sole purpose of distributing some or all of a gainsharing payment received by the ACO, PGP, NPPGP, or TGP.

Distribution payment means a payment from a CJR collaborator that is an ACO, PGP, NPPGP, or TGP to a collaboration agent, under a distribution arrangement, composed only of gainsharing payments.

DME stands for durable medical equipment.

Downstream collaboration agent means an individual who is not a CJR collaborator or a collaboration agent and who is a PGP member, an NPPGP member, or a TGP member that has entered into a downstream distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a collaboration agent.

Downstream distribution arrangement means a financial arrangement between a collaboration agent that is both a PGP, NPPGP, or TGP and an ACO participant and a downstream collaboration agent for the sole purpose of distributing some or all of a distribution payment received by the PGP, NPPGP, or TGP.

Downstream distribution payment means a payment from a collaboration agent that is both a PGP, NPPGP, or TGP and an ACO participant to a downstream collaboration agent, under a downstream distribution arrangement, composed only of distribution payments.

Dual-eligibility risk adjustment factor means the coefficient of risk associated with beneficiaries that are eligible for full Medicaid benefits or beneficiaries that are not eligible for full Medicaid benefits, calculated as described in § 510.301(a)(1).

EFT stands for electronic funds transfer.

Episode benchmark price means a dollar amount assigned to CJR episodes based on historical episode payment data (3 years of historical Medicare payment data grouped into CJR episodes according to the episode definition as described in § 510.200(b)) prior to the application of the effective discount factor or applicable discount factor, as described in § 510.300(c).

Episode of care (or Episode) means all Medicare Part A and B items and services described in § 510.200(b) (and excluding the items and services described in § 510.200(d)) that are furnished to a beneficiary described in § 510.205 during the time period that begins with the beneficiary's admission to an anchor hospitalization or, on or after July 4, 2021, the date of admission to an anchor hospitalization or the date of the anchor procedure, as applicable, and ends on the 90th day after the following, as applicable:

(1) The date of discharge from the anchor hospitalization (with the day of discharge itself being counted as the first day of the 90-day post-discharge period); or

(2) The date of service for the anchor procedure.

ESRD stands for end stage renal disease.

Gainsharing payment means a payment from a participant hospital to a CJR collaborator, under a sharing arrangement, composed of only reconciliation payments or internal cost savings or both.

HCAHPS stands for Hospital Consumer Assessment of Healthcare Providers and Systems.

HCPCS stands for Healthcare Common Procedure Coding System.

HHA means a Medicare-enrolled home health agency.

Historical episode payment means the expenditures for historical episodes that occurred during the historical period used to determine the episode benchmark price.

Hospital means a provider subject to the prospective payment system specified in § 412.1(a)(1) of this chapter.

ICD-CM stands for International Classification of Diseases, Clinical Modification.

Inpatient prospective payment systems (IPPS) means the payment systems for subsection (d) hospitals as defined in section 1886(d)(1)(B) of the Act.

Internal cost savings means the measurable, actual, and verifiable cost savings realized by the participant hospital resulting from care redesign undertaken by the participant hospital in connection with providing items and services to beneficiaries within specific CJR episodes of care. Internal cost savings does not include savings realized by any individual or entity that is not the participant hospital.

IPF stands for inpatient psychiatric facility.

IRF stands for inpatient rehabilitation facility.

Low-volume hospital means a hospital identified by CMS as having fewer than 20 LEJR episodes in total across the 3 historical years of data used to calculate the performance year 1 CJR episode target prices.

Lower-extremity joint replacement (LEJR) means any procedure that is within MS-DRG 469 or 470, or, on or after October 1, 2020, MS-DRG 521 or 522, including lower-extremity joint replacement procedures or reattachment of a lower extremity.

LTCH stands for long-term care hospital.

Mandatory MSA means an MSA designated by CMS as a mandatory participation MSA in accordance with § 510.105(a).

Medicare severity diagnosis-related group (MS-DRG) means, for the purposes of this model, the classification of inpatient hospital discharges updated in accordance with § 412.10 of this chapter.

Medicare-dependent, small rural hospital (MDH) means a specific type of hospital that meets the classification criteria specified under § 412.108 of this chapter.

Member of the NPPGP or NPPGP member means a nonphysician practitioner or therapist who is an owner or employee of an NPPGP and who has reassigned to the NPPGP his or her right to receive Medicare payment.

Member of the PGP or PGP member means a physician, nonphysician practitioner, or therapist who is an owner or employee of the PGP and who has reassigned to the PGP his or her right to receive Medicare payment.

Member of the TGP or TGP member means a therapist who is an owner or employee of a TGP and who has reassigned to the TGP his or her right to receive Medicare payment.

Metropolitan Statistical Area (MSA) means a core-based statistical area associated with at least one urbanized area that has a population of at least 50,000.

Net payment reconciliation amount (NPRA) means the amount determined in accordance with § 510.305(e) or (m).

Nonphysician practitioner means (except for purposes of subpart G of this part) one of the following:

(1) A physician assistant who satisfies the qualifications set forth at § 410.74(a)(2)(i) and (ii) of this chapter.

(2) A nurse practitioner who satisfies the qualifications set forth at § 410.75(b) of this chapter.

(3) A clinical nurse specialist who satisfies the qualifications set forth at § 410.76(b) of this chapter.

(4) A certified registered nurse anesthetist (as defined at § 410.69(b)).

(5) A clinical social worker (as defined at § 410.73(a)).

(6) A registered dietician or nutrition professional (as defined at § 410.134).

NPI stands for National Provider Identifier.

NPPGP means an entity that is enrolled in Medicare as a group practice, includes at least one owner or employee who is a nonphysician practitioner, does not include a physician owner or employee, and has a valid and active TIN.

OIG stands for the Department of Health and Human Services Office of the Inspector General.

OP THA/OP TKA means a total hip arthroplasty or total knee arthroplasty, respectively, for which the institutional claim is billed by the hospital through the OPPS.

OPPS stands for the outpatient prospective payment system.

PAC stands for post-acute care.

Participant hospital means one of the following:

(1) During performance years 1 and 2 of the CJR model and the period from January 1, 2018 to January 31, 2018 of performance year 3, a hospital (other than a hospital excepted under § 510.100(b)) with a CCN primary address located in one of the geographic areas selected for participation in the CJR model in accordance with § 510.105.

(2) Between February 1, 2018 and September 30, 2021 a hospital (other than a hospital excepted under § 510.100(b)) that is one of the following:

(i) A hospital with a CCN primary address located in a mandatory MSA as of February 1, 2018 that is not a rural hospital or a low-volume hospital on that date.

(ii) A hospital that is a rural hospital or low-volume hospital with a CCN primary address located in a mandatory MSA that makes an election to participate in the CJR model in accordance with § 510.115.

(iii) A hospital with a CCN primary address located in a voluntary MSA that makes an election to participate in the CJR model in accordance with § 510.115.

(3) Beginning October 1, 2021, a hospital that is not a rural hospital or a low-volume hospital as defined in § 510.2, as of July 4, 2021 (based on the date of the CMS notification letter and not the effective date of the rural reclassification, if applicable) with a CCN primary address located in a mandatory MSA.

PBPM stands for per-beneficiary-per-month.

Performance year means one of the years in which the CJR model is being tested. Performance years for the model correlate to calendar years with the exceptions of performance year 1, which is April 1, 2016 through December 31, 2016, performance year 5, which is January 1, 2020 through September 30, 2021, and performance year 6 which is October 1, 2021 through December 31, 2022. For reconciliation purposes, performance year 5 is divided into two subsets, performance year subset 5.1 (January 1, 2020 through December 31, 2020) and performance year subset 5.2 (January 1, 2021 through September 30, 2021).

PGP stands for physician group practice.

Physician has the meaning set forth in section 1861(r) of the Act.

Post-episode spending amount means the sum of Medicare Parts A and B payments for items and services that are furnished to a beneficiary within 30 days after the end of the beneficiary's episode.

Provider of outpatient therapy services means an entity that is enrolled in Medicare as a provider of therapy services and furnishes one or more of the following:

(1) Outpatient physical therapy services as defined in § 410.60 of this chapter.

(2) Outpatient occupational therapy services as defined in § 410.59 of this chapter.

(3) Outpatient speech-language pathology services as defined in § 410.62 of this chapter.

Quality-adjusted target price means the dollar amount assigned to CJR episodes as the result of adjusting the episode benchmark price by the participant hospital's effective discount factor or applicable discount factor based on the participant hospital's quality category, as described in §§ 510.300(c) and 510.315(f).

Quality improvement points are points that CMS adds to a participant hospital's composite quality score for a measure if the hospital's performance percentile on an individual quality measure for performance years 2 through 4 and 6 through 8, or for performance year subsets of performance year 5, increases from the previous performance year or performance year subset by at least 2 deciles on the performance percentile scale, as described in § 510.315(d). For performance year 1, CMS adds quality improvement points to a participant hospital's composite quality score for a measure if the hospital's performance percentile on an individual quality measure increases from the corresponding time period in the previous year by at least 2 deciles on the performance percentile scale, as described in § 510.315(d).

Quality performance points are points that CMS adds to a participant hospital's composite quality score for a measure based on the performance percentile scale and for successful data submission of patient-reported outcomes.

Reconciliation payment means a payment made by CMS to a CJR participant hospital as determined in accordance with § 510.305(f) or (l).

Reconciliation target price means, for performance years 6 through 8, the target price applied to an episode at reconciliation, as determined in accordance with § 510.301.

Region means one of the nine U.S. census divisions, as defined by the U.S. Census Bureau.

Repayment amount means the amount owed by a participant hospital to CMS, as reflected on a reconciliation report.

Rural hospital means an IPPS hospital that meets one of the following definitions:

(1) Is located in a rural area as defined under § 412.64 of this chapter.

(2) Is located in a rural census tract defined under § 412.103(a)(1) of this chapter.

(3) Has reclassified as a rural hospital under § 412.103 of this chapter.

Rural referral center (RRC) has the same meaning given this term under § 412.96 of this chapter.

Sharing arrangement means a financial arrangement between a participant hospital and a CJR collaborator for the sole purpose of making gainsharing payments or alignment payments under the CJR model.

SNF stands for skilled nursing facility.

Sole community hospital (SCH) means a hospital that meets the classification criteria specified in § 412.92 of this chapter.

TGP means an entity that is enrolled in Medicare as a therapy group in private practice, includes at least one owner or employee who is a therapist in private practice, does not include an owner or employee who is a physician or nonphysician practitioner, and has a valid and active TIN.

Therapist means one of the following individuals as defined at § 484.4 of this chapter:

(1) Physical therapist.

(2) Occupational therapist.

(3) Speech-language pathologist.

Therapist in private practice means a therapist that—

(1) Complies with the special provisions for physical therapists in private practice in § 410.60(c) of this chapter;

(2) Complies with the special provisions for occupational therapists in private practice in § 410.59(c) of this chapter; or

(3) Complies with the special provisions for speech-language pathologists in private practice in § 410.62(c) of this chapter.

TIN stands for taxpayer identification number.

TKA/THA stands for total knee arthroplasty/total hip arthroplasty.

Voluntary MSA means an MSA designated by CMS as a voluntary participation MSA in accordance with § 510.105(a).

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 610, 611, Jan. 3, 2017; 82 FR 57103, Dec. 1, 2017; 85 FR 19292, Apr. 6, 2020; 85 FR 71198, Nov. 6, 2020; 86 FR 23569, May 3, 2021]

§ 510.100 Episodes being tested.

(a) Initiation of an episode. An episode is initiated when, with respect to a beneficiary described in § 510.205—

(1) The participant hospital admits the beneficiary for an anchor hospitalization; or

(2) On or after July 4, 2021, an anchor procedure is performed at the participant hospital.

(b) Exclusions. A hospital is excluded from being a participant hospital, but only so long as any of the following conditions apply:

(1) The hospital is an episode initiator for an LEJR episode in the risk-bearing period of Models 2 or 4 of BPCI.

(2) The hospital is participating in Model 1 of BPCI.

(3) These exclusions cease to apply as of the date that the hospital no longer meets any of the conditions specified in this paragraph.

[80 FR 73540, Nov. 24, 2015, as amended at 86 FR 23570, May 3, 2021]

§ 510.105 Geographic areas.

(a) General. The geographic areas for inclusion in the CJR model are obtained based on a stratified random sampling of certain MSAs in the United States.

(1) All counties within each of the selected MSAs are selected for inclusion in the CJR model.

(2) Beginning with performance year 3, the selected MSAs are designated as either mandatory participation MSAs or voluntary participation MSAs.

(3) Beginning with performance year 6, only the 34 MSAs designated as mandatory participation MSAs as of performance year 3.

(b) Stratification criteria. Geographic areas in the United States are stratified according to the characteristics that CMS determines are necessary to ensure that the model is tested on a broad range of different types of hospitals that may face different obstacles and incentives for improving quality and controlling costs.

(c) Exclusions. CMS excludes from the selection of geographic areas MSAs that met the following criteria:

(1) Had fewer than 400 episodes between July 1, 2013 and June 30, 2014.

(2) Had fewer than 400 non-Model 1, 2, or 4 BPCI episodes as of October 1, 2015.

(3) Failed either or both of the following rules regarding participation in BPCI:

(i) More than 50 percent of eligible episodes initiated in a BPCI Model 2 or 4 initiating hospital.

(ii) More than 50 percent of eligible episodes that included SNF or HHA services, where the SNF or HHA services were furnished by a BPCI Model 3 initiating HHA or SNF.

(4) For MSAs including both Maryland and non-Maryland counties, more than 50 percent of eligible episodes were initiated at a Maryland hospital.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 57103, Dec. 1, 2017; 86 FR 23570, May 3, 2021]

§ 510.110 Access to records and retention.

Participant hospitals, CJR collaborators, collaboration agents, downstream collaboration agents, and any other individuals or entities performing CJR activities must do all of the following:

(a) Allow the Government, including CMS, OIG, HHS and the Comptroller General or their designees, scheduled and unscheduled access to all books, contracts, records, documents and other evidence (including data related to utilization and payments, quality criteria, billings, lists of CJR collaborators, sharing arrangements, distribution arrangements, downstream distribution arrangements and the documentation required under §§ 510.500(d) and 510.525(c)) sufficient to enable the audit, evaluation, inspection or investigation of any of the following:

(1) The individual's or entity's compliance with CJR model requirements.

(2) The calculation, distribution, receipt, or recoupment of gainsharing payments, alignment payments, distribution payments, and downstream distribution payments.

(3) The obligation to repay any reconciliation payments owed to CMS.

(4) The quality of the services furnished to a CJR beneficiary during a CJR episode.

(5) The sufficiency of CJR beneficiary notifications.

(6) The accuracy of the CJR participant hospital's submissions under CEHRT use requirements.

(b) Maintain all such books, contracts, records, documents, and other evidence for a period of 10 years from the last day of the participant hospital's participation in the CJR model or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless—

(1) CMS determines a particular record or group of records should be retained for a longer period and notifies the participant hospital at least 30 calendar days before the disposition date; or

(2) There has been a dispute or allegation of fraud or similar fault against the participant hospital, CJR collaborator, collaboration agents, downstream collaboration agent, or any other individual or entity performing CJR activities in which case the records must be maintained for 6 years from the date of any resulting final resolution of the dispute or allegation of fraud or similar fault.

[82 FR 612, Jan. 3, 2017]

§ 510.115 Voluntary participation election.

(a) General. To continue participation in performance year 3 and participate in performance year 4 and performance year 5, the following hospitals must submit a written participation election letter as described in paragraph (c) of this section during the voluntary participation election period specified in paragraph (b) of this section:

(1) Hospitals (other than those excluded under § 510.100(b)) with a CCN primary address in a voluntary MSA.

(2) Low-volume hospitals with a CCN primary address in a mandatory MSA.

(3) Rural hospitals with a CCN primary address in a mandatory MSA.

(b) Voluntary participation election period. The voluntary participation election period begins on January 1, 2018 and ends on January 31, 2018.

(c) Voluntary participation election letter. The voluntary participation election letter serves as the model participation agreement. CMS accepts the voluntary participation election letter if the letter meets all of the following criteria:

(1) Includes the following:

(i) Hospital name.

(ii) Hospital address.

(iii) Hospital CCN.

(iv) Hospital contact name, telephone number, and email address.

(v) Model name (that is, CJR model).

(2) Includes a certification that the hospital will—

(i) Comply with all applicable requirements of this part and all other laws and regulations applicable to its participation in the CJR model; and

(ii) Submit data or information to CMS that is accurate, complete and truthful, including, but not limited to, the participation election letter and any quality data or other information that CMS uses in its reconciliation processes.

(3) Is signed by the hospital administrator, CFO or CEO.

(4) Is submitted in the form and manner specified by CMS.

[82 FR 57103, Dec. 1, 2017]

§ 510.120 CJR participant hospital CEHRT track requirements.

(a) CJR CEHRT use. For performance years 2 through 8, CJR participant hospitals choose either of the following:

(1) CEHRT use. Participant hospitals attest in a form and manner specified by CMS to their use of CEHRT as defined in § 414.1305 of this chapter to document and communicate clinical care with patients and other health professionals.

(2) No CEHRT use. Participant hospitals do not attest in a form and manner specified by CMS to their use of CEHRT as defined in § 414.1305 of this chapter to document and communicate clinical care with patients and other health professionals.

(b) Clinician financial arrangements list. Each participant hospital that chooses CEHRT use as provided in paragraph (a)(1) of this section must submit to CMS a clinician financial arrangements list in a form and manner specified by CMS on a no more than quarterly basis. The list must include the following information on individuals and entities for the period of the CJR performance year specified by CMS:

(1) CJR collaborators. For each physician, nonphysician practitioner, or therapist in private practice who is a CJR collaborator during the period of the CJR performance year specified by CMS:

(i) The name, TIN, and NPI of the CJR collaborator.

(ii) The start date and, if applicable, end date, for the sharing arrangement between the CJR participant hospital and the CJR collaborator.

(2) Collaboration agents. For each physician, nonphysician practitioner, or therapist who is a collaboration agent during the period of the CJR performance year specified by CMS:

(i) The name and TIN of the CJR collaborator and the name, TIN, and NPI of the collaboration agent.

(ii) The start date and, if applicable, end date, for the distribution arrangement between the CJR collaborator and the collaboration agent.

(3) Downstream collaboration agents. For each physician, nonphysician practitioner, or therapist who is a downstream collaboration agent during the period of the CJR performance year specified by CMS—

(i) The name and TIN of the CJR collaborator and the name and TIN of the collaboration agent and the name, TIN, and NPI of the downstream collaboration agent.

(ii) The start date and, if applicable, end date, for the downstream distribution arrangement between the collaboration agent and the downstream collaboration agent.

(c) Clinician engagement list. Each participant hospital that chooses CEHRT use as provided in paragraph (a)(1) of this section must submit to CMS a clinician engagement list in a form and manner specified by CMS on a no more than quarterly basis. This list must include the following information on individuals for the period of the performance year specified by CMS:

(1) For each physician, nonphysician practitioner, or therapist who is not a CJR collaborator during the period of the CJR model performance year specified by CMS but who does have a contractual relationship with the participant hospital based at least in part on supporting the participant hospital's quality or cost goals under the CJR model during the period of the performance year specified by CMS:

(i) The name, TIN, and NPI of the individual.

(ii) The start date and, if applicable, the end date for the contractual relationship between the individual and participant hospital.

(2) The CJR participant hospital must retain and provide access to the required documentation in accordance with § 510.110.

(d) Attestation to no individuals. If there are no individuals that meet the requirements to be reported, as specified in paragraphs (b)(1) through (3) or paragraph (c) of this section, the participant hospital must attest in a form and manner required by CMS that there are no individuals to report.

(e) Documentation requirements. (1) Each participant hospital that chooses CEHRT use as provided in paragraph (a)(1) of this section must maintain documentation of their attestation to CEHRT use, clinician financial arrangements lists, and clinician engagement lists.

(2) The participant hospital must retain and provide access to the required documentation in accordance with § 510.110.

[82 FR 612, Jan. 3, 2017, as amended at 82 FR 57103, Dec. 1, 2017; 86 FR 23570, May 3, 2021]

§ 510.200 Time periods, included and excluded services, and attribution.

(a) Time periods. All episodes must begin on or after April 1, 2016 and end on or before December 31, 2024.

(b) Included services. All Medicare Parts A and B items and services are included in the episode, except as specified in paragraph (d) of this section. These services include, but are not limited to, the following:

(1) Physicians' services.

(2) Inpatient hospital services (including hospital readmissions).

(3) IPF services.

(4) LTCH services.

(5) IRF services.

(6) SNF services.

(7) HHA services.

(8) Hospital outpatient services.

(9) Outpatient therapy services.

(10) Clinical laboratory services.

(11) DME.

(12) Part B drugs and biologicals.

(13) Hospice services.

(14) PBPM payments under models tested under section 1115A of the Act.

(15) The surgeon's Part B claim for the LEJR procedure dated within the 3 days prior to an inpatient admission, if the LEJR procedure was performed at the participant hospital on an outpatient basis but the patient was subsequently admitted as an inpatient, resulting in an anchor hospitalization.

(c) Episode attribution. All items and services included in the episode are attributed to the participant hospital at which the anchor hospitalization or anchor procedure, as applicable, occurs.

(d) Excluded services. The following items, services, and payments are excluded from the episode:

(1) Hemophilia clotting factors provided in accordance with § 412.115 of this chapter.

(2) New technology add-on payments, as defined in part 412, subpart F of this chapter.

(3) Transitional pass-through payments for medical devices as defined in § 419.66 of this chapter.

(4) Items and services unrelated to the anchor hospitalization or the anchor procedure. Excluded services include, but are not limited, to the following:

(i) Inpatient hospital admissions for MS-DRGs that group to the following categories of diagnoses:

(A) Oncology.

(B) Trauma medical.

(C) Chronic disease surgical, such as prostatectomy.

(D) Acute disease surgical, such as appendectomy.

(ii) Medicare Part B services, as identified by the principal ICD-CM diagnosis code on the claim (based on the ICD-CM version in use during the performance year) that group to the following categories of diagnoses:

(A) Acute disease diagnoses, such as severe head injury.

(B) Certain chronic disease diagnoses, as specified by CMS on a diagnosis-by-diagnosis basis depending on whether the condition was likely to have been affected by the LEJR procedure and recovery period or whether substantial services were likely to be provided for the chronic condition during the episode. Such chronic disease diagnoses are posted on the CMS Web site and may be revised in accordance with paragraph (e) of this section.

(iii) Certain PBPM payments under models tested under section 1115A of the Act. PBPM model payments that CMS determines to be primarily used for care coordination or care management services for clinical conditions in excluded categories of diagnoses, as described in this paragraph.

(A) The list of excluded PBPM payments is posted on the CMS Web site and are revised in accordance with paragraph (e) of this section.

(B) Notwithstanding the foregoing, all PBPM model payments funded from CMS' Innovation Center appropriation are excluded from the episode.

(5) Certain incentive programs and add on payments under existing Medicare payment systems in accordance with § 510.300(b)(6) of this chapter.

(6) For performance years 1 through 4 and for performance year subsets 5.1 and 5.2, payments for otherwise included items and services in excess of 2 standard deviations above the mean regional episode payment in accordance with § 510.300(b)(5).

(7) For performance years 6 through 8 only, payments for otherwise included items and services in excess of the 99th percentile of regional spending, ranked within each region, for each of the four MS-DRG target price categories, as specified in § 510.300(a)(1) and (6), for performance years 6 through 8, in accordance with § 510.300(b)(5).

(e) Updating the lists of excluded services. (1) The list of excluded MS-DRGs, ICD-CM diagnosis codes, and CMS model PBPM payments are posted on the CMS Web site.

(2) For performance years 1 through 5 only, on an annual basis, or more frequently as needed, CMS updates the list of excluded services to reflect annual coding changes or other issues brought to CMS' attention.

(3) For performance years 1 through 5 only, CMS applies the following standards when revising the list of excluded services for reasons other than to reflect annual coding changes:

(i) Items or services that are directly related to the LEJR procedure or the quality or safety of LEJR care would be included in the episode.

(ii) Items or services for chronic conditions that may be affected by the LEJR procedure or post-surgical care would be related and included in the episode.

(iii) Items and services for chronic conditions that are generally not affected by the LEJR procedure or post-surgical care would be excluded from the episode.

(iv) Items and services for acute clinical conditions not arising from existing, episode-related chronic clinical conditions or complications of LEJR surgery would be excluded from the episode.

(v) PBPM payments under CMS models determined to be primarily used for care coordination or care management services for clinical conditions in excluded categories of diagnoses, as described in § 510.200(d), would be excluded from the episode.

(4) For performance years 1 through 5 only, CMS posts the following to the CMS website:

(i) Potential revisions to the exclusion to allow for public comment; and

(ii) An updated exclusions list after consideration of public comment.

(5) For performance years 6 through 8, the list of excluded services posted on the CMS website as it appears at the beginning of performance year 5 will apply and will not be updated.

[80 FR 73540, Nov. 24, 2015, as amended at 85 FR 19292, Apr. 6, 2020; 85 FR 71199, Nov. 6, 2020; 86 FR 23570, May 3, 2021]

§ 510.205 Beneficiary inclusion criteria.

(a) Episodes tested in the CJR model include only those in which care is furnished to beneficiaries who meet all of the following criteria upon admission to the anchor hospitalization:

(1) Are enrolled in Medicare Parts A and Part B.

(2) Eligibility for Medicare is not on the basis of end stage renal disease, as described in § 406.13 of this chapter.

(3) Are not enrolled in any managed care plan (for example, Medicare Advantage, health care prepayment plans, or cost-based health maintenance organizations).

(4) Are not covered under a United Mine Workers of America health care plan.

(5) Have Medicare as their primary payer.

(6) For episodes beginning on or after July 1, 2017, are not prospectively assigned to—

(i) An ACO in the Next Generation ACO model;

(ii) An ACO in a track of the Comprehensive ESRD Care Model incorporating downside risk for financial losses; or

(iii) A Shared Savings Program ACO in the ENHANCED track (formerly Track 3).

(b) If at any time during the episode a beneficiary no longer meets all of the criteria in this section, the episode is canceled in accordance with § 510.210(b).

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 613, Jan. 3, 2017; 86 FR 23571, May 3, 2021]

§ 510.210 Determination of the episode.

(a) General. (1) An episode begins with the admission of a Medicare beneficiary described in § 510.205 to a participant hospital for an anchor hospitalization and ends on the 90th day after the date of discharge, with the day of discharge itself being counted as the first day in the 90-day post-discharge period.

(2) On or after July 4, 2021, an episode—

(i) Begins and ends in the manner specified in paragraph (a)(1) of this section; or

(ii) Begins on the date of service of an anchor procedure furnished to a Medicare beneficiary described in § 510.205 and ends on the 90th day after the date of service of the anchor procedure.

(b) Cancellation of an episode. The episode is canceled and is not included in the determination of NPRA as specified in § 510.305 if any of the following occur:

(1) The beneficiary does any of the following during the episode:

(i) Ceases to meet any criterion listed in § 510.205.

(ii) Is readmitted to any participant hospital for another anchor hospitalization, or, on or after July 4, 2021, receives an anchor procedure at any participant hospital.

(iii) Initiates an LEJR episode under BPCI.

(iv) Dies.

(2) For performance year 3, the participant hospital did not submit a participation election letter that was accepted by CMS to continue participation in the model.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 57104, Dec. 1, 2017; 86 FR 23571, May 3, 2021]

§ 510.300 Determination of episode quality-adjusted target prices.

(a) General. CMS establishes episode quality-adjusted target prices for participant hospitals for each performance year or performance year subset of the model as specified in this section. Episode quality-adjusted target prices are established according to the following:

(1) MS-DRG and fracture status. MS-DRG assigned at discharge for anchor hospitalization and present of hip fracture diagnosis for anchor hospitalization—

(i)(A) MS-DRG 469 with hip fracture; or

(B) For episodes beginning on or after October 1, 2020, MS-DRG 521;

(ii) MS-DRG 469 without hip fracture;

(iii)(A) MS-DRG 470 with hip fracture; or

(B) For episodes beginning on or after October 1, 2020, MS-DRG 522; or

(iv) MS-DRG 470 without hip fracture.

(2) Applicable time period for performance year or performance year subset episode quality-adjusted target prices. For performance years 1 through 4 and performance year subset 5.1 only, episode quality-adjusted target prices are updated to account for Medicare payment updates no less than 2 times per year, for updated quality-adjusted target prices effective October 1 and January 1, and at other intervals if necessary.

(3) Episodes that straddle performance years, performance year subsets, or payment updates. The quality-adjusted target price that applies to the episode is one of the following:

(i) For episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021, the date of admission for the anchor hospitalization.

(ii) For episodes beginning on or after July 4, 2021 and ending on or after October 1, 2021, the date of the anchor procedure or the date of admission for the anchor hospitalization, as applicable.

(4) Identifying episodes with hip fracture. CMS develops a list of ICD-CM hip fracture diagnosis codes that, when reported in the principal diagnosis code files on the claim for the anchor hospitalization or anchor procedure, represent a bone fracture for which a hip replacement procedure, either a partial hip arthroplasty or a total hip arthroplasty, could be the primary surgical treatment. The list of ICD-CM hip fracture diagnosis codes used to identify hip fracture episodes can be found on the CMS website. Beginning on October 1, 2020, hip fracture episodes initiated by an anchor hospitalization will be identified by MS-DRGs 521 and 522.

(i) For performance years 1 through 5 only, on an annual basis, or more frequently as needed, CMS updates the list of ICD-CM hip fracture diagnosis codes to reflect coding changes or other issues brought to CMS' attention.

(ii) For performance years 1 through 5 only, CMS applies the following standards when revising the list of ICD-CM hip fracture diagnosis codes.

(A) The ICD-CM diagnosis code is sufficiently specific that it represents a bone fracture for which a physician could determine that a hip replacement procedure, either a Partial Hip Arthroplasty (PHA) or a THA, could be the primary surgical treatment.

(B) The ICD-CM diagnosis code is the primary reason (that is, principal diagnosis code) for the anchor hospitalization.

(iii) For performance years 1 through 5 only, CMS posts the following to the CMS website:

(A) Potential ICD-CM hip fracture diagnosis codes for public comment; and

(B) A final ICD-CM hip fracture diagnosis code list after consideration of public comment.

(iv) For performance years 6 through 8, the hip fracture diagnosis code list posted at https://innovation.cms.gov/Files/worksheets/cjr-icd10hipfracturecodes.xlsx as it appears at the beginning of performance year 5 will not be updated. The hip fracture diagnosis code list will be used to identify hip fracture episodes initiated by an anchor procedure in performance years 6 through 8.

(5) Quality performance. Quality-adjusted target prices reflect effective discount factors or applicable discount factors based on a hospital's composite quality score, as specified in §§ 510.300(c) and 510.315(f).

(6) For episodes beginning on or after July 4, 2021 that are initiated by an anchor procedure, permitted OP TKAs and OP THAs are grouped with MS-DRG 470 or MS-DRG 522 episodes as follows:

(i) Permitted OP THAs with hip fracture group with MS-DRG 522.

(ii) Permitted OP THAs without hip fracture and permitted OP TKAs group with MS-DRG 470.

(b) Episode quality-adjusted target price. (1) CMS calculates quality-adjusted target prices based on a blend of each participant hospital's hospital-specific and regional episode expenditures. The region corresponds to the U.S. Census Division associated with the primary address of the CCN of the participant hospital and the regional component is based on all hospitals in said region, except as follows. In cases where an MSA selected for participation in CJR spans more than one U.S. Census Division, the entire MSA will be grouped into the U.S. Census Division where the largest city by population in the MSA is located for quality-adjusted target price and reconciliation calculations. The calendar years used for historical expenditure calculations are as follows:

(i) Episodes beginning in 2012 through 2014 for performance years 1 and 2.

(ii) Episodes beginning in 2014 through 2016 for performance years 3 and 4.

(iii) Episodes beginning in 2016 through 2018 for each of performance year subsets 5.1 and 5.2.

(iv) Episodes beginning in 2019 for performance year 6.

(v) Episodes beginning in 2021 for performance year 7.

(vi) Episodes beginning in 2022 for performance year 8.

(2) Specifically, the blend consists of the following:

(i) Two-thirds of the participant hospital's own historical episode payments and one-third of the regional historical episode payments for performance years 1 and 2.

(ii) One-third of the hospital's own historical episode payments and two-thirds of the regional historical episode payments for performance year 3.

(iii) Regional historical episode payments for performance year 4, for each subset of performance year 5, and performance years 6 through 8.

(3) Exception for low-volume hospitals. Quality-adjusted target prices for participant hospitals with fewer than 20 CJR episodes in total across the 3 historical years of data used to calculate the quality-adjusted target price are based on 100 percent regional historical episode payments.

(4) Exception for recently merged or split hospitals. Hospital-specific historical episode payments for participant hospitals that have undergone a merger, consolidation, spin off or other reorganization that results in a new hospital entity without 3 full years of historical claims data are determined using the historical episode payments attributed to their predecessor(s).

(5) Exception for high episode spending. (i) For performance years 1 through 4, and for performance year 5, each subset thereof, episode payments are capped at 2 standard deviations above the mean regional episode payment for both the hospital-specific and regional components of the quality-adjusted target price.

(ii) For performance years 6 through 8, episode payments are capped at the 99th percentile of regional spending for each of the four MS-DRG categories, as specified in § 510.300(a)(1) and (6).

(6) Exclusion of incentive programs and add-on payments under existing Medicare payment systems. Certain incentive programs and add-on payments are excluded from historical episode payments by using, with certain modifications, the CMS Price (Payment) Standardization Detailed Methodology used for the Medicare spending per beneficiary measure in the Hospital Value-Based Purchasing Program.

(7) Communication of episode quality-adjusted target prices. CMS communicates episode quality-adjusted target prices to participant hospitals before the performance period in which they apply.

(8) Inclusion of reconciliation payments and repayments. For performance years 3, 4, and each of performance year subsets 5.1 and 5.2 only, reconciliation payments and repayment amounts under § 510.305(f)(2) and (3) and from LEJR episodes included in the BPCI initiative are included in historical episode payments.

(c) Discount factor. A participant hospital's episode quality-adjusted target prices incorporate discount factors to reflect Medicare's portion of reduced expenditures from the CJR model as described in this section.

(1) Discount factors affected by the quality incentive payments and the composite quality score. In all performance years and performance year subsets, the discount factor may be affected by the quality incentive payment and composite quality score as provided in § 510.315 to create the effective discount factor or applicable discount factor used for calculating reconciliation payments and repayment amounts. The quality-adjusted target prices incorporate the effective or applicable discount factor at reconciliation.

(2) Discount factor for reconciliation payments. The discount factor for reconciliation payments in all performance years and performance year subsets is 3.0 percent.

(3) Discount factors for repayment amounts. The discount factor for repayment amounts is—

(i) Not applicable in performance year 1, as the requirement for hospital repayment under the CJR model is waived in performance year 1;

(ii) In performance years 2 and 3, 2.0 percent; and

(iii) In performance years 4, each subset of performance year 5, and performance years 6 through 8, 3.0 percent.

(d) Data sharing. (1) CMS makes available to participant hospitals, through the most appropriate means, data that CMS determines may be useful to participant hospitals to do the following:

(i) Determine appropriate ways to increase the coordination of care.

(ii) Improve quality.

(iii) Enhance efficiencies in the delivery of care.

(iv) Otherwise achieve the goals of the CJR model described in this section.

(2) Beneficiary-identifiable data. (i) CMS makes beneficiary-identifiable data available to a participant hospital in accordance with applicable privacy laws and only in response to the hospital's request for such data for a beneficiary who has been furnished a billable service by the participant hospital corresponding to the episode definitions for CJR.

(ii) The minimum data necessary to achieve the goals of the CJR model, as determined by CMS, may be provided under this section for a participant hospital's baseline period and no less frequently than on a quarterly basis throughout the hospital's participation in the CJR model.

[80 FR 73540, Nov. 24, 2015, as amended at 81 FR 11451, Mar. 4, 2016; 82 FR 613, Jan. 3, 2017; 82 FR 57104, Dec. 1, 2017; 85 FR 71199, Nov. 6, 2020; 86 FR 23571, May 3, 2021]

§ 510.301 Determination of reconciliation target prices.

Beginning with performance year 6, the quality-adjusted target price computed under § 510.300 is further adjusted for risk and market trends as described in this section to arrive at the reconciliation target price amount, with the exception of episodes that are reconciled in performance year 6 but subject to a performance year subset 5.2 target price. Specifically:

(a) Risk adjustment. (1) The quality-adjusted target prices computed under § 510.300 are risk adjusted at a beneficiary level by a CJR HCC count risk adjustment factor, an age bracket risk adjustment factor, and a dual-eligibility status risk adjustment factor. All three factors are binary, yes/no variables, meaning that a beneficiary either does or does not meet the criteria for a specific variable.

(i) The CJR HCC count risk adjustment factor uses five variables, representing beneficiaries with zero, one, two, three, or four or more CMS-HCC conditions.

(ii) The age bracket risk adjustment factor uses four variables, representing beneficiaries aged—

(A) Less than 65 years;

(B) 65 to 74 years;

(C) 75 years to 84 years; or

(D) 85 years or more.

(iii) The dual-eligibility status factor uses two variables, representing beneficiaries that are eligible for full Medicaid benefits or beneficiaries that are not eligible for full Medicaid benefits.

(2) All three factors are computed prior to the start of performance years 6 and 8 via a linear regression analysis. The regression analysis is computed using 1 year of claims data as follows:

(i) For performance year 6, CMS uses claims data with dates of service dated January 1, 2019 to December 31, 2019.

(ii) For performance year 7, CMS uses the same regression analysis results and corresponding coefficients that were calculated for performance year 6.

(iii) For performance year 8, CMS uses claims data with dates of service dated January 1, 2021 to December 31, 2021.

(3)(i) The dependent variable in the annual regression that produces the risk adjustment coefficients is equal to the difference between the log transformed target price calculated under § 510.300 and the capped episode costs as described in § 510.300(b)(5)(ii).

(ii) The independent variables are binary values assigned to each CJR HCC count variable, age bracket variable and dual-eligibility status variable.

(iii) Using these variables, the annual regression produces exponentiated coefficients to determine the anticipated marginal effect of each risk adjustment factor on episode costs. CMS transforms, or exponentiate, these coefficients in order to “reverse” the previous logarithmic transformation, and the resulting coefficients are the CJR HCC count risk adjustment factor, the age bracket risk adjustment factor, and the dual-eligibility status factor that would be used during reconciliation for the subsequent performance year.

(4)(i) At the time of reconciliation, the quality adjusted target prices computed under § 510.300 are risk adjusted at the beneficiary level by applying the applicable CJR HCC count risk adjustment factor, the age bracket risk adjustment factor, and the dual-eligibility risk adjustment factor specific to the beneficiary in the episode.

(ii)(A) For the CJR HCC count risk adjustment factor, applicable means the coefficient that applies to the CMS-HCC condition count for the beneficiary in the episode;

(B) For the age bracket risk adjustment factor, applicable means the coefficient for the age bracket into which the beneficiary falls on the first day of the episode; and

(C) For the dual-eligibility risk adjustment factor, applicable means the coefficient for beneficiaries that are eligible for full Medicaid benefits on the first day of the episode.

(5)(i) The risk-adjusted target prices are normalized at reconciliation to remove the overall impact of adjusting for age, CJR HCC count, and dual-eligibility status on the national average target price.

(ii) The normalization factor is the national mean of the target price for all episode types divided by the national mean of the risk-adjusted target price.

(iii) CMS applies the normalization factor to the previously calculated, beneficiary-level, risk-adjusted target prices specific to each episode region and MS-DRG combination (as specified in paragraph (a)(4) of this section).

(iv) These normalized target prices are then further adjusted for market trends (as specified in paragraph (b) of this section) and quality performance (as specified at § 510.300) to become the reconciliation target prices, which are compared to actual episode costs at reconciliation, as specified in § 510.305(m)(1)(i).

(b) Market trend adjustment factor. (1) The risk-adjusted quality-adjusted target price computed under § 510.300 and paragraph (a) of this section is further adjusted for market trend changes at the region and MS-DRG level.

(2) This adjustment is accomplished by multiplying each risk-adjusted quality-adjusted target price computed under § 510.300 and paragraph (a) of this section by the applicable market trend adjustment factor.

(3) The applicable market trend adjustment factor is calculated as the percent difference between the average regional MS-DRG episode costs computed using the performance year claims data and comparison average regional MS-DRG fracture episode costs computed using historical calendar year claims data used to calculate the regional target prices in effect for that performance year.

[86 FR 23571, May 3, 2021]

§ 510.305 Determination of the NPRA and reconciliation process.

(a) General. Providers and suppliers furnishing items and services included in the episode bill for such items and services in accordance with existing rules and as if this part were not in effect.

(b) Reconciliation. (1) For performance years 1 through 4 and for each subset of performance year 5, CMS uses a series of reconciliation processes, which CMS performs as described in paragraphs (d) and (f) of this section after the end of each performance year, to establish final payment amounts to participant hospitals for CJR model episodes for a given performance year.

(2) For performance years 6 through 8, CMS conducts one reconciliation process, which CMS performs as described in paragraphs (l) and (m) of this section after the end of each performance year, to establish final payment amounts to participant hospitals for CJR model episodes for a given performance year.

(3) Following the end of each performance year, for performance years 1 through 4 and for performance year 5, each subset thereof, CMS determines actual episode payments for each episode for the performance year (other than episodes that have been canceled in accordance with § 510.210(b)) and determines the amount of a reconciliation payment or repayment amount.

(c) Data used. CMS uses the most recent claims data available to perform each reconciliation calculation.

(d) Annual reconciliation for performance years 1 through 5. (1) Beginning 2 months after the end of each of performance years 1 through 4 and performance year subset 5.1 and 5 months after the end of performance year subset 5.2, CMS does all of the following:

(i) Performs a reconciliation calculation to establish an NPRA for each participant hospital.

(ii) For participant hospitals that experience a reorganization event in which one or more hospitals reorganize under the CCN of a participant hospital performs—

(A) Separate reconciliation calculations (during both initial and subsequent reconciliations for a performance year) for each predecessor participant hospital for episodes where anchor hospitalization admission occurred before the effective date of the reorganization event; and

(B) Reconciliation calculations (during both initial and subsequent reconciliations for a performance year) for each new or surviving participant hospital for episodes where the anchor hospitalization admission occurred on or after the effective date of the reorganization event.

(2) CMS—

(i) Calculates the NPRA for each participant hospital in accordance with paragraph (e) of this section including the adjustments provided for in paragraph (e)(1)(iv) of this section; and

(ii) Assesses whether hospitals meet specified quality requirements under § 510.315.

(e) Calculation of the NPRA for performance years 1 through 5. By comparing the quality-adjusted target prices described in § 510.300 and the participant hospital's actual episode spending for each of performance years 1 through 4, and for performance year 5, each subset thereof, and applying the adjustments in paragraph (e)(1)(v) of this section, CMS establishes an NPRA for each participant hospital for each of performance years 1 through 4 and for performance year 5, each subset thereof.

(1) Initial calculation. In calculating the NPRA for each participant hospital for each of performance years 1 through 4 and each of performance year subsets 5.1 and 5.2, CMS does the following:

(i) Determines actual episode payments for each episode included in the performance year or performance year subset (other than episodes that have been canceled in accordance with § 510.210(b)) using claims data that is available 2 months after the end of the performance year or performance year subset. Actual episode payments are capped, as applicable, at the amount determined in accordance with § 510.300(b)(5) for the performance year or performance year subset at the amount determined in paragraph (k) of this section for episodes affected by extreme and uncontrollable circumstances, or at the quality adjusted target price determined for that episode under § 510.300 for an episode with actual episode payments that include a claim with a COVID-19 diagnosis code and initiate after the earlier of March 31, 2021 or the last day of the emergency period described in paragraph (k)(4) of this section.

(ii) Multiplies each episode quality-adjusted target price by the number of episodes included in the performance year or performance year subset (other than episodes that have been canceled in accordance with § 510.210(b)) to which that episode quality-adjusted target price applies.

(iii) Aggregates the amounts computed in paragraph (e)(1)(ii) of this section for all episodes included in the performance year or performance year subset (other than episodes that have been canceled in accordance with § 510.210(b)).

(iv) Subtracts the amount determined under paragraph (e)(1)(i) of this section from the amount determined under paragraph (e)(1)(iii) of this section.

(v) Applies the following prior to determination of the reconciliation payment or repayment amount:

(A) Limitation on loss. Except as provided in paragraph (e)(1)(v)(C) of this section, the total amount of the NPRA and subsequent reconciliation calculation for a performance year or performance year subset cannot exceed the following:

(1) For performance year 2 only, 5 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year.

(2) For performance year 3, 10 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year.

(3) For performance year 4 and each of performance year subsets 5.1 and 5.2, 20 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year or performance year subset.

(4) As provided in paragraph (i) of this section, the subsequent reconciliation calculation reassesses the limitation on loss for a given performance year by applying the limitations on loss to the aggregate of the 2 reconciliation calculations.

(5) The post-episode spending and ACO overlap calculation amounts in paragraphs (j)(1) and (2) of this section are not subject to the limitation on loss.

(B) Limitation on gain. The total amount of the NPRA and subsequent reconciliation calculation for a performance year or performance year subset cannot exceed the following:

(1) For performance years 1 and 2, 5 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year.

(2) For performance year 3, 10 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year.

(3) For performance year 4 and each of performance year subsets 5.1 and 5.2, 20 percent of the amount calculated in paragraph (e)(1)(iii) of this section for the performance year or performance year subset.

(4) As provided in paragraph (i) of this section, the subsequent reconciliation calculation reassesses the limitation on gain for a given performance year by applying the limitations on gain to the aggregate of the 2 reconciliation calculations.

(5) The post-episode spending and ACO overlap calculation amounts in paragraphs (j)(1) and (j)(2) of this section are not subject to the limitation on gain.

(C) Financial loss limits for rural hospitals, SCHs, MDHs, and RRCs. If a participant hospital is a rural hospital, SCH, MDH, or RRC, then for performance year 2, the total repayment amount for which the participant hospital is responsible due to the NPRA and subsequent reconciliation calculation cannot exceed 3 percent of the amount calculated in paragraph (e)(1)(iii) of this section. For performance years 3 and 4 and for performance year subsets 5.1 and 5.2, the amount cannot exceed 5 percent of the amount calculated in paragraph (e)(1)(iii) of this section.

(f) Determination of reconciliation or repayment amount—(1) Determination of the reconciliation or repayment amount. (i) Subject to paragraph (f)(1)(iii) of this section, for performance year 1, the reconciliation payment (if any) is equal to the NPRA.

(ii) Subject to paragraph (f)(1)(iii) of this section, for performance years 2 through 4 and for each of performance year subsets 5.1 and 5.2, results from the subsequent reconciliation calculation for a prior year's reconciliation as described in paragraph (i) of this section and the post-episode spending and ACO overlap calculations as described in paragraph (j) of this section are added to the current year's NPRA in order to determine the reconciliation payment or repayment amount.

(iii) The reconciliation or repayment amount may be adjusted as provided in § 510.410(b).

(iv) Results from the performance year 6 reconciliation and post-episode spending calculations as described in paragraph (m) of this section are added together in order to determine the reconciliation payment or repayment amount for performance year 6.

(v) Results from the performance year 7 reconciliation and post-episode spending calculations as described in paragraph (m) of this section are added together in order to determine the reconciliation payment or repayment amount for performance year 7.

(vi) Results from the performance year 8 reconciliation and post-episode spending calculations as described in paragraph (m) of this section are added together in order to determine the reconciliation payment or repayment amount for performance year 8.

(2) Reconciliation payment. If the amount described in paragraph (f)(1) of this section is positive and the composite quality score described in § 510.315 is acceptable (defined as greater than or equal to 5.00 and less than 6.9), good (defined as greater than or equal to 6.9 and less than or equal to 15.0), or excellent (defined as greater than 15.0), Medicare pays the participant hospital a reconciliation payment in an amount equal to the amount described in paragraph (f)(1) of this section.

(3) Repayment amount. If the amount described in paragraph (f)(1) of this section is negative, the participant hospital pays to Medicare an amount equal to the amount described in paragraph (f)(1) of this section, in accordance with § 405.371 of this chapter. CMS waives this requirement for performance year 1.

(g) Determination of eligibility for reconciliation based on quality. (1) CMS assesses each participant hospital's performance on quality metrics, as described in § 510.315, to determine whether the participant hospital is eligible to receive a reconciliation payment for a performance year or performance year subset.

(2) If the hospital's composite quality score described in § 510.315 is acceptable (defined as greater than or equal to 5.00 and less than 6.9), good (defined as greater than or equal to 6.9 and less than or equal to 15.0), or excellent (defined as greater than 15.0), and the hospital is determined to have a positive NPRA under § 510.305(e)), the hospital is eligible for a reconciliation payment.

(3) If the hospital's composite quality score described in § 510.315 is below acceptable, defined as less than 4.00 for a performance year or performance year subset, the hospital is not eligible for a reconciliation payment.

(4) If the hospital is found to be engaged in an inappropriate and systemic under delivery of care, the quality of the care provided must be considered to be seriously compromised and the hospital must be ineligible to receive or retain a reconciliation payment for any period in which such under delivery of care was found to occur.

(h) Reconciliation report. CMS issues each participant hospital a CJR reconciliation report for the performance year or performance year subset. Each CJR reconciliation report contains the following:

(1) Information on the participant hospital's composite quality score described in § 510.315.

(2) The total actual episode payments for the participant hospital.

(3) The NPRA.

(4) Whether the participant hospital is eligible for a reconciliation payment or must make a repayment to Medicare.

(5) As applicable, the NPRA and subsequent reconciliation calculation amount for the previous performance year or performance year subset.

(6) As applicable, the post-episode spending amount and ACO overlap calculation for the previous performance year or performance year subset.

(7) The reconciliation payment or repayment amount.

(i) Subsequent reconciliation calculation. (1) Fourteen months after the end of each of performance years 1 through 4 and performance year subset 5.1 and seventeen months after the end of performance year subset 5.2, CMS performs an additional calculation, using claims data available at that time, to account for final claims run-out and any additional episode cancelations due to overlap between the CJR model and other CMS models and programs, or for other reasons as specified in § 510.210(b).

(2) The subsequent calculation for each of performance years 1 through 4 and performance year subset 5.1 occurs concurrently with the first reconciliation process for the following performance year (or in the case of performance year subset 5.1, with the first reconciliation of performance year subset 5.2). If the result of the subsequent calculation is different than zero, CMS applies the stop-loss and stop-gain limits in paragraph (e) of this section to the aggregate calculation of the amounts described in paragraphs (e)(1)(iv) and (i)(1) of this section for that performance year or performance year subset (the initial reconciliation and the subsequent reconciliation calculation) to ensure such amount does not exceed the applicable stop-loss or stop-gain limits. The subsequent reconciliation calculation for performance year subset 5.2 will occur independently in 2023.

(j) Additional adjustments to the reconciliation payment or repayment amount. (1) In order to account for shared savings payments, CMS will reduce the reconciliation payment or increase the repayment amount for the subsequent performance year (for performance years 1 through 4 and performance year subset 5.1) by the amount of the participant hospital's discount percentage that is paid to the ACO in the prior performance year as shared savings. (This amount will be assessed independently for performance year subset 5.2 in 2023.) This adjustment is made only when the participant hospital is a participant or provider/supplier in the ACO and the beneficiary in the CJR episode is assigned to one of the following ACO models or programs:

(i) The Pioneer ACO model.

(ii) The Medicare Shared Savings Program (excluding Track 3 for CJR episodes that initiate on or after July 1, 2017).

(iii) The Comprehensive ESRD Care Initiative (excluding a track with downside risk for CJR episodes that initiate after July 1, 2017).

(iv) The Next Generation ACO model (excluding CJR episodes that initiate on or after July 1, 2017).

(2) If the average post-episode Medicare Parts A and B payments for a participant hospital in the prior performance year or performance year subset is greater than 3 standard deviations above the regional average post-episode payments for the same performance year or performance year subset, then the spending amount exceeding 3 standard deviations above the regional average post-episode payments for the same performance year or performance year subset is subtracted from the net reconciliation or added to the repayment amount for the subsequent performance year for years 1 through 4 and performance year subset 5.1, and assessed independently for performance year subset 5.2.

(k) Extreme and uncontrollable circumstances adjustment. (1) The episode spending adjustments specified in paragraph (k)(2) of this section apply for a participant hospital that has a CCN primary address that meets both of the following:

(i) Is located in an emergency area during an emergency period, as those terms are defined in section 1135(g) of the Act, for which the Secretary has issued a waiver under section 1135; and

(ii) Is located in a county, parish, or tribal government designated in a major disaster declaration under the Stafford Act.

(2)(i) For a non-fracture episode with a date of admission to the anchor hospitalization that is on or within 30 days before the date that the emergency period (as defined in section 1135(g) of the Act) begins, actual episode payments are capped at the target price determined for that episode under § 510.300.

(ii) For a fracture episode with a date of admission to the anchor hospitalization that is on or within 30 days before or after the date that the emergency period (as defined in section 1135(g) of the Act) begins, actual episode payments are capped at the target price determined for that episode under § 510.300.

(3) The following is an extreme and uncontrollable circumstances adjustment for 2019 Novel Coronavirus (previously referred to as 2019-nCoV, now as COVID-19):

(i) The episode spending adjustments specified in paragraph (k)(4) of this section apply for a participant hospital that has a CCN primary address that is located in an emergency area during an emergency period, as those terms are defined in section 1135(g) of the Act, for which the Secretary issued a waiver or modification of requirements under section 1135 of the Act on March 13, 2020.

(ii) [Reserved]

(4) For a fracture or non-fracture episode with a date of admission to the anchor hospitalization that is on or within 30 days before the date that the emergency period (as defined in section 1135(g) of the Act) begins or that occurs on or before March 31, 2021 or the last day of such emergency period, whichever is earlier, actual episode payments are capped at the quality adjusted target price determined for that episode under § 510.300.

(l) Annual reconciliation for performance years 6 through 8. (1) Beginning 6 months after the end of each of performance years 6 through 8, CMS does all of the following:

(i) Performs a reconciliation calculation to establish an NPRA for each participant hospital.

(ii) For participant hospitals that experience a reorganization event in which one or more hospitals reorganize under the CCN of a participant hospital, performs—

(A) Separate reconciliation calculations for each predecessor participant hospital for episodes where the anchor hospitalization admission or the anchor procedure occurred before the effective date of the reorganization event; and

(B) Reconciliation calculations for each new or surviving participant hospital for episodes where the anchor hospitalization admission or anchor procedure occurred on or after the effective date of the reorganization event.

(2) CMS—

(i) Calculates the NPRA for each participant hospital in accordance with paragraph (m) of this section including the adjustments provided for in paragraph (m)(1)(vii) of this section; and

(ii) Assesses whether participant hospitals meet specified quality requirements under § 510.315.

(m) Calculation of the NPRA for performance years 6 through 8. By comparing the reconciliation target prices described in § 510.301 and the participant hospital's actual episode spending for the performance year and applying the adjustments in paragraph (m)(1)(vii) of this section, CMS establishes an NPRA for each participant hospital for each of performance years 6 through 8.

(1) In calculating the NPRA for each participant hospital for each performance year, CMS does the following:

(i) Determines actual episode payments for each episode included in the performance year (other than episodes that have been canceled in accordance with § 510.210(b)) using claims data that is available 6 months after the end of the performance year. Actual episode payments are capped at the amount determined in accordance with § 510.300(b)(5)(ii) for the performance year, the amount determined in paragraph (k) of this section for episodes affected by extreme and uncontrollable circumstances, or the target price determined for that episode under § 510.300 for episodes that contain a COVID-19 Diagnosis Code as defined in § 510.2.

(ii) Multiplies each episode reconciliation target price by the number of episodes included in the performance year (other than episodes that have been canceled in accordance with § 510.210(b)) to which that episode reconciliation target price applies.

(iii) Aggregates the amounts computed in paragraph (m)(1)(ii) of this section for all episodes included in the performance year (other than episodes that have been canceled in accordance with § 510.210(b)).

(iv) Subtracts the amount determined under paragraph (m)(1)(i) of this section from the amount determined under paragraph (m)(1)(iii) of this section.

(v) Performs an additional calculation using claims data available at that time, to account for any episode cancelations due to overlap between the CJR model and other CMS models and programs, or for other reasons as specified in § 510.210(b).

(vi) Conducts a post-episode spending calculation as follows: If the average post-episode Medicare Parts A and B payments for a participant hospital in the performance year being reconciled is greater than 3 standard deviations above the regional average post-episode payments for that same performance year, then the spending amount exceeding 3 standard deviations above the regional average post-episode payments for the same performance year is subtracted from the net reconciliation or added to the repayment for that performance year.

(vii) Applies the following prior to determination of the reconciliation payment or repayment amount:

(A) Limitation on loss. Except as provided in paragraph (m)(1)(vii)(C) of this section, the total amount of the NPRA for a performance year cannot exceed 20 percent of the amount calculated in paragraph (m)(1)(iii) of this section for the performance year. The post-episode spending calculation amount in paragraph (m)(vi) of this section is not subject to the limitation on loss.

(B) Limitation on gain. The total amount of the NPRA for a performance year cannot exceed 20 percent of the amount calculated in paragraph (m)(1)(iii) of this section for the performance year. The post-episode spending calculation amount in paragraph (m)(vi) of this section are not subject to the limitation on gain.

(C) Limitation on loss for certain providers. Financial loss limits for rural hospitals, SCHs, MDHs, and RRCs for performance years 6 through 8. If a participant hospital is a rural hospital, SCH, MDH, or RRC, the amount cannot exceed 5 percent of the amount calculated in paragraph (m)(1)(iii) of this section.

(2) [Reserved]

[80 FR 73540, Nov. 24, 2015, as amended at 81 FR 11451, Mar. 4, 2016; 82 FR 613, Jan. 3, 2017; 82 FR 57104, Dec. 1, 2017; 85 FR 19292, Apr. 6, 2020; 85 FR 71199, Nov. 6, 2020; 86 FR 23572, May 3, 2021]

Editorial Note:At 86 FR 23572, May 3, 2021, § 510.305 was amended in part by revising paragraph (i); however, the amendment could not be incorporated due to inaccurate amendatory instruction.

§ 510.310 Appeals process.

(a) Notice of calculation error (first level of appeal). Subject to the limitations on review in subpart D of this part, if a participant hospital wishes to dispute calculations involving a matter related to payment, reconciliation amounts, repayment amounts, the use of quality measure results in determining the composite quality score, or the application of the composite quality score during reconciliation, the participant hospital is required to provide written notice of the calculation error, in a form and manner specified by CMS.

(1) Unless the participant hospital provides such notice, CMS deems final the CJR reconciliation report 45 calendar days after it is issued and proceeds with the payment or repayment processes as applicable.

(2) If CMS receives a notice of a calculation error within 45 calendar days of the issuance of the reconciliation report, CMS responds in writing within 30 calendar days to either confirm that there was an error in the calculation or verify that the calculation is correct, although CMS reserves the right to an extension upon written notice to the participant hospital.

(3) Only participant hospitals may use the dispute resolution process described in this part.

(4) Only participant hospitals may use the notice of calculation error process described in this part.

(b) Dispute resolution process (second level of appeal). (1) If the participant hospital is dissatisfied with CMS's response to the notice of a calculation error, the participant hospital may request a reconsideration review in a form and manner as specified by CMS.

(2) The reconsideration review request must provide a detailed explanation of the basis for the dispute and include supporting documentation for the participant hospital's assertion that CMS or its representatives did not accurately calculate the NPRA, the reconciliation payment, or the repayment amount in accordance with § 510.305.

(3) If CMS does not receive a request for reconsideration from the participant hospital within 10 calendar days of the issue date of CMS's response to the participant hospital's notice of calculation error, then CMS's response to the calculation error is deemed final and CMS proceeds with reconciliation payment or repayment processes, as applicable, as described in § 510.305.

(4) A CMS reconsideration official notifies the participant hospital in writing within 15 calendar days of receiving the participant hospital's review request of the following:

(i) The issues in dispute.

(ii) The review procedures.

(iii) The procedures (including format and deadlines) for submission of briefs and evidence.

(5) The provisions at § 425.804(b), (c), and (e) of this chapter are applicable to reviews conducted in accordance with the reconsideration review process for CJR.

(6) The CMS reconsideration official makes all reasonable efforts to issue a written determination within 30 days of the deadline for submission of briefs and evidence. The determination is final and binding.

(c) Exception to the process. If the participant hospital contests a matter that does not involve an issue contained in, or a calculation that contributes to, a CJR reconciliation report, a notice of calculation error is not required. In these instances, if CMS does not receive a request for reconsideration from the participant hospital within 10 calendar days of the notice of the initial determination, the initial determination is deemed final and CMS proceeds with action indicated in the initial determination. This does not apply to the limitations on review in paragraph (e) of this section.

(d) Notice of a participant hospital's termination from the CJR model. If a participant hospital receives notification that it has been terminated from the CJR model, it must provide a written notice to CMS requesting review of the termination within 10 calendar days of the notice. CMS has 30 days to respond to the participant hospital's request for review. If the participant hospital fails to notify CMS, the termination is deemed final.

(e) Limitations on review. In accordance with section 1115A(d)(2) of the Act, there is no administrative or judicial review under sections 1869 or 1878 of the Act or otherwise for the following:

(1) The selection of models for testing or expansion under section 1115A of the Act.

(2) The selection of organizations, sites, or participants to test those models selected.

(3) The elements, parameters, scope, and duration of such models for testing or dissemination.

(4) Determinations regarding budget neutrality under section 1115A(b)(3) of Act.

(5) The termination or modification of the design and implementation of a model under section 1115A(b)(3)(B) of Act.

(6) Decisions about expansion of the duration and scope of a model under section 1115A(c) of the Act, including the determination that a model is not expected to meet criteria described in section 1115A(c)(1) or (2) of the Act.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 615, Jan. 3, 2017; 86 FR 23573, May 3, 2021]

§ 510.315 Composite quality scores for determining reconciliation payment eligibility and quality incentive payments.

(a) General. A participant hospital's eligibility for a reconciliation payment under § 510.305(g), and the determination of quality incentive payments under paragraph (f) of this section, for a performance year or performance year subset depend on the hospital's composite quality score (including any quality performance points and quality improvement points earned) for that performance year or performance year subset.

(b) Composite quality score. CMS calculates a composite quality score for each participant hospital for each performance year or performance year subset which equals the sum of the following:

(1) The hospital's quality performance points for the hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty measure (NQF #1550) described in § 510.400(a)(1). This measure is weighted at 50 percent of the composite quality score.

(2) The hospital's quality performance points for the Hospital Consumer Assessment of Healthcare Providers and Systems Survey measure (NQF #0166) described in § 510.400(a)(2). This measure is weighted at 40 percent of the composite quality score.

(3) Any additional quality improvement points the hospital may earn as a result of demonstrating improvement on either or both of the quality measures in paragraphs (b)(1) and (2) of this section, as described in paragraph (d) of this section.

(4) If applicable, 2 additional points for successful THA/TKA voluntary data submission of patient-reported outcomes and limited risk variable data, as described in § 510.400(b). Successful submission is weighted at 10 percent of the composite quality score.

(c) Quality performance points. CMS computes quality performance points for each quality measure based on the participant hospital's performance relative to the distribution of performance of all subsection (d) hospitals that are eligible for payment under IPPS and meet the minimum patient case or survey count for that measure.

(1) For the hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty measure (NQF #1550) described in § 510.400(a)(1), CMS assigns the participant hospital measure value to a performance percentile and then quality performance points are assigned based on the following performance percentile scale:

(i) 10.00 points for ≥90th.

(ii) 9.25 points for ≥80th and <90th.

(iii) 8.50 points for ≥70th and <80th;

(iv) 7.75 points for ≥60th and <70th.

(v) 7.00 points for ≥50th and <60th.

(vi) 6.25 points for ≥40th and <50th.

(vii) 5.50 points for ≥30th and <40th.

(viii) 0.0 points for <30th.

(2) For the Hospital Consumer Assessment of Healthcare Providers and Systems Survey measure (NQF #0166) described in § 510.400(a)(2), CMS assigns the participant hospital measure value to a performance percentile and quality performance points are assigned based on the following performance percentile scale:

(i) 8.00 points for ≥90th.

(ii) 7.40 points for ≥80th and <90th.

(iii) 6.80 points for ≥70th and <80th.

(iv) 6.20 points for ≥60th and <70th.

(v) 5.60 points for ≥50th and <60th.

(vi) 5.00 points for ≥40th and <50th.

(vii) 4.40 points for ≥30th and <40th.

(viii) 0.0 points for <30th.

(d) Quality improvement points. (1) For performance year 1, if a participant hospital's quality performance percentile on an individual measure described in § 510.400(a) increases from the corresponding time period in the previous year by at least 2 deciles on the performance percentile scale, then the hospitals is eligible to receive quality improvement points equal to 10 percent of the total available point for that individual measure up to a maximum composite quality score of 20 points.

(2) For each of performance years 2 through 4, each of performance year subsets 5.1 and 5.2, and each of performance years 6 through 8, if a participant hospital's quality performance percentile on an individual measure described in § 510.400(a) increases from the previous performance year or performance year subset by at least 2 deciles on the performance percentile scale, then the hospital is eligible to receive quality improvement points equal to 10 percent of the total available point for that individual measure up to a maximum composite quality score of 20 points.

(e) Exception for hospitals without a measure value. In the case of a participant hospital without a measure value that would allow CMS to assign quality performance points for that quality measure, CMS assigns the 50th percentile quality performance points to the hospital for the individual measure.

(1) A participant hospital will not have a measure value for the—

(i) Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty measure (NQF #1550) described in § 510.400(a)(1) if the hospital does not meet the minimum 25 case count; or

(ii) Hospital Consumer Assessment of Healthcare Providers and Systems Survey measure (NQF #0166) described in § 510.400(a)(2) if the hospital does not meet the minimum of 100 completed survey and does not have 4 consecutive quarters of HCAHPS data.

(ii) For either of the measures described in paragraphs (e)(1) or (2) of this section, if CMS identifies an error in the data used to calculate the measure and suppresses the measure value.

(f) Quality incentive payments. CMS provides incentive payments to participant hospitals that demonstrate good or excellent quality performance on the composite quality scores described in paragraph (b) of this section. These incentive payments are implemented in the form of the following reductions to the effective discount factors or applicable discount factors described in § 510.300(c):

(1) Performance years 1 through 5. For performance years 1 through 5—

(i) A 1.0 percentage point reduction to the effective discount factor or applicable discount factor for participant hospitals with good quality performance, defined as composite quality scores that are greater than or equal to 6.9 and less than or equal to 15.0; or

(ii) A 1.5 percentage point reduction to the effective discount factor or applicable discount factor for participant hospitals with excellent quality performance, defined as composite quality scores that are greater than 15.0.

(2) Performance years 6 through 8. For performance years 6 through 8—

(i) A 1.5-percentage point reduction to the effective discount factor or applicable discount factor for participant hospitals with good quality performance, defined as composite quality scores that are greater than or equal to 6.9 and less than or equal to 15.0; or

(ii) A 3-percentage point reduction to the effective discount factor or applicable discount factor for participant hospitals with excellent quality performance, defined as composite quality scores that are greater than 15.0.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 615, Jan. 3, 2017; 85 FR 71201, Nov. 6, 2020; 86 FR 23573, May 3, 2021]

§ 510.320 Treatment of incentive programs or add-on payments under existing Medicare payment systems.

The CJR model does not replace any existing Medicare incentive programs or add-on payments. The target price and NPRA for a participant hospital are independent of, and do not affect, any incentive programs or add-on payments under existing Medicare payment systems.

§ 510.325 Allocation of payments for services that straddle the episode.

(a) General. Services included in the episode that straddle the episode are prorated so that only the portion attributable to care furnished during the episode are included in the calculation of actual episode payments.

(b) Proration of services. Payments for services that straddle the episode are prorated using the following methodology:

(1) Non-IPPS inpatient services and other inpatient services. Non-IPPS inpatient services, and services furnished by other inpatient providers that extend beyond the end of the episode are prorated according to the percentage of the actual length of stay (in days) that falls within the episode.

(2) Home health agency services. Home health services paid under the prospective payment system in part 484, subpart E of this chapter are prorated according to the percentage of days, starting with the first billable service date (“start of care date”) and through and including the last billable service date, that occur during the episode. This methodology is applied in the same way if the home health services begin (the start of care date) prior to the start of the episode.

(3) IPPS services. IPPS claim amounts that extend beyond the end of the episode are prorated according to the geometric mean length of stay, using the following methodology:

(i) The first day of the IPPS stay is counted as 2 days.

(ii) If the actual length of stay that occurred during the episode is equal to or greater than the MS-DRG geometric mean, the normal MS-DRG payment is fully allocated to the episode.

(iii) If the actual length of stay that occurred during the episode is less than the geometric mean, the normal MS-DRG payment amount is allocated to the episode based on the number of inpatient days that fall within the episode.

(iv) If the full amount is not allocated to the episode, any remainder amount is allocated to the post-episode spending calculation (defined in § 510.2).

§ 510.400 Quality measures and reporting.

(a) Reporting of quality measures. The following quality measures are used for public reporting, for determining whether a participant hospital is eligible for reconciliation payments under § 510.305(g), and whether a participant hospital is eligible for quality incentive payments under § 510.315(f) in the performance year or performance year subset:

(1) Hospital-level risk-standardized complication rate following elective primary total hip arthroplasty and/or total knee arthroplasty.

(2) Hospital Consumer Assessment of Healthcare Providers and Systems Survey.

(b) Requirements for successful voluntary data submission of patient-reported outcomes and limited risk variable data. To be eligible to receive the additional points added to the composite quality score for successful voluntary data submission of patient-reported outcomes and limited risk variable data, as described in § 510.315(b)(4), participant hospitals must submit the THA/TKA patient-reported outcome and limited risk variable data requested by CMS related to the pre- and post-operative periods for elective primary total hip and/or total knee arthroplasty procedures. The data must be submitted within 60 days of the end of the most recent performance period and be accompanied by the patient-reported outcomes and limited risk variable data (eleven elements finalized) as outlined in § 510.315(b)(4).

(1) For each eligible procedure all eleven risk variable data elements are required to be submitted. The eleven risk variables are as follows:

(i) Date of birth.

(ii) Race.

(iii) Ethnicity.

(iv) Date of admission to anchor hospitalization.

(v) Date of eligible THA/TKA procedure.

(vi) Medicare Health Insurance Claim Number.

(vii) Body mass index.

(viii) Use of chronic (≥90 day) narcotics.

(ix) Total painful joint count.

(x) Quantified spinal pain.

(xi) Single Item Health Literacy Screening (SILS2) questionnaire.

(2) Hospitals must also submit the amount of requested THA/TKA patient-reported outcomes data required for each performance year or performance year subset of the model in order to be considered successful in submitting voluntary data.

(i) The amount of requested THA/TKA patient-reported outcomes data to submit, in order to be considered successful will increase each subsequent year of the model over the first 5 years of the model (with the exception of performance year subset 5.2, for which CMS will request the same amount of THA/TKA patient-reported outcomes data as performance year subset 5.1, updated to reflect the timeframe applicable to performance year subset 5.2).

(ii) A phase-in approach that determines the amount of requested THA/TKA patient-reported outcomes data to submit over performance years 1 through 4 and performance year subset 5.1 (with the exception of performance year subset 5.2, for which CMS will request the same amount of THA/TKA patient-reported outcomes as performance year subset 5.1, updated to reflect the timeframe applicable to performance year subset 5.2) of the model will be applied so that in year 1 successful submission of data would mean CMS received all requested THA/TKA patient-reported outcomes and limited risk variable data on both of the following:

(A) Greater than or equal to 50 percent of eligible procedures or greater than or equal to 50 eligible patients during the data collection period.

(B) Submission of requested THA/TKA PRO and limited risk variable data is completed within 60 days of the most recent performance period.

(3) For years 1 through 5 of the model an increasing amount of data is requested by CMS for each performance period as follows:

(i) Year 1 (2016). Submit pre-operative data on primary elective THA/TKA procedures for ≥50% or ≥50 eligible procedures performed between July 1, 2016 and August 31, 2016, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(ii) Year 2 (2017). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥50% or ≥50 eligible procedures performed between July 1, 2016 through August 31, 2016; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥60% or ≥75 procedures performed between September 1, 2016 through June 30, 2017, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(iii) Year 3 (2018). Submit—

(A) POST-operative data on primary elective THA/TKA procedures for ≥60% or ≥75 procedures performed between September 1, 2016 and June 30, 2017; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥70% or ≥100 procedures performed between July 1, 2017 and June 30, 2018, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(iv) Year 4 (2019). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥70% or ≥100 procedures performed between July 1, 2017 and June 30, 2018; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2018 and June 30, 2019, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(v) Year 5 (subset 5.1, January 1, 2020-December 31, 2020). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2018 and June 30, 2019 and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2019 and June 30, 2020, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(vi) Year 5 (subset 5.2, January 1, 2021-September 30, 2021). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2019 and June 30, 2020; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2020 and June 30, 2021, unless CMS requests a more limited data set, in which case, submit all requested data elements.

(4) For years 6 through 8 of the model the following data are requested by CMS for each performance period as follows:

(i) Year 6 (October 1, 2021 to December 31, 2022). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥80% or ≥200 procedures performed between July 1, 2019 and June 30, 2020; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥80% or ≥300 procedures performed between July 1, 2021 and June 30, 2022.

(ii) Year 7 (2023). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥80% or ≥300 procedures performed between July 1, 2021 and June 30, 2022; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥85% or ≥400 procedures performed between July 1, 2022 and June 30, 2023.

(iii) Year 8 (2024). Submit—

(A) Post-operative data on primary elective THA/TKA procedures for ≥85% or ≥400 procedures performed between July 1, 2022 and June 30, 2023; and

(B) Pre-operative data on primary elective THA/TKA procedures for ≥90% or ≥500 procedures performed between July 1, 2023 and June 30, 2024.

(c) Public reporting. CMS—

(1) Makes the quality measurement results calculated for the complication and patient survey quality measures described in paragraph (a) of this section for each participant hospital in each performance year publicly available on the CMS Web site in a form and manner as determined by CMS;

(2) Shares each participant hospital's quality metrics with the hospital prior to display on the Web site; and

(3) Does not publicly report the voluntary patient-reported outcomes and limited risk variable data during this model, but indicates whether a hospital has successfully submitted such data in accordance with § 510.400(b).

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 615, Jan. 3, 2017; 85 FR 71201, Nov. 6, 2020; 86 FR 23574, May 3, 2021; 86 FR 36229, July 9, 2021]

§ 510.405 Beneficiary choice and beneficiary notification.

(a) Beneficiary choice. The CJR model does not restrict Medicare beneficiaries' ability to choose any Medicare enrolled provider or supplier, or any physician or practitioner who has opted out of Medicare.

(1) As part of discharge planning and referral, participant hospitals must provide a complete list of HHAs, SNFs, IRFs, or LTCHs that are participating in the Medicare program, and that serve the geographic area (as defined by the HHA) in which the patient resides, or in the case of a SNF, IRF, or LTCH, in the geographic area requested by the patient.

(i) This list must be presented to CJR beneficiaries for whom home health care, SNF, IRF, or LTCH services are medically necessary.

(ii) Participant hospitals must specify on the list those post-acute care providers on the list with whom they have a sharing arrangement.

(iii) Participant hospitals may recommend preferred providers and suppliers, consistent with applicable statutes and regulations.

(iv) Participant hospitals may not limit beneficiary choice to any list of providers or suppliers in any manner other than that permitted under applicable statutes and regulations.

(v) Participant hospitals must take into account patient and family preferences when they are expressed.

(2) Participant hospitals may not charge any CJR collaborator a fee to be included on any list of preferred providers or suppliers, nor may the participant hospital accept such payments.

(b) Required beneficiary notification—(1) Participant hospital beneficiary notification—(i) Notification to beneficiaries. Each participant hospital must provide written notification to any Medicare beneficiary that meets the criteria in § 510.205 of his or her inclusion in the CJR model.

(ii) Timing of notification. Prior to discharge from the anchor hospitalization, or prior to discharge from the anchor procedure, as applicable, the participant hospital must provide the CJR beneficiary with a participant hospital beneficiary notification as described in paragraph (b)(1)(iv) of this section.

(iii) List of beneficaries receiving a notification. The participant hospital must be able to generate a list of all beneficiaries receiving such notification, including the date on which the notification was provided to the beneficiary, to CMS or its designee upon request.

(iv) Content of notification. The beneficiary notification must contain all of the following:

(A) A detailed explanation of the model and how it might be expected to affect the beneficiary's care.

(B) Notification that the beneficiary retains freedom of choice to choose providers and services.

(C) Explanation of how patients can access care records and claims data through an available patient portal, and how they can share access to their Blue Button® electronic health information with caregivers.

(D) A statement that all existing Medicare beneficiary protections continue to be available to the beneficiary. These include the ability to report concerns of substandard care to Quality Improvement Organizations or the 1-800-MEDICARE helpline.

(E) A list of the providers, suppliers, and ACOs with whom the CJR participant hospital has a sharing arrangement. This requirement may be fulfilled by the participant hospital including in the detailed notification a Web address where beneficiaries may access the list.

(2) CJR collaborator notice. A participant hospital must require every CJR collaborator to provide written notice to applicable CJR beneficiaries of the structure of the CJR model and the existence of its sharing arrangement with the participant hospital.

(i) With the exception of ACOs, PGPs, NPPGPs, and TGPs, a CJR participant hospital must require every CJR collaborator that furnishes an item or service to a CJR beneficiary during a CJR episode to provide written notice to the beneficiary of the structure of the model and the existence of the individual's or entity's sharing arrangement. The notice must be provided no later than the time at which the beneficiary first receives an item or service from the CJR collaborator during a CJR episode. In circumstances where, due to the patient's condition, it is not feasible to provide notification at such time, the notification must be provided to the beneficiary or his or her representative as soon as is reasonably practicable. The CJR collaborator must be able to generate a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(ii) A participant hospital must require every PGP, NPPGP, or TGP that is a CJR collaborator where a member of the PGP, member of the NPPGP, or member of the TGP furnishes an item or service to a CJR beneficiary during a CJR episode to provide written notice to the beneficiary of the structure of the model and the existence of the entity's sharing arrangement. The notice must be provided no later than the time at which the beneficiary first receives an item or service from any member of the PGP, member of the NPPGP, or member of the TGP, and the required PGP, NPPGP, or TGP notice may be provided by that member respectively. In circumstances where, due to the patient's condition, it is not feasible to provide notice at such times, the notice must be provided to the beneficiary or his or her representative as soon as is reasonably practicable. The PGP, NPPGP, or TGP must be able to generate a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(iii) A participant hospital must require every ACO that is a CJR collaborator where an ACO participant or ACO provider/supplier furnishes an item or service to a CJR beneficiary during a CJR episode to provide written notice to the beneficiary of the structure of the model and the existence of the entity's sharing arrangement. The notice must be provided no later than the time at which the beneficiary first receives an item or service from any ACO participant or ACO provider/supplier and the required ACO notice may be provided by that ACO participant or ACO provider/supplier respectively. In circumstances where, due to the patient's condition, it is not feasible to provide notice at such times, the notice must be provided to the beneficiary or his or her representative as soon as is reasonably practicable. The ACO must be able to generate a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(3) Discharge planning notice. A participant hospital must provide the beneficiary with a written notice of any potential financial liability associated with non-covered services recommended or presented as an option as part of discharge planning, no later than the time that the beneficiary discusses a particular post-acute care option or at the time the beneficiary is discharged from an anchor procedure or anchor hospitalization, whichever occurs earlier.

(i) If the participant hospital knows or should have known that the beneficiary is considering or has decided to receive a non-covered post-acute care service or other non-covered associated service or supply, the participant hospital must notify the beneficiary that the service would not be covered by Medicare.

(ii) If the participant hospital is discharging a beneficiary to a SNF prior to the occurrence of a 3-day hospital stay, and the beneficiary is being transferred to or is considering a SNF that would not qualify under the SNF 3-day waiver in § 510.610, the participant hospital must notify the beneficiary in accordance with paragraph (b)(3)(i) of this section that the beneficiary will be responsible for payment for the services furnished by the SNF during that stay, except those services that would be covered by Medicare Part B during a non-covered inpatient SNF stay.

(4) Access to records and retention. Lists of beneficiaries that receive notifications or notices must be retained, and access provided to CMS, or its designees, in accordance with § 510.110.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 616, Jan. 3, 2017; 86 FR 23574, May 3, 2021]

§ 510.410 Compliance enforcement.

(a) General. Participant hospitals must comply with all of the requirements outlined in this part. Except as specifically noted in this part, the regulations under this part must not be construed to affect the payment, coverage, program integrity, or other requirements (such as those in parts 412 and 482 of this chapter) that apply to providers and suppliers under this chapter.

(b) Failure to comply. (1) CMS may take one or more of the remedial actions set forth in paragraph (b)(2) of this section if a participant hospital or its related CJR collaborators, collaboration agents, or downstream collaboration agents—

(i) Fails to comply with any requirements of this part or is identified as noncompliant through monitoring by HHS (including CMS and OIG) of the CJR model, including but not limited to the following:

(A) Avoiding potentially high cost patients.

(B) Targeting potentially low cost patients.

(C) Failing to provide medically appropriate services or systematically engaging in the over or under delivery of appropriate care.

(D) Failing to provide beneficiaries with complete and accurate information, including required notices.

(E) Failing to allow beneficiary choice of medically necessary options, including non-surgical options.

(F) Failing to follow the requirements related to sharing arrangements.

(G) Failing to participate in CJR model-related evaluation activities conducted by CMS or its contractors or both.

(ii) Has signed a sharing arrangement, distribution arrangement, or downstream distribution arrangement that is noncompliant with the requirements of this part.

(iii) Takes any action that threatens the health or safety of patients;

(iv) Avoids at-risk Medicare beneficiaries, as this term is defined in § 425.20;

(v) Avoids patients on the basis of payer status;

(vi) Is subject to sanctions or final actions of an accrediting organization or federal, state, or local government agency that could lead to the inability to comply with the requirements and provisions of this part;

(vii) Takes any action that CMS determines for program integrity reasons is not in the best interests of the CJR model, or fails to take any action that CMS determines for program integrity reasons should have been taken to further the best interests of the CJR model;

(viii) Is subject to action by HHS (including OIG and CMS) or the Department of Justice to redress an allegation of fraud or significant misconduct, including intervening in a False Claims Act qui tam matter, issuing a pre-demand or demand letter under a civil sanction authority, or similar actions; or

(ix) Is subject to action involving violations of the physician self-referral law, civil monetary penalties law, federal anti-kickback statute, antitrust laws, or any other applicable Medicare laws, rules, or regulations that are relevant to the CJR model.

(2) Remedial actions include the following:

(i) Issuing a warning letter to the participant hospital.

(ii) Requiring the participant hospital to develop a corrective action plan, commonly referred to as a CAP.

(iii) Reducing or eliminating a participant hospital's reconciliation payment.

(iv) Requiring a participant hospital to terminate a sharing arrangement with a CJR collaborator and prohibiting further engagement in sharing arrangements with the participant hospital by that CJR collaborator.

(v) Terminating the participant hospital's participation in the CJR model. Where a participant is terminated from the CJR model, the participant hospital will remain liable for all negative NPRA generated from episodes of care that ended prior to termination.

(3) CMS may add a 25 percent penalty to a repayment amount on the participant hospital's reconciliation report if all of the following conditions are met:

(i) CMS has required a corrective action plan from a participant hospital;

(ii) The participant hospital owes a repayment amount to CMS; and

(iii) The participant hospital fails to timely comply with the corrective action plan or is noncompliant with the CJR model's requirements.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 617, Jan. 3, 2017; 82 FR 57104, Dec. 1, 2017]

§ 510.500 Sharing arrangements under the CJR model.

(a) General. (1) A participant hospital may enter into a sharing arrangement with a CJR collaborator to make a gainsharing payment, or to receive an alignment payment, or both. A participant hospital must not make a gainsharing payment or receive an alignment payment except in accordance with a sharing arrangement.

(2) A sharing arrangement must comply with the provisions of this section and all other applicable laws and regulations, including the applicable fraud and abuse laws and all applicable payment and coverage requirements.

(3) Participant hospitals must develop, maintain, and use a set of written policies for selecting individuals and entities to be CJR collaborators. These policies must contain criteria related to, and inclusive of, the quality of care delivered by the potential CJR collaborator. The selection criteria cannot be based directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the participant hospital, any CJR collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a participant hospital, CJR collaborator, collaboration agent, or downstream collaboration agent. A selection criterion that considers whether a potential CJR collaborator has performed a reasonable minimum number of services that would qualify as CJR activities will be deemed not to violate the volume or value standard if the purpose of the criterion is to ensure the quality of care furnished to CJR beneficiaries.

(4) If a participant hospital enters into a sharing arrangement, its compliance program must include oversight of sharing arrangements and compliance with the applicable requirements of the CJR model.

(b) Requirements. (1) A sharing arrangement must be in writing and signed by the parties, and entered into before care is furnished to CJR beneficiaries under the sharing arrangement.

(2) Participation in a sharing arrangement must be voluntary and without penalty for nonparticipation.

(3) The sharing arrangement must require the CJR collaborator and its employees, contractors (including collaboration agents), and subcontractors (including downstream collaboration agents) to comply with all of the following:

(i) The applicable provisions of this part (including requirements regarding beneficiary notifications, access to records, record retention, and participation in any evaluation, monitoring, compliance, and enforcement activities performed by CMS or its designees).

(ii) All applicable Medicare provider enrollment requirements at § 424.500 of this chapter, including having a valid and active TIN or NPI, during the term of the sharing arrangement.

(iii) All other applicable laws and regulations.

(4) The sharing arrangement must require the CJR collaborator to have or be covered by a compliance program that includes oversight of the sharing arrangement and compliance with the requirements of the CJR model that apply to its role as a CJR collaborator, including any distribution arrangements.

(5) The sharing arrangement must not pose a risk to beneficiary access, beneficiary freedom of choice, or quality of care.

(6) The board or other governing body of the participant hospital must have responsibility for overseeing the participant hospital's participation in the CJR model, its arrangements with CJR collaborators, its payment of gainsharing payments, its receipt of alignment payments, and its use of beneficiary incentives in the CJR model.

(7) The written agreement memorializing a sharing arrangement must specify the following:

(i) The purpose and scope of the sharing arrangement.

(ii) The obligations of the parties, including specified CJR activities and other services to be performed by the parties under the sharing arrangement.

(iii) The date of the sharing arrangement.

(iv) The financial or economic terms for payment, including the following:

(A) Eligibility criteria for a gainsharing payment.

(B) Eligibility criteria for an alignment payment.

(C) Frequency of gainsharing or alignment payment.

(D) Methodology and accounting formula for determining the amount of a gainsharing payment or alignment payment.

(8) The sharing arrangement must not—

(i) Induce the participant hospital, CJR collaborator, or any employees, contractors, or subcontractors of the participant hospital or CJR collaborator to reduce or limit medically necessary services to any Medicare beneficiary; or

(ii) Restrict the ability of a CJR collaborator to make decisions in the best interests of its patients, including the selection of devices, supplies, and treatments.

(c) Gainsharing payment, alignment payment, and internal cost savings conditions and restrictions. (1) Gainsharing payments, if any, must—

(i) Be derived solely from reconciliation payments, or internal cost savings, or both;

(ii) Be distributed on an annual basis (not more than once per calendar year);

(iii) Not be a loan, advance payment, or payment for referrals or other business; and

(iv) Be clearly identified as a gainsharing payment at the time it is paid.

(2)(i) To be eligible to receive a gainsharing payment, a CJR collaborator must meet quality of care criteria for the performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment. The quality of care criteria must be established by the participant hospital and directly related to the CJR episode.

(ii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR collaborator other than ACO, PGP, NPPGP, or TGP must have directly furnished a billable item or service to a CJR beneficiary during a CJR episode that occurred in the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment or was assessed a repayment amount.

(iii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR collaborator that is a PGP, NPPGP, or TGP must meet the following criteria:

(A) The PGP, NPPGP, or TGP must have billed for an item or service that was rendered by one or more PGP member, NPPGP member, or TGP member respectively to a CJR beneficiary during a CJR episode that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment or was assessed a repayment amount.

(B) The PGP, NPPGP, or TGP must have contributed to CJR activities and been clinically involved in the care of CJR beneficiaries during the same performance year for which the CJR participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment or was assessed a repayment amount. For example, a PGP, NPPGP, or TGP might have been clinically involved in the care of CJR beneficiaries by—

(1) Providing care coordination services to beneficiaries during and/or after inpatient admission;

(2) Engaging with a participant hospital in care redesign strategies, and actually performing a role in implementing such strategies, that are designed to improve the quality of care for CJR episodes and reduce CJR episode spending; or

(3) In coordination with other providers and suppliers (such as PGP members, NPPGP members, or TGP members; the participant hospital; and post-acute care providers), implementing strategies designed to address and manage the comorbidities of CJR beneficiaries.

(iv) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a CJR collaborator that is an ACO must meet the following criteria:

(A) The ACO must have had an ACO provider/supplier that directly furnished, or an ACO participant that billed for, an item or service that was rendered to a CJR beneficiary during a CJR episode that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment or was assessed a repayment amount; and

(B) The ACO must have contributed to CJR activities and been clinically involved in the care of CJR beneficiaries during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment or was assessed the repayment amount. For example, an ACO might be have been clinically involved in the care of CJR beneficiaries by—

(1) Providing care coordination services to CJR beneficiaries during and/or after inpatient admission;

(2) Engaging with a participant hospital in care redesign strategies, and actually performing a role in implementing such strategies, that are designed to improve the quality of care and reduce spending for CJR episodes; or

(3) In coordination with providers and suppliers (such as ACO participants, ACO providers/suppliers, the participant hospital, and post-acute care providers), implementing strategies designed to address and manage the comorbidities of CJR beneficiaries.

(3)(i) The methodology for accruing, calculating and verifying internal cost savings must be transparent, measurable, and verifiable in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(ii) The methodology used to calculate internal cost savings must reflect the actual, internal cost savings achieved by the participant hospital through the documented implementation of CJR activities identified by the participant hospital and must exclude—

(A) Any savings realized by any individual or entity that is not the participant hospital; and

(B) “Paper” savings from accounting conventions or past investment in fixed costs.

(4) The total amount of a gainsharing payment for a performance year paid to a CJR collaborator must not exceed the following:

(i) For episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021, in the case of a CJR collaborator who is a physician or non-physician practitioner, 50 percent of the Medicare-approved amounts under the PFS for items and services furnished by that physician or non-physician practitioner to the participant hospital's CJR beneficiaries during CJR model episodes that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment being made.

(ii) For episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021, in the case of a CJR collaborator that is a PGP or NPPGP, 50 percent of the Medicare-approved amounts under the PFS for items and services billed by that PGP or NPPGP and furnished to the participant hospital's CJR beneficiaries by the PGP members or NPPGP members respectively during CJR model episodes that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment being made.

(5) The amount of any gainsharing payments must be determined in accordance with a methodology that is substantially based on quality of care and the provision of CJR activities. The methodology may take into account the amount of such CJR activities provided by a CJR collaborator relative to other CJR collaborators.

(6) For a performance year, the aggregate amount of all gainsharing payments that are derived from a reconciliation payment the CJR participant hospital receives from CMS must not exceed the amount of that reconciliation payment.

(7) No entity or individual, whether a party to a sharing arrangement or not, may condition the opportunity to make or receive gainsharing payments or to make or receive alignment payments directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the participant hospital, any CJR collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a participant hospital, CJR collaborator, collaboration agent, or downstream collaboration agent.

(8) A participant hospital must not make a gainsharing payment to a CJR collaborator if CMS has notified the participant hospital that such collaborator is subject to any action for noncompliance with this part or the fraud and abuse laws, or for the provision of substandard care to CJR beneficiaries or other integrity problems.

(9) The sharing arrangement must require the participant hospital to recoup any gainsharing payment that contained funds derived from a CMS overpayment on a reconciliation report or was based on the submission of false or fraudulent data.

(10) Alignment payments from a CJR collaborator to a participant hospital may be made at any interval that is agreed upon by both parties, and must not be—

(i) Issued, distributed, or paid prior to the calculation by CMS of a repayment amount reflected in a reconciliation report;

(ii) Loans, advance payments, or payments for referrals or other business; or

(iii) Assessed by a participant hospital if it does not owe a repayment amount.

(11) The participant hospital must not receive any amounts under a sharing arrangement from a CJR collaborator that are not alignment payments.

(12) For a performance year, the aggregate amount of all alignment payments received by the participant hospital must not exceed 50 percent of the participant hospital's repayment amount.

(13) The aggregate amount of all alignment payments from a CJR collaborator to the participant hospital may not be greater than—

(i) With respect to a CJR collaborator other than an ACO, 25 percent of the participant hospital's repayment amount.

(ii) With respect to a CJR collaborator that is an ACO, 50 percent of the participant hospital's repayment amount.

(14) The amount of any alignment payments must be determined in accordance with a methodology that does not directly account for the volume or value of past or anticipated referrals or business otherwise generated by, between or among the participant hospital, any CJR collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a participant hospital, CJR collaborator, collaboration agent, or downstream collaboration agent.

(15) All gainsharing payments and any alignment payments must be administered by the participant hospital in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(16) All gainsharing payments and alignment payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(d) Documentation requirements. (1) Participant hospitals must—(i) Document the sharing arrangement contemporaneously with the establishment of the arrangement;

(ii) Publicly post (and update on at least a quarterly basis) on a Web page on the CJR participant hospital's Web site—

(A) Accurate current and historical lists of all CJR collaborators, including CJR collaborator names and addresses.

(B) Written policies for selecting individuals and entities to be CJR collaborators required by § 510.500(a)(3).

(iii) Maintain and require each CJR collaborator to maintain contemporaneous documentation with respect to the payment or receipt of any gainsharing payment or alignment payment that includes at a minimum:

(A) Nature of the payment (gainsharing payment or alignment payment);

(B) Identity of the parties making and receiving the payment;

(C) Date of the payment;

(D) Amount of the payment;

(E) Date and amount of any recoupment of all or a portion of a CJR collaborator's gainsharing payment.

(F) Explanation for each recoupment, such as whether the CJR collaborator received a gainsharing payment that contained funds derived from a CMS overpayment on a reconciliation report, or was based on the submission of false or fraudulent data.

(2) The participant hospital must keep records of all of the following:

(i) Its process for determining and verifying its potential and current CJR collaborators' eligibility to participate in Medicare.

(ii) Its plan to track internal cost savings.

(iii) Information on the accounting systems used to track internal cost savings.

(iv) A description of current health information technology, including systems to track reconciliation payments and internal cost savings.

(v) Its plan to track gainsharing payments and alignment payments.

(3) The participant hospital must retain and provide access to, and must require each CJR collaborator to retain and provide access to, the required documentation in accordance with § 510.110.

[82 FR 617, Jan. 3, 2017, as amended at 86 FR 23575, May 3, 2021]

§ 510.505 Distribution arrangements.

(a) General. (1) An ACO, PGP, NPPGP, or TGP that has entered into a sharing arrangement with a participant hospital may distribute all or a portion of any gainsharing payment it receives from the participant hospital only in accordance with a distribution arrangement.

(2) All distribution arrangements must comply with the provisions of this section and all other applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All distribution arrangements must be in writing and signed by the parties, contain the date of the agreement, and be entered into before care is furnished to CJR beneficiaries under the distribution arrangement.

(2) Participation in a distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The distribution arrangement must require the collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the participant hospital, any CJR collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a participant hospital, CJR collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any distribution payments from an ACO, from an NPPGP to an NPPGP member, or from a TGP to a TGP member must be determined in accordance with a methodology that is substantially based on quality of care and the provision of CJR activities and that may take into account the amount of such CJR activities provided by a collaboration agent relative to other collaboration agents.

(6) The amount of any distribution payments from a PGP must be determined either in a manner that complies with § 411.352(g) of this chapter or in accordance with a methodology that is substantially based on quality of care and the provision of CJR activities and that may take into account the amount of such CJR activities provided by a collaboration agent relative to other collaboration agents.

(7) Except for a distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, a collaboration agent is eligible to receive a distribution payment only if the collaboration agent furnished or billed for an item or service rendered to a CJR beneficiary during a CJR episode that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment being distributed.

(8) Except for a distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, the total amount of distribution payments for a performance year paid to a collaboration agent must not exceed the following:

(i) For episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021, in the case of a collaboration agent that is a physician or non-physician practitioner, 50 percent of the total Medicare-approved amounts under the PFS for items and services furnished by the collaboration agent to the participant hospital's CJR beneficiaries during CJR model episodes that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment being distributed.

(ii) For episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021, in the case of a collaboration agent that is a PGP or NPPGP, 50 percent of the total Medicare-approved amounts under the PFS for items and services billed by that PGP or NPPGP for items and services furnished by PGP members or NPPGP member respectively to the participant hospital's CJR beneficiaries during CJR model episodes that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment being distributed.

(9) With respect to the distribution of any gainsharing payment received by an ACO, PGP, NPPGP, or TGP, the total amount of all distribution payments must not exceed the amount of the gainsharing payment received by the CJR collaborator from the participant hospital.

(10) All distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(11) The collaboration agent must retain the ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments.

(12) The distribution arrangement must not—

(i) Induce the collaboration agent to reduce or limit medically necessary items and services to any Medicare beneficiary; or

(ii) Reward the provision of items and services that are medically unnecessary.

(13) The CJR collaborator must maintain contemporaneous documentation regarding distribution arrangements in accordance with § 510.110, including the following:

(i) The relevant written agreements;

(ii) The date and amount of any distribution payment(s);

(iii) The identity of each collaboration agent that received a distribution payment; and

(iv) A description of the methodology and accounting formula for determining the amount of any distribution payment.

(14) The CJR collaborator may not enter into a distribution arrangement with any individual or entity that has a sharing arrangement with the same participant hospital.

(15) The CJR collaborator must retain and provide access to, and must require collaboration agents to retain and provide access to, the required documentation in accordance with § 510.110.

[82 FR 620, Jan. 3, 2017, as amended at 86 FR 23575, May 3, 2021]

§ 510.506 Downstream distribution arrangements.

(a) General. (1) An ACO participant that is a PGP, NPPGP, or TGP and that has entered into a distribution arrangement with a CJR collaborator that is an ACO may distribute all or a portion of any distribution payment it receives from the CJR collaborator only in accordance with downstream distribution arrangement.

(2) All downstream distribution arrangements must comply with the provisions of this section and all applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All downstream distribution arrangements must be in writing and signed by the parties, contain the date of the agreement, and be entered into before care is furnished to CJR beneficiaries under the downstream distribution arrangement.

(2) Participation in a downstream distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The downstream distribution arrangement must require the downstream collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a downstream distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the participant hospital, any CJR collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a participant hospital, CJR collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any downstream distribution payments from an NPPGP to an NPPGP member or from a TGP to a TGP member must be determined in accordance with a methodology that is substantially based on quality of care and the provision CJR activities and that may take into account the amount of such CJR activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(6) The amount of any downstream distribution payments from a PGP must be determined either in a manner that complies with § 411.352(g) of this chapter or in accordance with a methodology that is substantially based on quality of care and the provision CJR activities and that may take into account the amount of such CJR activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(7) Except for a downstream distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, a downstream collaboration agent is eligible to receive a downstream distribution payment only if the downstream collaboration agent furnished an item or service by the downstream collaboration agent to a CJR beneficiary during a CJR episode that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment from which the ACO made the distribution payment to the PGP, NPPGP, or TGP that is an ACO participant.

(8) Except for a downstream distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, for episodes beginning on or after April 1, 2016 and ending on or before September 30, 2021 the total amount of downstream distribution payments for a performance year paid to a downstream collaboration agent who is a physician or non-physician practitioner and is either a member of a PGP or a member of an NPPGP must not exceed 50 percent of the total Medicare-approved amounts under the PFS for items and services furnished by the downstream collaboration agent to the participant hospital's CJR beneficiaries during a CJR model episode that occurred during the same performance year for which the participant hospital accrued the internal cost savings or earned the reconciliation payment that comprises the distribution payment being distributed.

(9) The total amount of all downstream distribution payments made to downstream collaboration agents must not exceed the amount of the distribution payment received by the PGP, NPPGP, or TGP from the ACO.

(10) All downstream distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(11) The downstream collaboration agent must retain his or her ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments.

(12) The downstream distribution arrangement must not—

(i) Induce the downstream collaboration agent to reduce or limit medically necessary services to any Medicare beneficiary; or

(ii) Reward the provision of items and services that are medically unnecessary.

(13) The PGP, NPPGP, or TGP must maintain contemporaneous documentation regarding downstream distribution arrangements in accordance with § 510.110, including the following:

(i) The relevant written agreements.

(ii) The date and amount of any downstream distribution payment.

(iii) The identity of each downstream collaboration agent that received a downstream distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any downstream distribution payment.

(14) The PGP, NPPGP, or TGP may not enter into a downstream distribution arrangement with any PGP member, NPPGP member, or TGP member who has—

(i) A sharing arrangement with a participant hospital.

(ii) A distribution arrangement with the ACO that the PGP, NPPGP, or TGP is a participant in.

(15) The PGP, NPPGP, or TGP must retain and provide access to, and must require downstream collaboration agents to retain and provide access to, the required documentation in accordance with § 510.110.

[82 FR 621, Jan. 3, 2017, as amended at 86 FR 23575, May 3, 2021]

§ 510.510 Enforcement authority.

(a) OIG authority. OIG authority is not limited or restricted by the provisions of the CJR model, including the authority to audit, evaluate, investigate, or inspect the participant hospital, CJR collaborators, or any other person or entity or their records, data, or information, without limitation.

(b) Other authorities. None of the provisions of the CJR model limits or restricts the authority of any other government agency permitted by law to audit, evaluate, investigate, or inspect the participant hospital, CJR collaborators, or any other person or entity or their records, data, or information, without limitation.

§ 510.515 Beneficiary incentives under the CJR model.

(a) General. Participant hospitals may choose to provide in-kind patient engagement incentives to beneficiaries in a CJR episode, subject to the following conditions:

(1) The incentive must be provided directly by the participant hospital or by an agent of the hospital under the hospital's direction and control to the beneficiary during a CJR episode of care.

(2) The item or service provided must be reasonably connected to medical care provided to a beneficiary during a CJR episode of care.

(3) The item or service must be a preventive care item or service or an item or service that advances a clinical goal, as listed in paragraph (c) of this section, for a beneficiary in a CJR episode by engaging the beneficiary in better managing his or her own health.

(4) The item or service must not be tied to the receipt of items or services outside the CJR episode of care.

(5) The item or service must not be tied to the receipt of items or services from a particular provider or supplier.

(6) The availability of the items or services must not be advertised or promoted except that a beneficiary may be made aware of the availability of the items or services at the time the beneficiary could reasonably benefit from them.

(7) The cost of the items or services must not be shifted to another federal health care program, as defined at section 1128B(f) of the Act.

(b) Technology provided to a CJR beneficiary. Beneficiary engagement incentives involving technology are subject to the following additional conditions:

(1) Items or services involving technology provided to a beneficiary may not exceed $1,000 in retail value for any one beneficiary in any one CJR episode.

(2) Items or services involving technology provided to a beneficiary must be the minimum necessary to advance a clinical goal, as listed in paragraph (c) of this section, for a beneficiary in a CJR episode.

(3) Items of technology exceeding $100 in retail value must—

(i) Remain the property of the CJR participant; and

(ii) Be retrieved from the beneficiary at the end of the CJR episode. The participant hospital must document all retrieval attempts, including the ultimate date of retrieval. Documented, diligent, good faith attempts to retrieve items of technology will be deemed to meet the retrieval requirement.

(c) Clinical goals of the CJR model. The following are the clinical goals of the CJR model, which may be advanced through beneficiary incentives:

(1) Beneficiary adherence to drug regimens.

(2) Beneficiary adherence to a care plan.

(3) Reduction of readmissions and complications resulting from LEJR procedures.

(4) Management of chronic diseases and conditions that may be affected by the LEJR procedure.

(d) Documentation of beneficiary incentives. (1) Participant hospitals must maintain documentation of items and services furnished as beneficiary incentives that exceed $25 in retail value.

(2) The documentation must be established contemporaneously with the provision of the items and services and must include at least the following:

(i) The date the incentive is provided.

(ii) The identity of the beneficiary to whom the item or service was provided.

(3) The documentation regarding items of technology exceeding $100 in retail value must also include contemporaneous documentation of any attempt to retrieve technology at the end of a CJR episode as described in paragraph (b)(3) of this section.

(4) The CJR participant hospital must retain and provide access to the required documentation in accordance with § 510.110.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 621, Jan. 3, 2017]

§ 510.600 Waiver of direct supervision requirement for certain post-discharge home visits.

(a) General. CMS waives the requirement in § 410.26(b)(5) of this chapter that services and supplies furnished incident to a physician's service must be furnished under the direct supervision of the physician (or other practitioner) to permit home visits as specified in this section. The services furnished under this waiver are not considered to be “hospital services,” even when furnished by the clinical staff of the hospital.

(b) General supervision of qualified personnel. The waiver of the direct supervision requirement in § 410.26(b)(5) of this chapter applies only in the following circumstances:

(1) The home visit is furnished during the episode to a beneficiary who has been discharged from an anchor hospitalization or anchor procedure.

(2) The home visit is furnished at the beneficiary's home or place of residence.

(3) The beneficiary does not qualify for home health services under sections 1835(a) and 1814(a) of the Act at the time of any such home visit.

(4) The visit is furnished by clinical staff under the general supervision of a physician or non-physician practitioner. Clinical staff are individuals who work under the supervision of a physician or other qualified health care professional, and who are allowed by law, regulation, and facility policy to perform or assist in the performance of a specific professional service, but do not individually report that professional service.

(5) No more than 9 visits are furnished to the beneficiary during the episode.

(c) Payment. Up to 9 post-discharge home visits per CJR episode may be billed under Part B by the physician or nonphysician practitioner or by the participant hospital to which the supervising physician has reassigned his or her billing rights.

(d) Other requirements. All other Medicare rules for coverage and payment of services incident to a physician's service continue to apply.

[80 FR 73540, Nov. 24, 2015, as amended at 86 FR 23575, May 3, 2021]

§ 510.605 Waiver of certain telehealth requirements.

(a) Waiver of the geographic site requirements. Except for the geographic site requirements for a face-to-face encounter for home health certification, CMS waives the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act for episodes being tested in the CJR model, but only for services that—

(1) May be furnished via telehealth under existing requirements; and

(2) Are included in the episode in accordance with § 510.200(b).

(b) Waiver of the originating site requirements. Except for the originating site requirements for a face-to-face encounter for home health certification, CMS waives the originating site requirements under section 1834(m)(4)(C)(ii)(I) through (VIII) of the Act for episodes being tested in the CJR model to permit a telehealth visit to originate in the beneficiary's home or place of residence, but only for services that—

(1) May be furnished via telehealth under existing requirements; and

(2) Are included in the CJR episode in accordance with § 510.200(b).

(c) Waiver of selected payment provisions. (1) CMS waives the payment requirements under section 1834(m)(2)(A) so that the facility fee normally paid by Medicare to an originating site for a telehealth service is not paid if the service is originated in the beneficiary's home or place of residence.

(2) CMS waives the payment requirements under section 1834(m)(2)(B) of the Act to allow the distant site payment for telehealth home visit HCPCS codes unique to this model.

(d) Other requirements. All other requirements for Medicare coverage and payment of telehealth services continue to apply, including the list of specific services approved to be furnished by telehealth.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 57104, Dec. 1, 2017]

§ 510.610 Waiver of SNF 3-day rule.

(a) Waiver of the SNF 3-day rule—(1) Performance year—(i) Performance years 2 through 5. For episodes being tested in performance years 2 through 5 of the CJR model, CMS waives the SNF 3-day rule for coverage of a SNF stay for a beneficiary who is a CJR beneficiary on the date of discharge from the anchor hospitalization, but only if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the CJR beneficiary's admission to the SNF.

(ii) Performance years 6 through 8. (A) For episodes being tested in performance years 6 through 8 of the CJR model, CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of discharge from the anchor hospitalization for a beneficiary who is a CJR beneficiary on the date of discharge from the anchor hospitalization, but only if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the CJR beneficiary's admission to the SNF.

(B) For episodes being tested in performance years 6 through 8 of the CJR model, CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of service of the anchor procedure for a beneficiary who is a CJR beneficiary on the date of service of the anchor procedure, but only if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the CJR beneficiary's admission to the SNF.

(2) Determination of qualified SNFs. CMS determines the qualified SNFs for each calendar quarter based on a review of the most recent rolling 12 months of overall star ratings on the Five-Star Quality Rating System for SNFs on the Nursing Home Compare website. Qualified SNFs are rated an overall of 3 stars or better for at least 7 of the 12 months.

(3) Posting of qualified SNFs. CMS posts to the CMS website the list of qualified SNFs in advance of the calendar quarter.

(b) Financial liability for non-covered SNF services. If CMS determines that the waiver requirements specified in paragraph (a) of this section were not met, the following apply:

(1) CMS makes no payment to a SNF for SNF services if the SNF admits a CJR beneficiary who has not had a qualifying inpatient stay or anchor procedure.

(2) In the event that CMS makes no payment for SNF services furnished by a SNF as a result of paragraph (b)(1) of this section, the beneficiary protections specified in paragraph (b)(3) of this section apply, unless the participant hospital has provided the beneficiary with a discharge planning notice in accordance with § 510.405(b)(3).

(3) If the participant hospital does not provide the beneficiary with a discharge planning notice in accordance with § 510.405(b)(3)—

(i) The SNF must not charge the beneficiary for the expenses incurred for such services;

(ii) The SNF must return to the beneficiary any monies collected for such services; and

(iii) The participant hospital is financially liable for the expenses incurred for such services.

(4) If the participant hospital provided a discharge planning notice to the beneficiary in accordance with § 510.405(b)(3), then normal SNF coverage requirements apply and the beneficiary may be financially liable for non-covered SNF services.

(c) Other requirements. All other Medicare rules for coverage and payment of Part A-covered services continue to apply except as otherwise waived in this part.

[82 FR 622, Jan. 3, 2017, as amended at 86 FR 23575, May 3, 2021]

§ 510.615 Waiver of certain post-operative billing restrictions.

(a) Waiver to permit certain services to be billed separately during the 90-day post-operative global surgical period. CMS waives the billing requirements for global surgeries to allow the separate billing of certain post-discharge home visits described under § 510.600, including those related to recovery from the surgery, as described in paragraph (b) of this section, for episodes being tested in the CJR model.

(b) Services to which the waiver applies. Up to 9 post-discharge home visits, including those related to recovery from the surgery, per CJR episode may be billed separately under Part B by the physician or nonphysician practitioner, or by the participant hospital to which the physician or nonphysician practitioner has reassigned his or her billing rights.

(c) Other requirements. All other Medicare rules for global surgery billing during the 90-day post-operative period continue to apply.

§ 510.620 Waiver of deductible and coinsurance that otherwise apply to reconciliation payments or repayments.

(a) Waiver of deductible and coinsurance. CMS waives the requirements of sections 1813 and 1833(a) of the Act for Medicare Part A and Part B payment systems only to the extent necessary to make reconciliation payments or receive repayments based on the NPRA that reflect the episode payment methodology under the final payment model for CJR participant hospitals.

(b) Reconciliation payments or repayments. Reconciliation payments or repayments do not affect the beneficiary cost-sharing amounts for the Part A and Part B services provided under the CJR model.

[80 FR 73540, Nov. 24, 2015, as amended at 82 FR 622, Jan. 3, 2017]

§ 510.900 Termination of the CJR model.

CMS may terminate the CJR model for reasons including but not limited to the following:

(a) CMS determines that it no longer has the funds to support the CJR model.

(b) CMS terminates the model in accordance with section 1115A(b)(3)(B) of the Act. As provided by section 1115A(d)(2) of the Act, termination of the model is not subject to administrative or judicial review.

§ 512.100 Basis and scope.

(a) Basis. This subpart implements standard provisions for certain Innovation Center models, as that term is defined in this subpart.

(b) Scope. (1) The regulations in this subpart apply to the Radiation Oncology Model implemented under subpart B, the End-Stage Renal Disease (ESRD) Treatment Choices Model implemented under subpart C, and each Innovation Center model for which participation by Model participants is mandatory that begins its first performance period on or after January 1, 2025.

(2) This subpart sets forth the following:

(i) Basis and scope.

(ii) Definitions.

(iii) Beneficiary protections.

(iv) Cooperation in model evaluation and monitoring.

(v) Audits and record retention.

(vi) Rights in data and intellectual property.

(vii) Monitoring and compliance.

(viii) Remedial action.

(ix) Innovation Center model termination by CMS.

(x) Limitations on review.

(xi) Miscellaneous provisions on bankruptcy and other notifications.

(xii) Reconsideration review processes.

(3) Except as specifically noted in this subpart, these regulations do not affect the applicability of other provisions affecting providers and suppliers under Medicare FFS, including provisions regarding payment, coverage, or program integrity.

[89 FR 96444, Dec. 4, 2024]

§ 512.110 Definitions.

For purposes of this part, the following terms are defined as follows unless otherwise stated:

Beneficiary means an individual who is enrolled in Medicare FFS.

Change in control means any of the following:

(1) The acquisition by any “person” (as this term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934), directly or indirectly, of voting securities of the model participant representing more than 50 percent of the model participant's outstanding voting securities or rights to acquire such securities.

(2) The acquisition of the model participant by any individual or entity.

(3) The sale, lease, exchange or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the model participant.

(4) The approval and completion of a plan of liquidation of the model participant, or an agreement for the sale or liquidation of the model participant.

Covered services means the scope of health care benefits described in sections 1812 and 1832 of the Act for which payment is available under Part A or Part B of Title XVIII of the Act.

Days means calendar days.

Descriptive model materials and activities means general audience materials such as brochures, advertisements, outreach events, letters to beneficiaries, web pages, mailings, social media, or other materials or activities distributed or conducted by or on behalf of the model participant or its downstream participants when used to educate, notify, or contact beneficiaries regarding the Innovation Center model. The following communications are not descriptive model materials and activities: Communications that do not directly or indirectly reference the Innovation Center model (for example, information about care coordination generally); information on specific medical conditions; referrals for health care items and services; and any other materials that are excepted from the definition of “marketing” as that term is defined at 45 CFR 164.501.

Downstream participant means an individual or entity that has entered into a written arrangement with a model participant under which the downstream participant engages in one or more Innovation Center model activities.

Governing documentation means the applicable Federal regulations, and the model-specific participation agreement, cooperative agreement, and any addendum to an existing contract with CMS, that collectively specify the terms of the Innovation Center model.

Innovation Center model means an innovative payment and service delivery model tested under the authority of section 1115A(b) of the Act, including a model expansion under section 1115A(c) of the Act.

Innovation Center model activities mean any activities affecting the care of model beneficiaries related to the test of the Innovation Center model.

Medically necessary means reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the functioning of a malformed body member.

Model beneficiary means a beneficiary attributed to a model participant or otherwise included in an Innovation Center model.

Model participant means an individual or entity that is identified as a participant in the Innovation Center model.

Model-specific payment means a payment made by CMS only to model participants, or a payment adjustment made only to payments made to model participants, under the terms of the Innovation Center model that is not applicable to any other providers or suppliers.

Performance period means the period of time during which an Innovation Center model is tested and model participants are held accountable for cost and quality of care; the performance period for each Innovation Center model is specified in the governing documentation.

Provider means a “provider of services” as defined under section 1861(u) of the Act and codified in the definition of “provider” at § 400.202 of this chapter.

Standard provisions for Innovation Center models mean the provisions codified in 42 CFR part 512 subpart A.

Supplier means a supplier as defined in section 1861(d) of the Act and codified at § 400.202 of this chapter.

U.S. Territories means American Samoa, the Federated States of Micronesia, Guam, the Marshall Islands, and the Commonwealth of the Northern Mariana Islands, Palau, Puerto Rico, U.S. Minor Outlying Islands, and the U.S. Virgin Islands.

[85 FR 61362, Sept. 29, 2020, as amended at 89 FR 96444, Dec. 4, 2024]

§ 512.120 Beneficiary protections.

(a) Beneficiary freedom of choice. (1) The model participant and its downstream model participants must not restrict beneficiaries' ability to choose to receive care from any provider or supplier.

(2) The model participant and its downstream model participants must not commit any act or omission, nor adopt any policy that inhibits beneficiaries from exercising their freedom to choose to receive care from any provider or supplier or from any health care provider who has opted out of Medicare. The model participant and its downstream model participants may communicate to model beneficiaries the benefits of receiving care with the model participant, if otherwise consistent with the requirements of this part and applicable law.

(b) Availability of services. (1) The model participant and its downstream participants must continue to make medically necessary covered services available to beneficiaries to the extent required by applicable law. Model beneficiaries and their assignees retain their rights to appeal claims in accordance with part 405, subpart I of this chapter.

(2) The model participant and its downstream participants must not take any action to select or avoid treating certain Medicare beneficiaries based on their income levels or based on factors that would render the beneficiary an “at-risk beneficiary” as defined at § 425.20 of this chapter.

(3) The model participant and its downstream participants must not take any action to selectively target or engage beneficiaries who are relatively healthy or otherwise expected to improve the model participant's or downstream participant's financial or quality performance, a practice commonly referred to as “cherry-picking.”

(c) Descriptive model materials and activities. (1) The model participant and its downstream participants must not use or distribute descriptive model materials and activities that are materially inaccurate or misleading.

(2) The model participant and its downstream participants must include the following statement on all descriptive model materials and activities: “The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of the Centers for Medicare & Medicaid Services (CMS). The authors assume responsibility for the accuracy and completeness of the information contained in this document.”

(3) The model participant and its downstream participants must retain copies of all written and electronic descriptive model materials and activities and appropriate records for all other descriptive model materials and activities in a manner consistent with § 512.135(c).

(4) CMS reserves the right to review, or have a designee review, descriptive model materials and activities to determine whether or not the content is materially inaccurate or misleading. This review takes place at a time and in a manner specified by CMS once the descriptive model materials and activities are in use by the model participant.

§ 512.130 Cooperation in model evaluation and monitoring.

The model participant and its downstream participants must comply with the requirements of § 403.1110(b) of this chapter and must otherwise cooperate with CMS' model evaluation and monitoring activities as may be necessary to enable CMS to evaluate the Innovation Center model in accordance with section 1115A(b)(4) of the Act and to conduct monitoring activities under § 512.150, including producing such data as may be required by CMS to evaluate or monitor the Innovation Center model, which may include protected health information as defined in 45 CFR 160.103 and other individually-identifiable data.

§ 512.135 Audits and record retention.

(a) Right to audit. The Federal government, including CMS, HHS, and the Comptroller General, or their designees, has the right to audit, inspect, investigate, and evaluate any documents and other evidence regarding implementation of an Innovation Center model.

(b) Access to records. The model participant and its downstream participants must maintain and give the Federal government, including CMS, HHS, and the Comptroller General, or their designees, access to all such documents and other evidence sufficient to enable the audit, evaluation, inspection, or investigation of the implementation of the Innovation Center model, including without limitation, documents and other evidence regarding all of the following:

(1) The model participant's and its downstream participants' compliance with the terms of the Innovation Center model, including this subpart.

(2) The accuracy of model-specific payments made under the Innovation Center model.

(3) The model participant's payment of amounts owed to CMS under the Innovation Center model.

(4) Quality measure information and the quality of services performed under the terms of the Innovation Center model, including this subpart.

(5) Utilization of items and services furnished under the Innovation Center model.

(6) The ability of the model participant to bear the risk of potential losses and to repay any losses to CMS, as applicable.

(7) Patient safety.

(8) Other program integrity issues.

(c) Record retention. (1) The model participant and its downstream participants must maintain the documents and other evidence described in paragraph (b) of this section and other evidence for a period of six years from the last payment determination for the model participant under the Innovation Center model or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless—

(i) CMS determines there is a special need to retain a particular record or group of records for a longer period and notifies the model participant at least 30 days before the normal disposition date; or

(ii) There has been a termination, dispute, or allegation of fraud or similar fault against the model participant or its downstream participants, in which case the records must be maintained for an additional 6 years from the date of any resulting final resolution of the termination, dispute, or allegation of fraud or similar fault.

(2) If CMS notifies the model participant of the special need to retain records in accordance with paragraph (c)(1)(i) of this section or there has been a termination, dispute, or allegation of fraud or similar fault against the model participant or its downstream participants described in paragraph (c)(1)(ii) of this section, the model participant must notify its downstream participants of this need to retain records for the additional period specified by CMS.

§ 512.140 Rights in data and intellectual property.

(a) CMS may—

(1) Use any data obtained under §§ 512.130, 512.135, and 512.150 to evaluate and monitor the Innovation Center model; and

(2) Disseminate quantitative and qualitative results and successful care management techniques, including factors associated with performance, to other providers and suppliers and to the public. Data disseminated may include patient—

(i) De-identified results of patient experience of care and quality of life surveys, and

(ii) De-identified measure results calculated based upon claims, medical records, and other data sources.

(b) Notwithstanding any other provision of this part, for all data that CMS confirms to be proprietary trade secret information and technology of the model participant or its downstream participants, CMS or its designee(s) will not release this data without the express written consent of the model participant or its downstream participant, unless such release is required by law.

(c) If the model participant or its downstream participant wishes to protect any proprietary or confidential information that it submits to CMS or its designee, the model participant or its downstream participant must label or otherwise identify the information as proprietary or confidential. Such assertions are subject to review and confirmation by CMS prior to CMS' acting upon such assertions.

§ 512.150 Monitoring and compliance.

(a) Compliance with laws. The model participant and each of its downstream participants must comply with all applicable laws and regulations.

(b) CMS monitoring and compliance activities. (1) CMS may conduct monitoring activities to ensure compliance by the model participant and each of its downstream participants with the terms of the Innovation Center model including this subpart; to understand model participants' use of model-specific payments; and to promote the safety of beneficiaries and the integrity of the Innovation Center model. Such monitoring activities may include, without limitation, all of the following:

(i) Documentation requests sent to the model participant and its downstream participants, including surveys and questionnaires.

(ii) Audits of claims data, quality measures, medical records, and other data from the model participant and its downstream participants.

(iii) Interviews with members of the staff and leadership of the model participant and its downstream participants.

(iv) Interviews with beneficiaries and their caregivers.

(v) Site visits to the model participant and its downstream participants, performed in a manner consistent with paragraph (c) of this section.

(vi) Monitoring quality outcomes and clinical data, if applicable.

(vii) Tracking patient complaints and appeals.

(2) In conducting monitoring and oversight activities, CMS or its designees may use any relevant data or information including without limitation all Medicare claims submitted for items or services furnished to model beneficiaries.

(c) Site visits. (1) In a manner consistent with § 512.130, the model participant and its downstream participants must cooperate in periodic site visits performed by CMS or its designees in order to facilitate the evaluation of the Innovation Center model and the monitoring of the model participant's compliance with the terms of the Innovation Center model, including this subpart.

(2) CMS or its designee provides, to the extent practicable, the model participant or downstream participant with no less than 15 days advance notice of any site visit. CMS—

(i) Will attempt, to the extent practicable, to accommodate a request for particular dates in scheduling site visits.

(ii) Will not accept a date request from a model participant or downstream participant that is more than 60 days after the date of the CMS initial site visit notice.

(3) The model participant and its downstream participants must ensure that personnel with the appropriate responsibilities and knowledge associated with the purpose of the site visit are available during all site visits.

(4) Additionally, CMS may perform unannounced site visits at the office of the model participant and any of its downstream participants at any time to investigate concerns about the health or safety of beneficiaries or other patients or other program integrity issues.

(5) Nothing in this part shall be construed to limit or otherwise prevent CMS from performing site visits permitted or required by applicable law.

(d) Reopening of payment determinations. (1) CMS may reopen a model-specific payment determination on its own motion or at the request of a model participant, within 4 years from the date of the determination, for good cause (as defined at § 405.986 of this chapter).

(2) CMS may reopen a model-specific payment determination at any time if there exists reliable evidence (as defined in § 405.902 of this chapter) that the determination was procured by fraud or similar fault (as defined in § 405.902 of this chapter).

(3) CMS's decision regarding whether to reopen a model-specific payment determination is binding and not subject to appeal.

(e) OIG authority. Nothing contained in the terms of the Innovation Center Model or this part limits or restricts the authority of the HHS Office of Inspector General or any other Federal government authority, including its authority to audit, evaluate, investigate, or inspect the model participant or its downstream participants for violations of any Federal statutes, rules, or regulations.

§ 512.160 Remedial action.

(a) Grounds for remedial action. CMS may take one or more remedial actions described in paragraph (b) of this section if CMS determines that the model participant or a downstream participant:

(1) Has failed to comply with any of the terms of the Innovation Center Model, including this subpart.

(2) Has failed to comply with any applicable Medicare program requirement, rule, or regulation.

(3) Has taken any action that threatens the health or safety of a beneficiary or other patient.

(4) Has submitted false data or made false representations, warranties, or certifications in connection with any aspect of the Innovation Center model.

(5) Has undergone a change in control that presents a program integrity risk.

(6) Is subject to any sanctions of an accrediting organization or a Federal, State, or local government agency.

(7) Is subject to investigation or action by HHS (including the HHS Office of Inspector General and CMS) or the Department of Justice due to an allegation of fraud or significant misconduct, including being subject to the filing of a complaint or filing of a criminal charge, being subject to an indictment, being named as a defendant in a False Claims Act qui tam matter in which the Federal government has intervened, or similar action.

(8) Has failed to demonstrate improved performance following any remedial action imposed under this section.

(9) For the ETC Model only, has misused or disclosed the beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the applicable data sharing agreement.

(b) Remedial actions. If CMS determines that one or more grounds for remedial action described in paragraph (a) of this section has taken place, CMS may take one or more of the following remedial actions:

(1) Notify the model participant and, if appropriate, require the model participant to notify its downstream participants of the violation.

(2) Require the model participant to provide additional information to CMS or its designees.

(3) Subject the model participant to additional monitoring, auditing, or both.

(4) Prohibit the model participant from distributing model-specific payments, as applicable.

(5) Require the model participant to terminate, immediately or by a deadline specified by CMS, its agreement with a downstream participant with respect to the Innovation Center model.

(6) In the ETC Model only:

(i) Terminate the ETC Participant from the ETC Model.

(ii) Suspend or terminate the ability of the ETC Participant, pursuant to § 512.397(c), to reduce or waive the coinsurance for kidney disease patient education services.

(7) Require the model participant to submit a corrective action plan in a form and manner and by a deadline specified by CMS.

(8) Discontinue the provision of data sharing and reports to the model participant.

(9) Recoup model-specific payments.

(10) Reduce or eliminate a model-specific payment otherwise owed to the model participant.

(11) Such other action as may be permitted under the terms of this part.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62020, Nov. 8, 2021]

§ 512.165 Innovation center model termination by CMS.

(a) CMS may terminate an Innovation Center model for reasons including, but not limited to, the following:

(1) CMS determines that it no longer has the funds to support the Innovation Center model.

(2) CMS terminates the Innovation Center model in accordance with section 1115A(b)(3)(B) of the Act.

(b) If CMS terminates an Innovation Center model, CMS provides written notice to the model participant specifying the grounds for model termination and the effective date of such termination.

§ 512.170 Limitations on review.

There is no administrative or judicial review under sections 1869 or 1878 of the Act or otherwise for all of the following:

(a) The selection of models for testing or expansion under section 1115A of the Act.

(b) The selection of organizations, sites, or participants, including model participants, to test the Innovation Center models selected, including a decision by CMS to remove a model participant or to require a model participant to remove a downstream participant from the Innovation Center model.

(c) The elements, parameters, scope, and duration of such Innovation Center models for testing or dissemination, including without limitation the following:

(1) The selection of quality performance standards for the Innovation Center model by CMS.

(2) The methodology used by CMS to assess the quality of care furnished by the model participant.

(3) The methodology used by CMS to attribute model beneficiaries to the model participant, if applicable.

(d) Determinations regarding budget neutrality under section 1115A(b)(3) of the Act.

(e) The termination or modification of the design and implementation of an Innovation Center model under section 1115A(b)(3)(B) of the Act.

(f) Determinations about expansion of the duration and scope of an Innovation Center model under section 1115A(c) of the Act, including the determination that an Innovation Center model is not expected to meet criteria described in paragraph (a) or (b) of such section.

§ 512.180 Miscellaneous provisions on bankruptcy and other notifications.

(a) Notice of bankruptcy. If the model participant has filed a bankruptcy petition, whether voluntary or involuntary, the model participant must provide written notice of the bankruptcy to CMS and to the U.S. Attorney's Office in the district where the bankruptcy was filed, unless final payment has been made by either CMS or the model participant under the terms of each model tested under section 1115A of the Act in which the model participant is participating or has participated and all administrative or judicial review proceedings relating to any payments under such models have been fully and finally resolved. The notice of bankruptcy must be sent by certified mail no later than 5 days after the petition has been filed and must contain a copy of the filed bankruptcy petition (including its docket number), and a list of all models tested under section 1115A of the Act in which the model participant is participating or has participated. This list need not identify a model tested under section 1115A of the Act in which the model participant participated if final payment has been made under the terms of the model and all administrative or judicial review proceedings regarding model-specific payments between the model participant and CMS have been fully and finally resolved with respect to that model. The notice to CMS must be addressed to the CMS Office of Financial Management at 7500 Security Boulevard, Mailstop C3-01-24, Baltimore, MD 21244 or such other address as may be specified on the CMS website for purposes of receiving such notices.

(b) Notice of legal name change. A model participant must furnish written notice to CMS at least 30 days after any change in its legal name becomes effective. The notice of legal name change must be in a form and manner specified by CMS and must include a copy of the legal document effecting the name change, which must be authenticated by the appropriate State official.

(c) Notice of change in control. (1) A model participant must furnish written notice to CMS in a form and manner specified by CMS at least 90 days before any change in control becomes effective.

(2)(i) If CMS determines, in accordance with § 512.160(a)(5), that a model participant's change in control would present a program integrity risk, CMS may take remedial action against the model participant under § 512.160(b).

(ii) CMS may also require immediate reconciliation and payment of all monies owed to CMS by a model participant that is subject to a change in control.

§ 512.190 Reconsideration review process.

(a) Applicability of this section. Section 512.190 is only applicable to the following:

(1) Innovation Center models that have waived section 1869 of the Act, or where section 1869 of the Act is not applicable for model participants.

(2) Model participants, unless the governing documentation for the Innovation Center model states otherwise.

(b) Right to reconsideration. The model participant may request reconsideration of a determination made by CMS in accordance with an Innovation Center model's governing documentation only if such reconsideration is not precluded by section 1115A(d)(2) of the Act, this subpart, or the governing documentation for the Innovation Center model for which CMS made the initial determination.

(1) A request for reconsideration by the model participant must satisfy all of the following criteria:

(i) Must be submitted to a designee of CMS (reconsideration official) who—

(A) Is authorized to receive such requests; and

(B) Did not participate in the determination that is the subject of the reconsideration request, or, if applicable, the timely error notice review process.

(ii)(A) Must include a copy of the initial determination issued by CMS; and

(B) Must contain a detailed, written explanation of the basis for the dispute, including supporting documentation.

(iii) Must be made within 30 days of the date of the initial determination for which reconsideration is being requested via email to an address as specified by CMS in the governing documentation for the Innovation Center model for which CMS made the initial determination.

(2) Requests that do not meet the requirements of paragraph (b)(1) of this section are denied.

(3) Within 10 business days of receiving a request for reconsideration, the reconsideration official sends CMS and the model participant a written acknowledgement of receipt of the reconsideration request. This acknowledgement sets forth all of the following:

(i) The review procedures.

(ii) A schedule that permits each party to submit position papers and documentation in support of the party's position for consideration by the reconsideration official.

(4) If the request is regarding a model-specific payment and the governing documentation specifies an initial timely error notice process, the model participant must satisfy the timely error notice requirements specified in the governing documentation before submitting a reconsideration request under paragraph (b) of this section. In the event that the model participant fails to timely submit an error notice with respect to a particular model-specific payment, the reconsideration review process would not be available to the model participant with regard to that model-specific payment.

(c) Standards for reconsideration. (1) The parties must continue to fulfill all responsibilities and obligations under the governing documentation during the course of any dispute arising under the governing documentation.

(2) The reconsideration consists of a review of documentation that is submitted timely and in accordance with the standards specified by the reconsideration official and are enumerated in paragraph (b)(3) of this section.

(3) The burden of proof is on the model participant to demonstrate to the reconsideration official with clear and convincing evidence that the determination is inconsistent with the terms of the governing documentation.

(d) Reconsideration determination. (1) The reconsideration determination is based solely upon both of the following:

(i) Position papers and supporting documentation that meet both of the following:

(A) Submitted timely to the reconsideration official in accordance with the schedule specified in paragraph (b)(3)(ii) of this section.

(B) The standards for submission under paragraph (b)(1) of this section.

(ii) Documents and data that were timely submitted to CMS in the required format before CMS made the determination that is the subject of the reconsideration request.

(2)(i) The reconsideration official issues the reconsideration determination to CMS and to the model participant in writing.

(ii) Absent unusual circumstances, in which case the reconsideration official reserves the right to an extension upon written notice to the model participant, the reconsideration determination is issued within 60 days of receipt of timely filed position papers and supporting documentation in accordance with the schedule specified in paragraph (b)(3)(ii) of this section.

(3) The reconsideration determination is final and binding 30 days after its issuance, unless the model participant or CMS timely requests review of the reconsideration determination in accordance with paragraphs (e)(1) and (2) of this section.

(e) CMS Administrator review. The model participant or CMS may request that the CMS Administrator review the reconsideration determination. The request must meet both of the following:

(1) Be made via email within 30 days of the date of the reconsideration determination to the address specified by CMS.

(2) Include a copy of the reconsideration determination and a detailed written explanation of why the model participant or CMS disagrees with the reconsideration determination.

(3) The CMS Administrator promptly sends the parties a written acknowledgement of receipt of the request for review.

(4) The CMS Administrator sends the parties notice of the following:

(i) Whether the request for review is granted or denied.

(ii) If the request for review is granted, the review procedures and a schedule that permits each party to submit a brief in support of the party's position for consideration by the CMS Administrator.

(4) If the request for review is denied, the reconsideration determination is final and binding as of the date the request for review is denied.

(5) If the request for review is granted all of the following occur:

(i) The record for review consists solely of—

(A) Timely submitted briefs and the evidence contained in the record of the proceedings before the reconsideration official; and

(B) Evidence as set forth in the documents and data described in paragraph (d)(1)(ii) of this section.

(ii) The CMS Administrator reviews the record and issues to CMS and to the model participant a written determination.

(iii) The written determination of the CMS Administrator is final and binding as of the date the written determination is sent.

[89 FR 96444, Dec. 4, 2024]

Editorial Note:At 89 FR 96444, Dec. 4, 2024, § 512.190 was added with two paragraph (e)(4)s.

§ 512.200 Basis and scope of subpart.

(a) Basis. This subpart implements the test of the Radiation Oncology (RO) Model under section 1115A(b) of the Act. Except as specifically noted in this subpart, the regulations under this subpart do not affect the applicability of other regulations affecting providers and suppliers under Medicare FFS, including the applicability of regulations regarding payment, coverage, and program integrity.

(b) Scope. This subpart sets forth the following:

(1) RO Model participation.

(2) Episodes being tested under the RO Model.

(3) Methodology for pricing.

(4) Billing and payment under the RO Model.

(5) Data reporting requirements.

(6) Medicare program waivers.

(7) Payment reconciliation and review processes.

(c) RO participants are subject to the general provisions for Innovation Center models specified in subpart A of this part 512 and in subpart K of part 403 of this chapter.

§ 512.205 Definitions.

For purposes of this subpart, the following definitions apply:

Aggregate quality score (AQS) means the numeric score calculated for each RO participant based on its performance on, and reporting of, quality measures and clinical data. The AQS is used to determine an RO participant's quality reconciliation payment amount.

APM means Alternative Payment Model.

ASC means Ambulatory Surgery Center.

Baseline period means the three calendar year period that begins on January 1 no fewer than five years but no more than six years prior to the start of the model performance period during which episodes must initiate in order to be used in the calculation of the national base rates, each RO participant's historical experience adjustment for the PC or TC or both for the model performance period, and the RO participant's case mix adjustment for the PC or TC or both for PY1. The baseline period is January 1, 2017 through December 31, 2019, unless the RO Model is prohibited by law from starting in calendar year (CY) 2022, in which case the baseline period will be delayed based on the new model performance period (for example, if the model performance period starts any time in CY 2023, then the baseline period would be CY 2018 through CY 2020).

Blend means the weight given to an RO participant's historical experience adjustment relative to the geographically-adjusted trended national base rate in the calculation of its participant-specific episode payment amounts.

CAH means Critical Access Hospital.

CEHRT means Certified Electronic Health Record Technology.

Clean period means the 28-day period after an RO episode has ended, during which time an RO participant must bill for medically necessary RT services furnished to the RO beneficiary in accordance with Medicare FFS billing rules.

Core-Based Statistical Area (CBSA) means a statistical geographic area, based on the definition as identified by the Office of Management and Budget, with a population of at least 10,000, which consists of a county or counties anchored by at least one core (urbanized area or urban cluster), plus adjacent counties having a high degree of social and economic integration with the core (as measured through commuting ties with the counties containing the core).

Discount factor means the percentage by which CMS reduces payment of the professional component and technical component.

(1) The reduction of payment occurs after the trend factor, the geographic adjustment, and the RO Model-specific adjustments have been applied, but before beneficiary cost-sharing and standard CMS adjustments, including sequestration, have been applied.

(2) The discount factor does not vary by cancer type.

(3) The discount factor for the professional component is 3.5 percent; the discount factor for the technical component is 4.5 percent.

Dual participant means an RO participant that furnishes both the professional component and technical component of RT services of an RO episode through a freestanding radiation therapy center, identified by a single TIN.

Duplicate RT service means any included RT service that is furnished to an RO beneficiary by an RT provider or RT supplier that is not excluded from participation in the RO Model at § 512.210(b), and that did not initiate the PC or TC of the RO beneficiary's RO episode. Such services are furnished in addition to the RT services furnished by the RO participant that initiated the PC or TC and continues to furnish care to the RO beneficiary during the RO episode.

Episode means the 90-day period of RT services that begins on the date of service that an RT provider or RT supplier that is not an RO participant furnishes an initial treatment planning service to a beneficiary, provided that an RT provider or RT supplier furnishes a technical component RT service to the beneficiary within 28 days of such initial treatment planning service. Additional criteria for constructing episodes to be included in determining the national base rates are set forth in § 512.250.

EOE stands for “end of episode” and means the end of an RO episode.

EUC stands for “extreme and uncontrollable circumstance” and means a circumstance that is beyond the control of one or more RO participants, adversely impacts such RO participants' ability to deliver care in accordance with the RO Model's requirements, and affects an entire region or locale.

HCPCS means Healthcare Common Procedure Coding System.

HOPD means hospital outpatient department.

Included cancer types means the cancer types determined by the criteria set forth in § 512.230, which are included in the RO Model test.

Included RT services means the RT services identified at § 512.235, which are included in the RO Model test.

Incomplete episode means an RO episode that is deemed not to have occurred because:

(1) A Technical participant or a Dual participant does not furnish a technical component to an RO beneficiary within 28 days following a Professional participant or the Dual participant furnishing an initial treatment planning service to that RO beneficiary;

(2) An RO beneficiary ceases to have traditional FFS Medicare as his or her primary payer at any time after the initial treatment planning service is furnished and before the date of service on a claim with an RO Model-specific HCPCS code and an EOE modifier; or

(3) An RO beneficiary switches RT provider or RT supplier before all included RT services in the RO episode have been furnished.

Individual practitioner means a Medicare-enrolled physician (identified by an NPI) who furnishes RT services to Medicare FFS beneficiaries, and has reassigned his or her billing rights to the TIN of an RO participant.

Individual practitioner list means a list of individual practitioners who furnish RT services under the TIN of a Dual participant or a Professional participant, which is annually compiled by CMS and which the RO participant must review, revise, and certify in accordance with § 512.217. The individual practitioner list is used for the RO Model as a Participation List as defined in § 414.1305 of this chapter.

Initial reconciliation means the first reconciliation of a PY that occurs as early as August following the applicable PY.

Legacy CCN means a CMS certification number (CCN) that an RO participant that is a hospital outpatient department (HOPD) or its predecessor(s) previously used to bill Medicare for included RT services but no longer uses to bill Medicare for included RT services.

Legacy TIN means a taxpayer identification number (TIN) that an RO participant that is a PGP, or a freestanding radiation therapy center, or its predecessor(s) previously used to bill Medicare for included RT services but no longer uses to bill Medicare for included RT services.

MIPS means Merit based Incentive Payment System.

Model performance period means the 5 performance years (PYs) during which RO episodes initiate and terminate. CMS will establish the start and end dates of the model performance period for the RO Model through future rulemaking.

National base rate means the total payment amount for the relevant component of an RO episode, before application of the trend factor, discount factor, adjustments, and applicable withholds, for each of the included cancer types.

NPI means National Provider Identifier.

OPPS means outpatient prospective payment system.

Participant-specific professional episode payment means a payment which is calculated by CMS as set forth in § 512.255 and which is paid by CMS to a Professional participant or Dual participant as set forth in § 512.265, for the provision of the professional component to an RO beneficiary during an RO episode.

Participant-specific technical episode payment means a payment which is calculated by CMS as set forth in § 512.255 and which is paid by CMS to a Technical participant or Dual participant in accordance with § 512.265, for the provision of the technical component to an RO beneficiary during an RO episode.

PGP means physician group practice.

PPS means prospective payment system.

Professional component (PC) means the included RT services that may only be furnished by a physician.

Professional participant means an RO participant that is a Medicare-enrolled PGP identified by a single TIN that furnishes only the PC of an RO episode.

PSO means patient safety organization.

PY stands for performance year and means each 12-month period beginning on January 1 and ending on December 31 during the model performance period, unless the model performance period begins on a date other than January 1, in which case, the first performance year (PY1) begins on that date and ends on December 31 of the same year.

QP means Qualifying APM Participants.

Reconciliation payment means a payment made by CMS to an RO participant, as determined in accordance with § 512.285.

Repayment amount means the amount owed by an RO participant to CMS, as determined in accordance with § 512.285.

Reconciliation report means the annual report issued by CMS to an RO participant for each PY, which specifies the RO participant's reconciliation payment amount or repayment amount.

RO beneficiary means a Medicare beneficiary who meets all of the beneficiary inclusion criteria at § 512.215(a) and whose RO episode meets all the criteria defined at § 512.245.

RO episode means the 90-day period that, as set forth in § 512.245, begins on the date of service that a Professional participant or a Dual participant furnishes an initial treatment planning service to an RO beneficiary in a freestanding radiation therapy center or an HOPD, provided that a Technical participant or the same Dual participant furnishes a technical component RT service to the RO beneficiary within 28 days of such RT treatment planning service.

RO participant means a Medicare-enrolled PGP, freestanding radiation therapy center, or HOPD that participates in the RO Model in accordance with § 512.210. An RO participant may be a Dual participant, Professional participant, or Technical participant.

RT provider means a Medicare-enrolled HOPD that furnishes RT services.

RT services are the treatment planning, technical preparation, special services (such as simulation), treatment delivery, and treatment management services associated with cancer treatment that uses high doses of radiation to kill cancer cells and shrink tumors.

RT supplier means a Medicare-enrolled PGP or freestanding radiation therapy center that furnishes RT services.

SOE stands for “start of episode” and means the start of an RO episode.

Stop-loss limit means the set percentage at which loss is limited under the Model used to calculate the stop-loss reconciliation amount.

Stop-loss reconciliation amount means the amount set forth in § 512.285(f) owed by CMS for the loss incurred under the Model to RO participants that have fewer than 60 episodes during the baseline period and were furnishing included RT services before the start of the model performance period in the CBSAs selected for participation.

Technical component (TC) means the included RT services that are not furnished by a physician, including the provision of equipment, supplies, personnel, and administrative costs related to RT services.

Technical participant means an RO participant that is a Medicare-enrolled HOPD or freestanding radiation therapy center, identified by a single CMS Certification Number (CCN) or TIN, which furnishes only the TC of an RO episode.

TIN means Taxpayer Identification Number.

Track One means a track for Professional participants and Dual participants that meet all RO Model requirements as specified in § 512.220, including use of CEHRT.

Track Two means a track for Professional participants and Dual participants that meet all RO Model requirements as specified in § 512.220, except for use of CEHRT.

Track Three means a track for Professional participants and Dual participants who do not meet one or more of the RO Model requirements set forth at § 512.220(a); and for all Technical participants.

Trend factor means an adjustment applied to the national base rates that updates those rates to reflect current trends in the OPPS and PFS rates for RT services.

True-up reconciliation means the process to calculate additional reconciliation payments or repayment amounts for incomplete episodes and duplicate RT services that are identified after the initial reconciliation and after a 12-month claims run-out for all RO episodes initiated in the applicable PY.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86304, Dec. 29, 2020; 86 FR 63994, Nov. 16, 2021; 87 FR 52704, Aug. 29, 2022]

Editorial Note:At 85 FR 86304, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.210 RO participants and geographic areas.

(a) RO participants. Unless otherwise specified in paragraph (b) or (c) of this section, any Medicare-enrolled PGP, freestanding radiation therapy center, or HOPD that furnishes included RT services in a 5-digit ZIP Code linked to a CBSA selected for participation to an RO beneficiary for an RO episode that begins and ends during the model performance period must participate in the RO Model.

(b) Participant exclusions. A PGP, freestanding radiation therapy center, or HOPD is excluded from participation in the RO Model if it:

(1) Furnishes RT services only in Maryland;

(2) Furnishes RT services only in Vermont;

(3) Furnishes RT services only in U.S. Territories;

(4) Is classified as an ambulatory surgery center (ASC), critical access hospital (CAH), or Prospective Payment System (PPS)-exempt cancer hospital; or

(5) Participates in the Pennsylvania Rural Health Model; or

(6) Participates in the Community Transformation Track of the Community Health Access and Rural Transformation (CHART) Model as a participating hospital.

(c) Low volume opt-out. A PGP, freestanding radiation therapy center, or HOPD that would otherwise be required to participate in the RO Model may choose to opt-out of the RO Model as follows:

(1) If the PGP, freestanding radiation therapy center, or HOPD furnished fewer than 20 episodes in the calendar year that is two years prior to the start of PY1 across all CBSAs selected for participation, it may opt out of the RO Model for PY1.

(2) If the PGP, freestanding radiation therapy center, or HOPD furnished fewer than 20 episodes in the calendar year that is two years prior to the start of PY2 across all CBSAs selected for participation, it may opt out of the RO Model for PY2.

(3) If the PGP, freestanding radiation therapy center, or HOPD furnished fewer than 20 RO episodes in PY1 across all CBSAs selected for participation, and PY1 begins on January 1, it may choose to opt out of the RO Model for PY3. In the event that PY1 begins on a date other than January 1, the PGP, freestanding radiation therapy center, or HOPD may opt-out of the RO Model for PY3 if the total number of furnished episodes of the calendar year in which PY1 began and RO episodes in PY1 is fewer than 20 across all CBSAs selected for participation.

(4) If the PGP, freestanding radiation therapy center, or HOPD furnished fewer than 20 RO episodes in PY2 across all CBSAs selected for participation, it may opt out of the RO Model for PY4.

(5) If the PGP, freestanding radiation therapy center, or HOPD furnished fewer than 20 RO episodes in PY3 across all CBSAs selected for participation, it may opt out of the RO Model for PY5.

(6) At least 30 days prior to the start of each PY, CMS provides notice to RO participants eligible for the low volume opt-out for the upcoming PY of such eligibility. The RO participant must attest that it intends to opt out of the RO Model prior to the start of the upcoming PY.

(7) An entity is not eligible for the low-volume opt out if its current TIN or CCN, or its legacy TIN or legacy CCN, or both were used to bill Medicare for 20 or more episodes or RO episodes, as applicable, of RT services in the two years prior to the applicable PY across all CBSAs selected for participation.

(d) Selected CBSAs. CMS randomly selects CBSAs to identify RT providers and RT suppliers to participate in the RO Model through a stratified sample design, allowing for participant and comparison groups to contain approximately 30 percent of all episodes in eligible geographic areas (CBSAs).

(e) Notice of change in TIN or CCN. An RO participant must furnish written notice to CMS in a form and manner specified by CMS at least 90 days before the effective date of any change in TIN or CCN that is used to bill Medicare.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86304, Dec. 29, 2020; 86 FR 63994, Nov. 16, 2021]

Editorial Note:At 85 FR 86304, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.215 Beneficiary population.

(a) Beneficiary inclusion criteria. An individual is an RO beneficiary if:

(1) The individual receives included RT services from an RO participant that billed the SOE modifier for the PC or TC of an RO episode during the Model performance period for an included cancer type; and

(2) At the time that the initial treatment planning service of an RO episode is furnished by an RO participant, the individual:

(i) Is eligible for Medicare Part A and enrolled in Medicare Part B;

(ii) Has traditional FFS Medicare as his or her primary payer (for example, is not enrolled in a PACE plan, Medicare Advantage or another managed care plan, or United Mine Workers insurance); and

(iii) Is not in a Medicare hospice benefit period.

(b) Any individual enrolled in a clinical trial for RT services for which Medicare pays routine costs is an RO beneficiary if the individual satisfies all of the beneficiary inclusion criteria in paragraph (a) of this section.

§ 512.217 Identification of individual practitioners.

(a) General. Upon the start of each PY, CMS creates and provides to each RO participant that is a PGP or a freestanding radiation therapy center an individual practitioner list identifying by NPI each individual practitioner associated with the RO participant. For RO participants that begin participation in the RO Model after the start of a PY, but at least 30 days prior to the last QP determination date as specified at § 414.1325 of this chapter, CMS creates and provides an individual practitioner list to that RO participant.

(b) Review of individual practitioner list. Up until the last QP determination date as specified at § 414.1325 of this chapter, the RO participant must review the individual practitioner list, correct any inaccuracies in accordance with paragraph (d) of this section, and certify the list (as corrected, if applicable) in a form and manner specified by CMS and in accordance with paragraph (c) of this section. The RO participant may correct any inaccuracies in its individual practitioner list until the last QP determination date as specified at § 414.1325 of this chapter. Any Dual participant, Professional participant, or Technical participant that is a freestanding radiation therapy center and joins the RO Model after the start of a PY must review and certify its individual practitioner list by the last QP determination date as specified at § 414.1325 of this chapter.

(c) List certification. (1) Up until the last QP determination date as specified at § 414.1325 of this chapter, an individual with the authority to legally bind the RO participant must certify the accuracy, completeness, and truthfulness of the individual practitioner list to the best of his or her knowledge, information, and belief.

(2) All Medicare-enrolled individual practitioners that have reassigned their right to receive Medicare payment for provision of RT services to the TIN of the RO participant must be included on the RO participant's individual practitioner list and each individual practitioner must agree to comply with the requirements of the RO Model before the RO participant certifies the individual practitioner list.

(3) If the RO participant does not certify the individual practitioner list in PY2 through PY5:

(i) Eligible clinicians in the RO Model will not be considered participants in a MIPS APM for purposes of MIPS reporting and scoring rules;

(ii) Eligible clinicians in the RO Model will not have Qualifying APM Participant (“QP”) determinations made based on their participation in the RO Model; and

(d) Changes to the individual practitioner list—(1) Additions. (i) An RO participant must notify CMS of an addition to its individual practitioner list when an eligible clinician reassigns his or her rights to receive payment from Medicare to the RO participant. The notice must be submitted in the form and manner specified by CMS up until the last QP determination date as specified at § 414.1325 of this chapter.

(ii) If the RO participant timely submits notice to CMS, then the addition of an individual practitioner to the RO participant's individual practitioner list is effective on the date specified in the notice furnished to CMS, but no earlier than 30 days before the date of the notice. If the RO participant fails to submit timely notice to CMS, then the addition of an individual practitioner to the individual practitioner list is effective on the date of the notice.

(2) Removals. (i) An RO participant must notify CMS when an individual on the RO participant's individual practitioner list ceases to be an individual practitioner up until the last QP determination date as specified at § 414.1325 of this chapter. The notice must be submitted in the form and manner specified by CMS.

(ii) The removal of an individual practitioner from the RO participant's individual practitioner list is effective on the date specified in the notice furnished to CMS. If the RO participant fails to submit a timely notice of the removal, then the removal is effective on the date that the individual ceases to be an individual practitioner.

(e) Update to Medicare enrollment information. The RO participant must ensure that all changes to enrollment information for an RO participant and its individual practitioners, including changes to reassignment of the right to receive Medicare payment, are reported to CMS consistent with § 424.516 of this chapter.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86304, Dec. 29, 2020; 86 FR 63995, Nov. 16, 2021]

Editorial Note:At 85 FR 86304, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.220 RO participant compliance with RO Model requirements.

(a) RO participant-specific requirements. (1) An RO participant must satisfy the requirements of this section to be included in Track One under the RO Model in a particular PY. An RO participant that meets all of these RO Model requirements in a particular PY, excluding use of CEHRT, will be in Track Two for such PY. An RO participant that does not meet one or more of the RO Model requirements in paragraph (a) of this section in a particular PY will be in Track Three for such PY.

(2) Each Professional participant and Dual participant must ensure its individual practitioners:

(i) Starting in PY1, discuss goals of care with each RO beneficiary before initiating treatment and communicate to the RO beneficiary whether the treatment intent is curative or palliative;

(ii) Starting in PY1, adhere to nationally recognized, evidence-based clinical treatment guidelines when appropriate in treating RO beneficiaries or, alternatively, document in the medical record the extent of and rationale for any departure from these guidelines;

(iii) Starting in PY1, assess each RO beneficiary's tumor, node, and metastasis cancer stage for the CMS-specified cancer diagnoses;

(iv) Starting in PY1, assess the RO beneficiary's performance status as a quantitative measure determined by the physician;

(v) Starting in PY1, send a treatment summary to each RO beneficiary's referring physician within 3 months of the end of treatment to coordinate care;

(vi) Starting in PY1, discuss with each RO beneficiary prior to treatment delivery his or her inclusion in, and cost-sharing responsibilities under, the RO Model; and

(vii) Starting in PY1, perform and document Peer Review (audit and feedback on treatment plans) before 25 percent of the total prescribed dose has been delivered and within 2 weeks of the start of treatment for:

(A) 50 percent of new patients in PY1,

(B) 55 percent of new patients in PY2,

(C) 60 percent of new patients in PY3,

(D) 65 percent of new patients in PY4,

(E) 70 percent of new patients in PY5.

(3) Starting in PY1, at such times and in the form and manner specified by CMS, each Technical participant and Dual participant must annually attest to whether it actively participates with a AHRQ-listed patient safety organization (PSO). Examples include maintaining a contractual or similar relationship with a PSO for the receipt and review of patient safety work product.

(b) CEHRT. (1) RO participants must use CEHRT, and ensure that their individual practitioners use CEHRT, in a manner sufficient to meet the applicable requirements of the Advanced APM criteria as specified at § 414.1415(a)(1)(i) of this chapter.

(2) Within 30 days of the start of PY1 and each subsequent PY, the RO participant must certify its use of CEHRT throughout such PY in a manner sufficient to meet the requirements set forth in § 414.1415(a)(1)(i) of this chapter.

(3) An RO participant that joins the RO Model at any time during an ongoing PY must certify their use of CEHRT by the last QP determination date as specified at § 414.1325 of this chapter.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86304, Dec. 29, 2020; 86 FR 63995, Nov. 16, 2021]

Editorial Note:At 85 FR 86304, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.225 Beneficiary notification.

(a) General. Starting in PY1, each Professional participant and Dual participant must notify each RO beneficiary to whom it furnishes included RT services—

(1) That the RO participant is participating in the RO Model;

(2) That the RO beneficiary has the opportunity to decline claims data sharing for care coordination and quality improvement purposes. If an RO beneficiary declines claims data sharing for care coordination and quality improvement purposes, then the RO participant must inform CMS within 30 days of receiving notification from the RO beneficiary that the beneficiary is declining to have his or her claims data shared in that manner; and,

(3) Of the RO beneficiary's cost-sharing responsibilities.

(b) Form and manner of notification. Notification of the information specified in paragraph (a) of this section must be carried out by an RO participant by providing each RO beneficiary with a CMS-developed standardized written notice during the RO beneficiary's initial treatment planning session. The RO participants must furnish the notice to the RO beneficiary in the form and manner specified by CMS.

(c) Applicability of general Innovation Center provisions. The beneficiary notifications under this section are not descriptive model materials and activities under § 512.120(c). The requirement described in § 512.120(c)(2) does not apply to the standardized written notice described in paragraph (b) of this section.

§ 512.230 Criteria for determining cancer types.

(a) Included cancer types. CMS includes in the RO Model cancer types that satisfy the following criteria:

(1) The cancer type is commonly treated with radiation per nationally recognized, evidence-based clinical treatment guidelines;

(2) The cancer type has one or more associated current ICD-10 codes that have demonstrated pricing stability; and

(3) The Secretary has not determined that the cancer type is not suitable for inclusion in the RO Model.

(b) Removing cancer types. CMS removes cancer types in the RO Model if it determines:

(1) That there is a ≥10 percent error in established national base rates; or

(2) The cancer type does not meet the criteria set forth in paragraph (a) of this section.

(c) ICD-10 codes for included cancer types. CMS displays on the RO Model website no later than 30 days prior to each PY the ICD-10 diagnosis codes associated with each included cancer type.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 63996, Nov. 16, 2021]

§ 512.235 Included RT services.

(a) Only the following RT services furnished using an included modality identified at § 512.240 for an included cancer type are included RT services that are paid for by CMS under § 512.265:

(1) Treatment planning;

(2) Technical preparation and special services;

(3) Treatment delivery; and,

(4) Treatment management.

(b) All other RT services furnished by an RO participant during the Model performance period are subject to Medicare FFS payment rules.

§ 512.240 Included modalities.

The modalities included in the RO Model are 3-dimensional conformal RT (3DCRT), intensity-modulated RT (IMRT), stereotactic radiosurgery (SRS), stereotactic body RT (SBRT), proton beam therapy (PBT), and image-guided radiation therapy (IGRT).

[86 FR 63996, Nov. 16, 2021]

§ 512.245 Included RO episodes.

(a) General. Any RO episode that begins on or after the first day of the model performance period and ends on or before the last day of the model performance period is included in the model performance period.

(b) Death or election of hospice benefit. An RO episode is included in, and paid for under, the RO Model if the RO beneficiary dies after the TC of an RO episode has been initiated, or if the RO beneficiary elects the Medicare hospice benefit after the initial treatment planning service, provided that the TC is initiated within 28 days following the initial treatment planning service. Each RO participant will receive both installments of the episode payment under such circumstances, regardless of whether the RO beneficiary dies or elects the Medicare hospice benefit before the relevant course of RT treatment has ended.

(c) Clean periods. An RO episode must not be initiated for the same RO beneficiary during a clean period.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86305, Dec. 29, 2020; 86 FR 63996, Nov. 16, 2021]

Editorial Note:At 85 FR 86305, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.250 Determination of national base rates.

CMS determines a national base rate for the PC and TC for each included cancer type.

(a) National base rates are the historical average cost for an episode of care for each of the included cancer types prior to the Model performance period.

(b) National base rates are determined in the following manner:

(1) CMS excludes from episode pricing and RO episode pricing any claim containing an RT service furnished:

(i) In Maryland, Vermont, or any of the U.S. Territories;

(ii) In the inpatient setting;

(iii) By an entity classified as an ASC, CAH, or PPS-exempt cancer hospital; or

(iv) By an HOPD participating in the Pennsylvania Rural Health Model at the time the RT service was furnished.

(2) CMS excludes the following episodes from the determination of the national base rates:

(i) Episodes that are not linked to a CBSA selected for participation in the RO Model;

(ii) Episodes that are not attributed to an RT provider or RT supplier;

(iii) Episodes that are not assigned an included cancer type; or

(iv) Episodes for which the total allowed amount for RT services listed on claims used to calculate an episode's payment amount is not greater than $0.

(3) CMS calculates the episode amount CMS paid on average to RT providers and RT suppliers for the PC and TC for each of the included cancer types in the HOPD setting, creating the RO Model's national base rates.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 63996, Nov. 16, 2021]

§ 512.255 Determination of participant-specific professional episode payment and participant-specific technical episode payment amounts.

(a) Thirty days before the start of each PY, CMS provides each RO participant its case mix and historical experience adjustments for both the PC and TC as calculated in paragraphs (c)(3) and (4) of this section. If an RO participant is not eligible to receive a historical experience adjustment or case mix adjustment as described under paragraph (c)(7) of this section, then CMS provides a zero value for those adjustments.

(b) Any episode used to calculate the participant-specific professional episode payment amounts and the participant-specific technical episode payment amounts for an RO participant is subject to the exclusions described in § 512.250(b)(1) and (2).

(c) CMS calculates the participant-specific professional episode payment amounts and participant-specific technical episode payment amounts for each included cancer type using the following:

(1) Trend factors. For every PY, CMS adjusts the national base rates for the PC and TC of each cancer type by calculating a separate trend factor for the PC and TC of each included cancer type.

(2) Geographic adjustment. CMS adjusts the trended national base rates prior to applying each RO participant's case mix and historical experience, and prior to applying the discounts and withholds, for local cost and wage indices based on where RT services are furnished, as described by existing geographic adjustment processes in the OPPS and PFS.

(3) Case mix adjustment. CMS establishes and applies a case mix adjustment to the national base rate after the trend factor and geographic adjustment have applied. The case mix adjustment reflects episode or RO episode characteristics that may be beyond the control of RO participants such as cancer type, age, sex, presence of a major procedure, death during the episode, and presence of chemotherapy.

(4) Historical experience adjustment. CMS establishes and applies a historical experience adjustment to the national base rate after the trend factor, geographic adjustment, and case mix adjustment have been applied. The historical experience adjustments reflect each RO participant's actual historical experience.

(5) Blend. CMS blends each RO participant's historical experience adjustment and the geographically-adjusted trended national base rate. The blend for RO participants with a professional historical experience adjustment or technical historical experience adjustment with a value equal to or less than zero is 90/10, meaning the calculation of the participant-specific episode payment amount is weighted according to 90 percent of the RO participant's historical experience adjustment and 10 percent of the geographically-adjusted trended national base for PY1 through PY5. The blend for RO participants with a professional historical experience adjustment or technical historical experience adjustment of more than zero is 90/10 in PY1, 85/15 in PY2, 80/20 in PY3, 75/25 in PY4, and 70/30 in PY5.

(6) Changes in business structure. (i) RO participants must notify CMS in writing of a merger, acquisition, or other new clinical or business relationship, at least 90 days before the date of the change as described in § 424.516.

(ii) CMS updates case mix and historical experience adjustments according to the relevant treatment history that applies as a result of a merger, acquisition, or other new clinical or business relationship in the RO participant's case mix and historical experience adjustment calculations from the effective date of the change.

(7) Adjustments for RO participants with fewer than 60 episodes during the baseline period. (i) RO participants that have fewer than 60 episodes in the baseline period do not receive a historical experience adjustment during the model performance period.

(ii) RO participants that have fewer than 60 episodes in the baseline period do not receive a case mix adjustment for PY1.

(iii) RO participants that have fewer than 60 episodes in the baseline period that continue to have fewer than 60 episodes in the rolling 3-year period used to determine the case mix adjustment for each PY and that have never received a case mix adjustment do not receive a case mix adjustment for that PY.

(iv) RO participants that have fewer than 60 episodes in the baseline period and were furnishing included RT services in the CBSAs selected for participation before the start of the model performance period are eligible to receive a stop-loss reconciliation amount, if applicable, as described in § 512.285(f).

(8) Discount factor. CMS reduces each episode payment by the discount factor after applying the trend factor, geographic adjustment, and case mix and historical experience adjustments to the national base rate.

(9) Incorrect payment withhold. To account for duplicate RT services and incomplete episodes:

(i) CMS withholds from each RO participant 1 percent from each episode payment, after applying the trend factor, geographic adjustment, case mix and historical experience adjustments, and discount to the national base rate.

(ii) CMS determines during the annual reconciliation process set forth at § 512.285 whether an RO participant is eligible to receive a portion or all of the withheld amount or whether any payment is owed to CMS.

(10) Quality withhold. In accordance with § 414.1415(b)(1) of this chapter, CMS withholds 2 percent from each professional episode payment after applying the trend factor, geographic adjustment, case mix and historical experience adjustments, and discount factor to the national base rate. RO participants may earn back this withhold, in part or in full, based on their AQS.

(11) Patient experience withhold. Starting in PY3,

(i) CMS withholds 1 percent from each technical episode payment after applying the trend factor, geographic adjustment, case mix and historical experience adjustments, and discount factor to the national base rate.

(ii) RO participants may earn back their patient-experience withhold, in part or in full, based on their results from the CAHPS® Cancer Care Radiation Therapy survey.

(12) Coinsurance. RO participants may collect beneficiary coinsurance payments for services furnished under the RO Model in multiple installments under a payment plan.

(i) The availability of payment plans may not be used as a marketing tool to influence beneficiary choice of health care provider.

(ii) RO participants offering a payment plan may inform the RO beneficiary of the availability of the payment plan prior to or during the initial treatment planning session and as necessary thereafter.

(iii) The beneficiary coinsurance payment equals 20 percent of the episode payment amount to be paid to the RO participant(s) prior to the application of sequestration for the billed RO Model-specific HCPCS code with a SOE modifier and for the billed RO Model-specific HCPCS code with an EOE modifier for the PC and TC, except as provided in paragraph (c)(12)(iv) and(v) of this section.

(iv) In the case of incomplete episodes, the beneficiary coinsurance payment equals 20 percent of the FFS amounts that would have been paid in the absence of the RO Model for the services furnished by the RO participant that initiated the PC and the RO participant that initiated the TC (if applicable).

(v) In the case of duplicate RT services, the beneficiary coinsurance payment equals 20 percent of the episode payment amount to be paid to the RO participant(s) per § 512.255(c)(12)(iii) and 20 percent of the FFS amount to the RT provider and/or RT supplier furnishing one or more duplicate RT services.

(13) Sequestration. In accordance with applicable law, CMS deducts a percentage from each episode payment after applying the trend factor, geographic adjustment, case mix and historical experience adjustments, discount, withholds, and coinsurance to the national base rate.

(14) Modifications to the participant-specific adjustments for changes in TINs or CCNs. (i) CMS calculates the RO participant's case mix adjustments in accordance with paragraph (c)(3) of this section based on all episodes and RO episodes, as applicable, attributed to the RO participant's legacy TIN(s) or legacy CCN(s), and current TIN or CCN, during the 3-year period that determines the case mix adjustment for each PY.

(ii) CMS calculates the RO participant's historical experience adjustments in accordance with paragraph (c)(4) of this section based on all episodes attributed to the RO participant's legacy TIN(s) or legacy CCN(s), and current TIN or CCN, during the baseline period.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86305, Dec. 29, 2020; 86 FR 63996, Nov. 16, 2021]

Editorial Note:At 85 FR 86305, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.260 Billing.

(a) Reassignment of billing rights. Each Professional participant and Dual participant must ensure that its individual practitioners reassign their billing rights to the TIN of the Professional participant or Dual participant.

(b) Billing under the RO Model. (1) Professional participants and Dual participants must bill an RO Model-specific HCPCS code and a SOE modifier to indicate that the treatment planning service has been furnished and that an RO episode has been initiated.

(2) Dual participants and Technical participants must bill an RO Model-specific HCPCS code and SOE modifier to indicate that a treatment delivery service was furnished.

(3) RO participants must bill the same RO Model-specific HCPCS code that initiated the RO episode and an EOE modifier to indicate that the RO episode has ended.

(4) RO participants may submit a claim with an EOE modifier only after the RT course of treatment has ended, except that such claim must not be submitted earlier than 28 days after the date of the initial treatment planning service.

(c) Billing for RT services performed during a clean period. RO participants must bill for any medically necessary RT services furnished to an RO beneficiary during a clean period in accordance with existing FFS billing processes in the OPPS and PFS.

(d) Submission of no-pay claims. RO participants must submit no-pay claims for any medically necessary included RT services furnished to an RO beneficiary during an RO episode pursuant to existing FFS billing processes in the OPPS and PFS.

§ 512.265 Payment.

(a) Payment for episodes. CMS pays an RO participant for all included RT services furnished to an RO beneficiary during a completed RO episode as follows:

(1) CMS pays a Professional participant a participant-specific professional episode payment for the professional component furnished to an RO beneficiary during an RO episode.

(2) CMS pays a Technical participant a participant-specific technical episode payment for the technical component furnished to an RO beneficiary during an RO episode.

(3) CMS pays a Dual participant a participant-specific professional episode payment and a participant-specific technical episode payment for the professional component and technical component furnished to an RO beneficiary during an RO episode.

(b) Payment installments. CMS makes each of the payments described in paragraph (a) of this section in two equal installments, as follows:

(1) CMS pays one-half of a participant-specific professional episode payment to a Professional participant or Dual participant or one-half of the participant-specific technical episode payment to a Technical participant or Dual participant after the RO participant bills an RO Model-specific HCPCS code with a SOE modifier.

(2) CMS pays the remaining half of a participant-specific professional episode payment to a Professional participant or Dual participant or one-half of the participant-specific technical episode payment to a Technical participant or Dual participant after the RO participant bills an RO Model-specific HCPCS code with an EOE modifier.

(c) Duplicate RT services. Duplicate RT services are reimbursed at the FFS amount, whether or not the RT provider or RT supplier that furnished such services is an RO participant.

§ 512.270 Treatment of add-on payments under existing Medicare payment systems.

(a) CMS does not make separate Medicare FFS payments to RO participants for any included RT services that are furnished to an RO beneficiary during an RO episode.

(b) An RO participant may receive Medicare FFS payment for items and services furnished to an RO beneficiary during an RO episode, provided that any such other item or service is not an included RT service.

§ 512.275 Quality measures, clinical data, and reporting.

(a) Data privacy compliance. The RO participant must—

(1) Comply with all applicable laws pertaining to any patient-identifiable data requested from CMS under the terms of the Innovation Center model, including any patient-identifiable derivative data, as well as the terms of any attestation or agreement entered into by the RO participant with CMS as a condition of receiving that data. Such laws may include, without limitation, the privacy and security rules promulgated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as modified, and the Health Information Technology for Economic and Clinical Health Act (HITECH).

(2) Contractually bind all downstream recipients of CMS data to the same terms and conditions to which the RO participant was itself bound in its agreements with CMS as a condition of the downstream recipient's receipt of the data from the RO participant.

(b) RO participant public release of patient de-identified information. The RO participant must include the disclaimer codified at § 512.120(c)(2) on the first page of any publicly-released document, the contents of which materially and substantially references or is materially and substantially based upon the RO participant's participation in the RO Model, including but not limited to press releases, journal articles, research articles, descriptive articles, external reports, and statistical/analytical materials.

(c) Reporting quality measures and clinical data elements. In addition to reporting described in other provisions in this part, Professional participants and Dual participants must report selected quality measures on all patients and clinical data elements describing cancer stage, disease characteristics, treatment intent, and specific treatment plan information on beneficiaries treated for specified cancer types, in the form, manner, and at a time specified by CMS.

(d) Technical participants and reporting of quality measures and clinical data elements. Technical participants that are freestanding radiation therapy centers and also begin furnishing the professional component during the model performance period must:

(1) Notify CMS no later than 30 days after the technical participant begins furnishing the professional component, in a form and manner specified by CMS; and

(2) Report quality measures and clinical data elements by the next submission period, as described in paragraph (c) of this section.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 63996, Nov. 16, 2021]

§ 512.280 RO Model Medicare program waivers.

(a) General. The Secretary may waive certain requirements of title XVIII of the Act as necessary solely for purposes of testing of the RO Model. Such waivers apply only to the participants in the RO Model.

(b) Hospital Outpatient Quality Reporting (OQR) Program. CMS waives the application of the Hospital OQR Program 2.0 percentage point reduction under section 1833(t)(17) of the Act for only those Ambulatory Payment Classifications (APCs) that include only RO Model-specific HCPCS codes during the Model performance period.

(c) Merit-based Incentive Payment System (MIPS). CMS waives the requirement under section 1848(q)(6)(E) of the Act and § 414.1405(e) of this chapter to apply the MIPS payment adjustment factor, and, as applicable, the additional MIPS payment adjustment factor (collectively referred to as the MIPS payment adjustment factors) to the TC of RO Model payments to the extent that the MIPS payment adjustment factors would otherwise apply to the TC of RO Model payments.

(d) APM Incentive Payment. CMS waives the requirements of § 414.1450(b) of this chapter such that technical component payment amounts under the RO Model shall not be considered in calculation of the aggregate payment amount for covered professional services as defined in section 1848(k)(3)(A) of the Act for the APM Incentive Payment made under § 414.1450(b)(1) of this chapter.

(e) PFS Relativity Adjuster. CMS waives the requirement to apply the PFS Relativity Adjuster to RO Model-specific APCs for RO participants that are non-excepted off-campus provider-based departments (PBDs) identified by section 603 of the Bipartisan Budget Act of 2015 (Pub. L. 114-74), which amended section 1833(t)(1)(B)(v) and added paragraph (t)(21) to the Social Security Act.

(f) General payment waivers. CMS waives the following sections of the Act solely for the purposes of testing the RO Model:

(1) 1833(t)(1)(A).

(2) 1833(t)(16)(D).

(3) 1848(a)(1).

(4) [Reserved].

(5) 1869 claims appeals procedures.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 63997, Nov. 16, 2021]

§ 512.285 Reconciliation process.

(a) General. CMS conducts an initial reconciliation and a true-up reconciliation for each RO participant for each PY in accordance with this section.

(b) Annual reconciliation calculations. (1) To determine the reconciliation payment or the repayment amount based on RO episodes initiated in a PY, CMS performs the following steps:

(i) CMS calculates an RO participant's incorrect episode payment reconciliation amount as described in paragraph (c) of this section.

(ii) CMS calculates the RO participant's quality reconciliation amount as described in paragraph (d) of this section, if applicable.

(iii) CMS calculates the RO participant's patient experience reconciliation amount, as described in paragraph (e) of this section, if applicable.

(iv) CMS calculates the stop-loss reconciliation amount, as described in paragraph (f) of this section, if applicable.

(v) CMS adds, as applicable, the incorrect episode payment reconciliation amount, any quality reconciliation payment amount, any patient experience reconciliation amount, and any stop-loss reconciliation payment amount. The sum of these amounts results in a reconciliation payment or repayment amount.

(2) CMS calculations use claims data available at the time of reconciliation.

(c) Incorrect episode payment reconciliation amount. CMS calculates the incorrect episode payment reconciliation amount as follows:

(1) Total incorrect payment withhold amount. CMS calculates the total incorrect payment withhold amount by adding the incorrect payment withhold amount for each episode initiated in the PY.

(2) Total duplicate RT services amount. CMS calculates the total duplicate RT services amount by adding all FFS amounts for duplicate RT services furnished during each episode initiated in the PY. The duplicate RT services amount is capped for each episode and will not be more than the participant-specific professional episode payment amount or participant-specific technical episode payment amount received by the RO participant for an RO episode, even if the duplicate RT services amount exceeds the participant-specific professional episode payment amount or the participant-specific technical episode payment amount.

(3) Total incomplete episode amount. For incomplete episodes initiated in the PY, CMS determines the total incomplete episode amount by calculating the difference between the following amounts:

(i) The sum of all FFS amounts that would have been paid to the RO participant in the absence of the RO Model for any included RT services furnished during such incomplete episodes, as determined by no-pay claims. CMS owes this sum to the RO participant for such incomplete episodes.

(ii) The sum of the participant-specific episode payment amounts paid to the RO participant for such incomplete episodes initiated in the PY.

(4) Total incorrect episode payment amount. CMS calculates the total incorrect episode payment amount as follows:

(i) If the sum described in paragraph (c)(3)(i) of this section is more than the sum described in paragraph (c)(3)(ii) of this section, the difference is subtracted from the total duplicate RT services amount described in paragraph (c)(2) of this section and the resulting amount is the total incorrect episode payment amount.

(ii) If the sum described in paragraph (c)(3)(i) of this section is less than the sum described in paragraph (c)(3)(ii) of this section, the difference is added to the total duplicate RT services amount described in paragraph (c)(2) of this section and the resulting amount is the total incorrect episode payment amount.

(5) Incorrect episode payment reconciliation amount. If the total incorrect episode payment amount represents money owed by the RO participant to CMS, CMS subtracts the total incorrect episode payment amount from the total incorrect payment withhold amount. In the case that the total incorrect episode payment amount represents money owed by CMS to the RO participant, CMS adds the total incorrect episode payment amount to the total incorrect payment withhold amount. The resulting amount is the RO participant's incorrect episode payment reconciliation amount.

(d) Quality reconciliation payment amount. For Professional participants and Dual participants, CMS determines the quality reconciliation payment amount for each PY by multiplying the participant's AQS (as a percentage) by the total quality withhold amount for all RO episodes initiated during the PY.

(e) Patient experience reconciliation amount. For PY3 and subsequent PYs, CMS determines the patient experience reconciliation amount for RO participants by multiplying the participant's AQS (as a percentage) by the total patient experience withhold amount for all RO episodes initiated during the PY.

(f) Stop-loss reconciliation amount. CMS determines the stop-loss reconciliation amount for RO participants that have fewer than 60 episodes during the baseline period and were furnishing included RT services before the start of the model performance period in the CBSAs selected for participation by—

(1) Using no-pay claims, CMS calculates the total FFS amount by summing the FFS amounts that would have been paid to the RO participant in the absence of the RO Model for all included RT services furnished during the RO episodes initiated in the PY; and

(2) CMS calculates the sum of all participant-specific professional episode payments and participant-specific technical episode payments paid to the RO participant for the RO episodes initiated in the PY.

(3) If the total FFS amount exceeds the sum of the participant-specific episode payment amounts for the PY by more than 20 percent then CMS owes the RO participant the amount that exceeds 20 percent, either increasing the amount of the RO participant's reconciliation payment or reducing the amount of the RO's participant's reconciliation repayment.

(g) True-up reconciliation. CMS conducts a true-up reconciliation in the same manner described in paragraph (b) of this section (except that the quality reconciliation payment amount and the patient experience reconciliation amount are not calculated) to determine any additional reconciliation payment or repayment amount that are identified using 12-months of claims run-out.

(h) Reconciliation report. CMS issues each RO participant a reconciliation report for each PY. Each reconciliation report contains the following:

(1) The RO participant's reconciliation payment or repayment amount, if any, for the relevant PY.

(2) Any additional reconciliation payment or repayment amount owed for a previous PY as a result of the true-up reconciliation.

(3) The net reconciliation payment or repayment amount owed.

(i) Payment of amounts owed. (1) CMS issues a reconciliation payment to the RO participant in the amount specified in the reconciliation report 30 days after the reconciliation report is deemed final.

(2) The RO participant must pay a repayment amount to CMS in the amount specified in the reconciliation report by a deadline specified by CMS. If the RO participant fails to timely pay the full repayment amount, CMS recoups the repayment amount from any payments otherwise owed by CMS to the RO participant, including Medicare payments for items and services unrelated to the RO Model.

(3) No coinsurance is owed by an RO beneficiary with respect to any repayment amount or reconciliation payment.

[85 FR 61362, Sept. 29, 2020, as amended at 85 FR 86305, Dec. 29, 2020; 86 FR 63997, Nov. 16, 2021]

Editorial Note:At 85 FR 86305, Dec. 29, 2020, this section was amended, effective Dec. 4, 2020; however, due to a publication error, the amendments were codified at 86 FR 33902, June 28, 2021.

§ 512.290 Timely error notice and reconsideration review process.

(a) Timely error notice. Subject to the limitations on review in § 512.170, an RO participant that identifies and wishes to contest a suspected error in the calculation of its reconciliation payment or repayment amount or AQS must provide written notice of the suspected calculation error to CMS within 45 days of the date of the reconciliation report. Such timely error notice must be in a form and manner specified by CMS. RO participants are not permitted to contest the RO Model pricing methodology or AQS methodology.

(1) Unless a timely error notice is received by CMS within 45 days of the date of issuance of a reconciliation report, the reconciliation payment or repayment amount determination specified in that reconciliation report is deemed binding and not subject to further review.

(2) If CMS receives a timely error notice, then CMS responds in writing within 30 days either to confirm that there was an error in the calculation or to verify that the calculation is correct. CMS may extend the deadline for its response upon written notice to the RO participant.

(3) Only the RO participant may use the timely error notice process described in this paragraph and the reconsideration review process described in paragraph (b) of this section.

(b) Reconsideration review—(1) Reconsideration request by an RO participant. (i) If the RO participant is dissatisfied with CMS' response to the timely error notice, then the RO participant may request a reconsideration review as specified in paragraph (b)(2) of this section.

(ii) If CMS does not receive a request for reconsideration from the RO participant within 10 days of the issue date of CMS' response to the RO participant's timely error notice, then CMS' response to the timely error notice is deemed binding and not subject to further review.

(2) Submission of a reconsideration request—(i) Information needed in the reconsideration request. The reconsideration review request must—

(A) Provide a detailed explanation of the basis for the dispute; and

(B) Include supporting documentation for the RO participant's assertion that CMS or its representatives did not accurately calculate the reconciliation payment or repayment amount or AQS in accordance with the terms of this subpart.

(3) Form, manner, and deadline for submission of the reconsideration request. The information specified in paragraph (b)(2)(i) of this section must be submitted—

(i) In a form and manner specified by CMS; and

(ii) Within 10 days of the date of the CMS response described in paragraph (a)(2) of this section.

(4) Designation of and notification from a CMS-designated reconsideration official.

(i) Designation of reconsideration official. CMS designates a reconsideration official who—

(A) Is authorized to receive such requests; and

(B) Was not involved in the responding to the RO participant's timely error notice.

(ii) Notification to the RO participant. The CMS-designated reconsideration official makes reasonable efforts to notify the RO participant and CMS in writing within 15 days of receiving the RO participant's reconsideration review request of the following:

(A) The issue(s) in dispute;

(B) The briefing schedule; and

(C) The review procedures.

(5) Resolution review. The CMS reconsideration official makes all reasonable efforts to complete the on-the-record resolution review and issue a written determination no later than 60 days after the submission of the final position paper in accordance with the reconsideration official's briefing schedule.

§ 512.292 Overlap with other models tested under Section 1115A and CMS programs.

Participant-specific professional episode payments and Participant-specific technical episode payments made under the RO Model are not adjusted to reflect payments made under models being tested under 1115A of the Act or the Medicare Shared Savings Program under section 1899 of the Act.

[86 FR 63997, Nov. 16, 2021]

§ 512.294 Extreme and uncontrollable circumstances.

(a) General. If CMS determines that there is an EUC pursuant to paragraph (b) of this section, CMS may grant RO participants exceptions to the RO Model requirements under paragraph (c) of this section and revise the RO Model's pricing methodology under paragraphs (e) and (f) of this section.

(b) Determination factors. CMS determines whether there is an EUC based on the following factors:

(1) Whether the RO participants are furnishing services within a geographic area considered to be within an “emergency area” during an “emergency period” as defined in section 1135(g) of the Social Security Act;

(2) Whether the geographic area within a county, parish, U.S. territory, or tribal government designated under the Stafford Act served as a condition precedent for the Secretary's exercise of the 1135 waiver authority, or the National Emergencies Act; or

(3) Whether a state of emergency has been declared in the geographic area.

(c) Modified requirements. CMS may grant RO Participants exceptions to the following RO Model requirements:

(1) Reporting requirements. CMS may delay or exempt RO participants from one or more of the RO Model's quality measure or clinical data element reporting requirements if an EUC impacts the RO participants' ability to comply with quality measure or clinical data element reporting requirements.

(2) Other requirements. CMS may issue a notice on the RO Model website that may waive compliance with or modify the following RO Model requirements:

(i) The requirement set forth at § 512.220(a)(2)(vii) that RO participants provide Peer Review (audit and feedback on treatment plans).

(ii) The requirement set forth at § 512.220(a)(3) that RO participants actively engage with an AHRQ-listed patient safety organization (PSO).

(d) Model performance period. If CMS determines that the EUC affects the United States and if CMS determines that the EUC would impact RO participants' ability to implement the requirements of the RO Model prior to the start of the model performance period, CMS may amend the model performance period.

(e) Trend factor. If CMS determines that the EUC affects the entire United States, and if CMS determines that as a result of the EUC, the trend factor (specific to the PC, TC, or both for an included cancer type) for the upcoming PY has increased or decreased by more than 10 percent compared to the corresponding trend factor of the previous CY when FFS payment rates are held constant with the previous CY, CMS may modify the trend factor calculation for the PC, TC, or both the PC and TC of an included cancer type in a manner that ensures the trend factor is consistent with the average utilization from the previous CY.

(f) Quality withhold. In response to a national, regional, or local event, CMS may adjust the quality withhold by choosing to repay the quality withhold during the next reconciliation and award all possible points in the subsequent AQS calculation amount or to not apply the quality withhold to RO Model payments during the EUC if CMS removes the quality measure and clinical data element reporting requirements pursuant to paragraph (c)(1) of this section.

[86 FR 63997, Nov. 16, 2021]

§ 512.300 Basis and scope.

(a) Basis. This subpart implements the test of the End-Stage Renal Disease (ESRD) Treatment Choices (ETC) Model under section 1115A(b) of the Act. Except as specifically noted in this subpart, the regulations under this subpart must not be construed to affect the applicability of other provisions affecting providers and suppliers under Medicare FFS, including the applicability of provisions regarding payment, coverage, or program integrity.

(b) Scope. This subpart sets forth the following:

(1) The duration of the ETC Model.

(2) The method for selecting ETC Participants.

(3) The schedule and methodologies for the Home Dialysis Payment Adjustment and Performance Payment Adjustment.

(4) The methodology for ETC Participant performance assessment for purposes of the Performance Payment Adjustment, including beneficiary attribution, benchmarking and scoring, and calculating the Modality Performance Score.

(5) Monitoring and evaluation, including quality measure reporting.

(6) Medicare payment waivers.

§ 512.310 Definitions.

For purposes of this subpart, the following definitions apply.

Adjusted ESRD PPS per Treatment Base Rate means the per treatment payment amount as defined in § 413.230 of this chapter, including patient-level adjustments and facility-level adjustments, and excluding any applicable training adjustment, add-on payment amount, outlier payment amount, transitional drug add-on payment adjustment (TDAPA) amount, and transitional add-on payment adjustment for new and innovative equipment and supplies (TPNIES) amount.

Benchmark Year (BY) means the 12-month period that begins 18 months prior to the start of a given measurement year (MY) from which data are used to construct benchmarks against which to score an ETC Participant's achievement and improvement on the home dialysis rate and transplant rate for the purpose of calculating the ETC Participant's MPS.

Clinical staff means a licensed social worker or registered dietician/nutrition professional who furnishes services for which payment may be made under the physician fee schedule under the direction of and incident to the services of the Managing Clinician who is an ETC Participant.

Clinician Home Dialysis Payment Adjustment (Clinician HDPA) means the payment adjustment to the MCP for a Managing Clinician who is an ETC Participant, for the Managing Clinician's home dialysis claims, as described in §§ 512.345 and 512.350.

Clinician Performance Payment Adjustment (Clinician PPA) means the payment adjustment to the MCP for a Managing Clinician who is an ETC Participant based on the Managing Clinician's MPS, as described in §§ 512.375(b) and 512.380.

Comparison Geographic Area(s) means those HRRs that are not Selected Geographic Areas.

ESRD Beneficiary means a beneficiary who meets any of the following:

(1) Is receiving dialysis or other services for end-stage renal disease, up to and including the month in which the beneficiary receives a kidney transplant up to and including the month in which the beneficiary receives a kidney transplant.

(2) Has already received a kidney transplant and has a non-AKI dialysis or MCP claim at least 12 months after the beneficiary's latest transplant date.

(3) Has a kidney transplant failure less than 12 months after the beneficiary's latest transplant date as identified by:

(i) Two or more MCP claims in the180 days following the date on which the kidney transplant was received;

(ii) 24 or more maintenance dialysis treatments at any time after 180 days following the transplant date; or,

(iii) Indication of a transplant failure after the beneficiary's date of transplant based on data from the Scientific Registry of Transplant Recipients (SRTR) database.

(4) If a beneficiary meets more than one of criteria described in paragraphs (3)(i) through (iii) of this definition, the beneficiary will be considered an ESRD beneficiary starting with the earliest month in which transplant failure was recorded.

ESRD facility means an ESRD facility as specified in § 413.171 of this chapter.

ETC Participant means an ESRD facility or Managing Clinician that is required to participate in the ETC Model pursuant to § 512.325(a).

Facility Home Dialysis Payment Adjustment (Facility HDPA) means the payment adjustment to the Adjusted ESRD PPS per Treatment Base Rate for an ESRD facility that is an ETC Participant for the ESRD facility's home dialysis claims, as described in §§ 512.340 and 512.350.

Facility Performance Payment Adjustment (Facility PPA) means the payment adjustment to the Adjusted ESRD PPS per treatment base rate for an ESRD facility that is an ETC Participant based on the ESRD facility's MPS, as described in §§ 512.375(a) and 512.380.

Health Equity Incentive means the amount added to the ETC Participant's improvement score, calculated as described in § 512.370(c)(1), if the ETC Participant's aggregation group demonstrated sufficient improvement on the home dialysis rate or transplant rate for attributed beneficiaries who are dual eligible or Medicare Low Income Subsidy (LIS) recipients between the Benchmark Year and the MY.

Home Dialysis Payment Adjustment (HDPA) means either the Facility HDPA or the Clinician HDPA.

Home dialysis rate means the rate of ESRD Beneficiaries attributed to the ETC Participant who dialyzed at home during the relevant MY, as described in § 512.365(b).

Hospital referral regions (HRRs) means the regional markets for tertiary medical care derived from Medicare claims data as defined by the Dartmouth Atlas Project at https://www.dartmouthatlas.org/.

Kidney transplant means a kidney transplant, alone or in conjunction with any other organ.

Living donor transplant (LDT) Beneficiary means an ESRD Beneficiary who received a kidney transplant from a living donor.

Living donor transplant rate means the rate of ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries attributed to the ETC Participant who received a kidney transplant from a living donor during the MY, as described in § 512.365(c)(1)(ii) and § 512.365(c)(2)(ii).

Managing Clinician means a Medicare-enrolled physician or non-physician practitioner, identified by a National Provider Identifier (NPI), who furnishes and bills the MCP for managing one or more adult ESRD Beneficiaries.

Measurement Year (MY) means the 12-month period for which achievement and improvement on the home dialysis rate and transplant rate are assessed for the purpose of calculating the ETC Participant's MPS and corresponding PPA. Each MY included in the ETC Model and its corresponding PPA Period are specified in § 512.355(c).

Modality Performance Score (MPS) means the numeric performance score calculated for each ETC Participant based on the ETC Participant's home dialysis rate and transplant rate, as described in § 512.370(a), which is used to determine the amount of the ETC Participant's PPA, as described in § 512.380.

Monthly capitation payment (MCP) means the monthly capitated payment made for each ESRD Beneficiary to cover all routine professional services related to treatment of the patient's renal condition furnished by the physician or non-physician practitioner as specified in § 414.314 of this chapter.

National Provider Identifier (NPI) means the standard unique health identifier used by health care providers for billing payors, assigned by the National Plan and Provider Enumeration System (NPPES) in 45 CFR part 162.

Performance Payment Adjustment (PPA) means either the Facility PPA or the Clinician PPA.

Performance Payment Adjustment Period (PPA Period) means the six-month period during which a PPA is applied in accordance with § 512.380.

Pre-emptive LDT Beneficiary means a beneficiary who received a kidney transplant from a living donor prior to beginning dialysis.

Qualified staff means both clinical staff and any qualified person (as defined at § 410.48(a) of this chapter) who is an ETC Participant.

Selected Geographic Area(s) are those HRRs selected by CMS pursuant to § 512.325(b) for purposes of selecting ESRD facilities and Managing Clinicians required to participate in the ETC Model as ETC Participants.

Subsidiary ESRD facility is an ESRD facility owned in whole or in part by another legal entity.

Taxpayer Identification Number (TIN) means a Federal taxpayer identification number or employer identification number as defined by the Internal Revenue Service in 26 CFR 301.6109-1.

Transplant rate means the sum of the transplant waitlist rate and the living donor transplant rate, as described in § 512.365(c).

Transplant waitlist rate means the rate of ESRD Beneficiaries attributed to the ETC Participant who were on the kidney transplant waitlist during the MY, as described in § 512.365(c)(1)(i)-(ii) and § 512.365(c)(2)(i)-(ii).

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62020, Nov. 8, 2021; 89 FR 89213, Nov. 12, 2024]

§ 512.320 Duration.

CMS will apply the payment adjustments described in this subpart under the ETC Model to claims with claim service dates beginning on or after January 1, 2021, and ending on or before December 31, 2025.

[90 FR 53139, Nov. 24, 2025]

§ 512.325 Participant selection and geographic areas.

(a) Selected participants. All Medicare-certified ESRD facilities and Medicare-enrolled Managing Clinicians located in a selected geographic area are required to participate in the ETC Model.

(b) Selected Geographic Areas. CMS establishes the Selected Geographic Areas by selecting all HRRs for which at least 20 percent of the component zip codes are located in Maryland, and a random sample of 30 percent of HRRs, stratified by Census-defined regions (Northeast, South, Midwest, and West). CMS excludes all U.S. Territories from the Selected Geographic Areas.

§ 512.330 Beneficiary notification.

(a) General. ETC Participants must prominently display informational materials in each of their office or facility locations where beneficiaries receive treatment to notify beneficiaries that the ETC Participant is participating in the ETC Model. CMS provides the ETC Participant with a template for these materials, indicating the required content that the ETC Participant must not change and places where the ETC Participant may insert its own original content. The CMS-provided template for the beneficiary notification will include, without limitation, the following information:

(1) A notification that the ETC Participant is participating in the ETC Model;

(2) Instructions on how to contact the ESRD Network Organizations with any questions or concerns about the ETC Participant's participation in the Model;

(3) An affirmation of the ESRD Beneficiary's protections under Medicare, including the beneficiary's freedom to choose his or her provider or supplier and to select the treatment modality of his or her choice.

(b) Applicability of general Innovation Center model provisions. The requirement described in § 512.120(c)(2) shall not apply to the CMS-provided materials described in paragraph (a) of this section. All other ETC Participant communications that are descriptive model materials and activities as defined under § 512.110 must meet the requirements described in § 512.120(c).

§ 512.340 Payments subject to the Facility HDPA.

CMS adjusts the Adjusted ESRD PPS per Treatment Base Rate by the Facility HDPA on claim lines with Type of Bill 072X, and with condition codes 74 or 76, when the claim is submitted by an ESRD facility that is an ETC Participant with a claim service date during a calendar year subject to adjustment as described in § 512.350 and the beneficiary is at least 18 years old before the first day of the month.

§ 512.345 Payments subject to the Clinician HDPA.

CMS adjusts the amount otherwise paid under Medicare Part B with respect to MCP claims on claim lines with CPT codes 90965 and 90966 by the Clinician HDPA when the claim is submitted by a Managing Clinician who is an ETC Participant with a claim service date during a calendar year subject to adjustment as described in § 512.350 and the beneficiary is at least 18 years old before the first day of the month.

§ 512.350 Schedule of home dialysis payment adjustments.

CMS adjusts the payments specified in § 512.340 by the Facility HDPA and adjusts the payments specified in § 512.345 by the Clinician HDPA, according to the following schedule:

(a) Calendar year 2021: +3 percent.

(b) Calendar year 2022: +2 percent.

(c) Calendar year 2023: +1 percent.

§ 512.355 Schedule of performance assessment and performance payment adjustment.

(a) Measurement Years. CMS assesses ETC Participant performance on the home dialysis rate and the transplant rate during each of the MYs. The first MY begins on January 1, 2021, and the final MY ends on December 31, 2024.

(b) Performance Payment Adjustment Period. CMS adjusts payments for ETC Participants by the PPA during each of the PPA Periods, each of which corresponds to a MY. The first PPA Period begins on July 1, 2022, and the final PPA Period ends on December 31, 2025.

(c) Measurement Years and Performance Payment Adjustment Periods. MYs and PPA Periods follow the following schedule:

Table 1 to Paragraph (c)—ETC Model Schedule of Measurement Years and PPA Periods

Measurement Year (MY) | Performance Payment Adjustment (PPA) period

MY 1—1/1/2021 through 12/31/2021 | PPA Period 1—7/1/2022 through 12/31/2022.

MY 2—7/1/2021 through 6/30/2022 | PPA Period 2—1/1/2023 through 6/30/2023.

MY 3—1/12022 through 12/31/2022 | PPA Period 3—7/1/2023 through 12/31/2023.

MY 4—7/1/2022 through 6/30/2023 | PPA Period 4—1/1/2024 through 6/30/2024.

MY 5—1/1/2023 through 12/31/2023 | PPA Period 5—7/1/2024 through 12/31/2024.

MY 6—7/1/2023 through 6/30/2024 | PPA Period 6—1/1/2025 through 6/30/2025.

MY 7—1/1/2024 through 12/31/2024 | PPA Period 7—7/1/2025 through 12/31/2025.

[85 FR 61362, Sept. 29, 2020, as amended at 90 FR 53139, Nov. 24, 2025]

§ 512.360 Beneficiary population and attribution.

(a) General. Except as provided in paragraph (b) of this section, CMS attributes ESRD Beneficiaries to an ETC Participant for each month during a MY based on the ESRD Beneficiary's receipt of services specified in paragraph (c) of this section during that month, for the purpose of assessing the ETC Participant's performance on the home dialysis rate and transplant rate during that MY. Except as provided in paragraph (b) of this section, CMS attributes Pre-emptive LDT Beneficiaries to a Managing Clinician for one or more months during a MY based on the Pre-emptive LDT Beneficiary's receipt of services specified in paragraph (c)(2) of this section during that MY, for the purpose of assessing the Managing Clinician's performance on the living donor transplant rate during that MY. CMS attributes ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries to the ETC Participant for each month during a MY retrospectively after the end of the MY. CMS attributes an ESRD Beneficiary to no more than one ESRD facility and no more than one Managing Clinician for a given month during a given MY. CMS attributes a Pre-emptive LDT Beneficiary to no more than one Managing Clinician for a given MY.

(b) Exclusions from attribution. CMS does not attribute an ESRD Beneficiary or Pre-emptive LDT Beneficiary to an ETC Participant for a month if, at any point during the month, the beneficiary—

(1) Is not enrolled in Medicare Part B;

(2) Is enrolled in Medicare Advantage, a cost plan, or other Medicare managed care plan;

(3) Does not reside in the United States;

(4) Is younger than 18 years of age before the first day of the month of the claim service date;

(5) Has elected hospice;

(6) Is receiving dialysis only for any acute kidney injury (AKI);

(7) Has a diagnosis of dementia at any point during the month of the claim service date or the preceding 12 months, as identified using the most recent dementia-related criteria at the time of beneficiary attribution, using the CMS-HCC (Hierarchical Condition Category) Risk Adjustment Model ICD-10-CM Mappings; or

(8) Is residing in or receiving dialysis in a skilled nursing facility (SNF) or nursing facility.

(c) Attribution services—(1) ESRD facility beneficiary attribution. To be attributed to an ESRD facility that is an ETC Participant for a month, an ESRD Beneficiary must not be excluded based on the criteria specified in paragraph (b) of this section and must have received renal dialysis services during the month from the ESRD facility. CMS does not attribute Pre-emptive LDT Beneficiaries to ESRD facilities.

(i) An ESRD Beneficiary is attributed to the ESRD facility at which the ESRD Beneficiary received the plurality of his or her dialysis treatments in that month, other than renal dialysis services for AKI, as identified by claims with Type of Bill 072X, with claim service dates at the claim header through date during the month.

(ii) If the ESRD Beneficiary receives an equal number of dialysis treatments from two or more ESRD facilities in a given month, CMS attributes the ESRD Beneficiary to the ESRD facility at which the beneficiary received the earliest dialysis treatment that month. If the ESRD Beneficiary receives an equal number of dialysis treatments from two or more ESRD facilities in a given month and the ESRD beneficiary received the earliest dialysis treatment that month from more than one ESRD facility, CMS attributes the beneficiary to one of the ESRD facilities that furnished the earliest dialysis treatment that month at random.

(2) Managing Clinician beneficiary attribution. (i) An ESRD beneficiary who is not excluded based on the criteria in paragraph (b) of this section is attributed to a Managing Clinician who is an ETC Participant for a month if that Managing Clinician submitted an MCP claim for services furnished to the beneficiary, identified with CPT codes 90957, 90958, 90959, 90960, 90961, 90962, 90965, or 90966, with claim service dates at the claim line through date during the month.

(A) If more than one Managing Clinician submits a claim for the MCP furnished to a single ESRD Beneficiary with a claim service date at the claim line during the month, the ESRD Beneficiary is attributed to the Managing Clinician associated with the earliest claim service date at the claim line through date during the month.

(B) If more than one Managing Clinician submits a claim for the MCP furnished to a single ESRD Beneficiary with the same earliest claim service date at the claim line through date for the month, the ESRD Beneficiary is randomly attributed to one of these Managing Clinicians.

(ii) For MY1 and MY2, a Pre-emptive LDT Beneficiary who is not excluded based on the criteria in paragraph (b) of this section is attributed to the Managing Clinician with whom the beneficiary has had the most claims between the start of the MY and the month in which the beneficiary received the transplant for all months between the start of the MY and the month of the transplant.

(A) If no Managing Clinician has had the plurality of claims for a given Pre-emptive LDT Beneficiary such that multiple Managing Clinicians each had the same number of claims for that beneficiary during the MY, the Pre-emptive LDT Beneficiary is attributed to the Managing Clinician associated with the latest claim service date at the claim line through date during the MY up to and including the month of the transplant.

(B) If no Managing Clinician had the plurality of claims for a given Pre-emptive LDT Beneficiary such that multiple Managing Clinicians each had the same number of services for that beneficiary during the MY, and more than one of those Managing Clinicians had the latest claim service date at the claim line through date during the MY up to and including the month of the transplant, the Pre-emptive LDT Beneficiary is randomly attributed to one of these Managing Clinicians.

(iii) For MY3 through MY7, a Pre-emptive LDT Beneficiary who is not excluded based on the criteria in paragraph (b) of this section is attributed to the Managing Clinician who submitted the most claims for services furnished to the beneficiary in the 365 days preceding the date in which the beneficiary received the transplant.

(A) If no Managing Clinician has had the most claims for a given Pre-emptive LDT Beneficiary such that multiple Managing Clinicians each had the same number of claims for that beneficiary in the 365 days preceding the date of the transplant, the Pre-emptive LDT Beneficiary is attributed to the Managing Clinician associated with the latest claim service date at the claim line through date during the 365 days preceding the date of the transplant.

(B) If no Managing Clinician had the most claims for a given Pre-emptive LDT Beneficiary such that multiple Managing Clinicians each had the same number of claims for that beneficiary in the 365 days preceding the date of the transplant, and more than one of those Managing Clinicians had the latest claim service date at the claim line through date during the 365 days preceding the date of the transplant, the Pre-emptive LDT Beneficiary is randomly attributed to one of these Managing Clinicians.

(C) The Pre-emptive LDT Beneficiary is considered eligible for attribution under this paragraph (c)(2)(iii) if the Pre-emptive LDT Beneficiary has at least 1-eligible month during the 12-month period that includes the month of the transplant and the 11 months prior to the month of the transplant. An eligible month refers to a month during which the Pre-emptive LDT Beneficiary not does not meet exclusion criteria in paragraph (b) of this section.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62021, Nov. 8, 2021; 90 FR 53139, Nov. 24, 2025]

§ 512.365 Performance assessment.

(a) General. For each MY, CMS separately assesses the home dialysis rate and the transplant rate for each ETC Participant based on the population of ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries attributed to the ETC Participant under § 512.360. Information used to calculate the home dialysis rate and the transplant rate includes Medicare claims data, Medicare administrative data, and data from the Scientific Registry of Transplant Recipients.

(b) Home dialysis rate. CMS calculates the home dialysis rate for ESRD facilities and Managing Clinicians as follows.

(1) Home dialysis rate for ESRD facilities. (i) The denominator is the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY. Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD Beneficiary received maintenance dialysis at home or in an ESRD facility, such that one beneficiary year is composed of 12 beneficiary months. Months during which attributed ESRD Beneficiaries received maintenance dialysis are identified by claims with Type of Bill 072X.

(ii) For MY3 through MY7, the numerator is the total number of home dialysis treatment beneficiary years, plus one half the total number of self dialysis treatment beneficiary years, plus one half the total number of nocturnal in center dialysis beneficiary years for attributed ESRD Beneficiaries during the MY.

(A) Home dialysis treatment beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received maintenance dialysis at home, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received maintenance dialysis at home are identified by claims with Type of Bill 072X and condition codes 74 or 76.

(B) Self dialysis treatment beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received self dialysis in center, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received self dialysis are identified by claims with Type of Bill 072X and condition code 72.

(C) Nocturnal in center dialysis beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received nocturnal in center dialysis, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received nocturnal in center dialysis are identified by claims with Type of Bill 072X and modifier UJ.

(iii) Information used to calculate the ESRD facility home dialysis rate includes Medicare claims data and Medicare administrative data.

(iv) The ESRD facility home dialysis rate is aggregated, as described in paragraph (e)(1) of this section.

(2) Home dialysis rate for Managing Clinicians. (i) The denominator is the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY. Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD Beneficiary received maintenance dialysis at home or in an ESRD facility, such that one beneficiary year is comprised of 12 beneficiary months. Months during which an attributed ESRD Beneficiary received maintenance dialysis are identified by claims with CPT codes 90957, 90958, 90959, 90960, 90961, 90962, 90965, or 90966.

(ii) For MY3 through MY7, the numerator is the total number of home dialysis treatment beneficiary years, plus one half the total number of self dialysis treatment beneficiary years, plus one half the total number of nocturnal in center dialysis beneficiary years for attributed ESRD Beneficiaries during the MY.

(A) Home dialysis treatment beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received maintenance dialysis at home, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received maintenance dialysis at home are identified by claims with CPT codes 90965 or 90966.

(B) Self-dialysis treatment beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received self dialysis in center, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received self dialysis are identified by claims with Type of Bill 072X and condition code 72.

(C) Nocturnal in center dialysis beneficiary years included in the numerator are composed of those months during which attributed ESRD Beneficiaries received nocturnal in center dialysis, such that 1-beneficiary year is comprised of 12-beneficiary months. Months in which an attributed ESRD Beneficiary received nocturnal in center dialysis are identified by claims with Type of Bill 072X and modifier UJ.

(iii) Information used to calculate the Managing Clinician home dialysis rate includes Medicare claims data and Medicare administrative data.

(iv) The Managing Clinician home dialysis rate is aggregated, as described in paragraph (e)(2) of this section.

(c) Transplant rate. CMS calculates the transplant rate for ETC Participants as follows.

(1) Transplant rate for ESRD facilities. The transplant rate for ESRD facilities is the sum of the transplant waitlist rate for ESRD facilities, as described in paragraph (c)(1)(i) of this section, and the living donor transplant rate for ESRD facilities, as described in paragraph (c)(1)(ii) of this section.

(i) Transplant waitlist rate for ESRD facilities. (A) The denominator is the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY. Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD beneficiary received maintenance dialysis at home or in an ESRD facility, such that 1-beneficiary year is comprised of 12-beneficiary months. For MY3 through MY7, months during which an attributed ESRD Beneficiary received maintenance dialysis are identified by claims with Type of Bill 072X, excluding claims for beneficiaries who were 75 years of age or older at any point during the month, or had a vital solid organ cancer diagnosis and were receiving treatment with chemotherapy or radiation for vital solid organ cancer during the MY.

(1) An attributed ESRD Beneficiary had a diagnosis of vital solid organ cancer in an MY if the beneficiary had any of the following diagnosis codes on any claim during the MY or the 6 months prior to the start of the MY: C22.0, C22.1, C22.2, C22.3, C22.4, C22.7, C22.8, C22.9, C34.10-C34.12, C34.2, C34.30-C34.32, C34.80-C34.82, C34.90-C34.92, C38.0, C38.8, C46.50-C46.52, C64.1, C64.2, C64.2, C78.00-C78.02, C78.7, C79.00-C79.02, C7A.090, C7A.093, or C7B.02.

(2) An attributed ESRD Beneficiary received treatment with chemotherapy or radiation for vital solid organ cancer during the MY if the beneficiary had a claim with any of the following procedure codes on any claim during the MY or the 6 months prior to the start of the MY:

(i) CPT® 96401-96402, 96405-96406, 96409, 96411, 96413, 96415-96417, 96420, 96422-26423, 96425, 96440, 96446, 96549, 77373, 77401-77402, 77407, 77412, 77423, 77424-77425, 77520, 77522-77523, 77525, 77761-77763, 77770-77772, 77778, 77789, 77799, 79005, 79101, 79200, 79300, 79403, 79440, 79445, 79999.

(ii) ICD-10-PCS® DB020ZZ, DB021ZZ, DB022ZZ, DB023Z0, DB023ZZ, DB024ZZ, DB025ZZ, DB026ZZ, DB1297Z, DB1298Z, DB1299Z, DB129BZ, DB129CZ, DB129YZ, DB12B6Z, DB12B7Z, DB12B8Z, DB12B9Z, DB12BB1, DB12BBZ, DB12BCZ, DB12BYZ, DB22DZZ, DB22HZZ, DB22JZZ, DBY27ZZ, DBY28ZZ, DBY2FZZ, DBY2KZZ, DB070ZZ, DB071ZZ, DB072ZZ, DB073Z0, DB073ZZ, DB074ZZ, DB075ZZ, DB076ZZ, DB1797Z, DB1798Z, DB1799Z, DB179BZ, DB179CZ, DB179YZ, DB17B6Z, DB17B7Z, DB17B8Z, DB17B9Z, DB17BB1, DB17BBZ, DB17BCZ, DB17BYZ, DB27DZZ, DB27HZZ, DB27JZZ, DBY77ZZ, DBY78ZZ, DBY7FZZ, DBY7KZZ, DF000ZZ, DF001ZZ, DF002ZZ, DF003Z0, DF003ZZ, DF004ZZ, DF005ZZ, DF006ZZ, DF1097Z, DF1098Z, DF1099Z, DF109BZ, DF109CZ, DF109YZ, DF10B6Z, DF10B7Z, DF10B8Z, DF10B9Z, DF10BB1, DF10BBZ, DF10BCZ, DF10BYZ, DF20DZZ, DF20HZZ, DF20JZZ, DFY07ZZ, DFY08ZZ, DFY0CZZ, DFY0FZZ, DFY0KZZ, DT000ZZ, DT001ZZ, DT002ZZ, DT003Z0, DT003ZZ, DT004ZZ, DT005ZZ, DT006ZZ, DT1097Z, DT1098Z, DT1099Z, DT109BZ, DT109CZ, DT109YZ, DT10B6Z, DT10B7Z, DT10B8Z, DT10B9Z, DT10BB1, DT10BBZ, DT10BCZ, DT10BYZ, DT20DZZ, DT20HZZ, DT20JZZ, DTY07ZZ, DTY08ZZ, DTY0CZZ, DTY0FZZ, DW020ZZ, DW021ZZ, DW022ZZ, DW023Z0, DW023ZZ, DW024ZZ, DW025ZZ, DW026ZZ, DW1297Z, DW1298Z, DW1299Z, DW129BZ, DW129CZ, DW129YZ, DW12B6Z, DW12B7Z, DW12B8Z, DW12B9Z, DW12BB1, DW12BBZ, DW12BCZ, DW12BYZ, DW22DZZ, DW22HZZ, DW22JZZ, DWY27ZZ, DWY28ZZ, DWY2FZZ, DW030ZZ, DW031ZZ, DW032ZZ, DW033Z0, DW033ZZ, DW034ZZ, DW035ZZ, DW036ZZ, DW1397Z, DW1398Z, DW1399Z, DW139BZ, DW139CZ, DW139YZ, DW13B6Z, DW13B7Z, DW13B8Z, DW13B9Z, DW13BB1, DW13BBZ, DW13BCZ, DB13BYZ, DW23DZZ, DW23HZZ, DW23JZZ, DWY37ZZ, DWY38ZZ, DWY3FZZ, DW050ZZ, DW051ZZ, DW052ZZ, DW053Z0, DW053ZZ, DW054ZZ, DW055ZZ, DW056ZZ, DWY57ZZ, DWY58ZZ, DWY5FZZ, DWY5GDZ, DWY5GFZ, DWY5GGZ, DWY5GHZ, DWY5GYZ.

(B) The numerator is the total number of attributed beneficiary years for which attributed ESRD Beneficiaries were on the kidney transplant waitlist. Months during which an attributed ESRD Beneficiary was on the kidney transplant waitlist are identified using data from the SRTR database.

(ii) Living donor transplant rate for ESRD facilities. (A) The denominator is the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY. Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD Beneficiary received maintenance dialysis at home or in an ESRD facility, such that 1-beneficiary year is comprised of 12-beneficiary months. For MY3 through MY7, months during which an attributed ESRD Beneficiary received maintenance dialysis are identified by claims with Type of Bill 072X, excluding claims for beneficiaries who were 75 years of age or older at any point during the month, or had a vital solid organ cancer diagnosis and were receiving treatment with chemotherapy or radiation for vital solid organ cancer during the MY. Months in which an attributed ESRD Beneficiary had a diagnosis of vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(1) of this section. Months in which an attributed ESRD Beneficiary received treatment with chemotherapy or radiation for vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(2) of this section.

(B) The numerator is the total number of attributed beneficiary years for LDT Beneficiaries during the MY. Beneficiary years for LDT Beneficiaries included in the numerator are composed of those months between the beginning of the MY up to and including the month of the transplant for LDT Beneficiaries attributed to an ESRD facility during the month of the transplant. LDT Beneficiaries are identified using information about living donor transplants from the SRTR Database and Medicare claims data.

(iii) The ESRD facility transplant waitlist rate is risk adjusted, as described in paragraph (d) of this section. The ESRD facility transplant rate is aggregated, as described in paragraph (e)(1) of this section.

(2) Transplant rate for Managing Clinicians. The transplant rate for Managing Clinicians is the sum of the transplant waitlist rate for Managing Clinicians, as described in paragraph (c)(2)(i) of this section, and the living donor transplant rate for Managing Clinicians, as described in paragraph (c)(2)(ii) of this section.

(i) Transplant waitlist rate for Managing Clinicians. (A) The denominator is the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY. Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD Beneficiary received maintenance dialysis at home or in an ESRD facility, such that 1-beneficiary year is comprised of 12-beneficiary months. For MY3 through MY7, months during which an attributed ESRD Beneficiary received maintenance dialysis are identified by claims with CPT codes 90957, 90958, 90959, 90960, 90961, 90962, 90965, or 90966, excluding claims for beneficiaries who were 75 years of age or older at any point during the month, or had a vital solid organ cancer diagnosis and were receiving treatment with chemotherapy or radiation for vital solid organ cancer during the MY. Months in which an attributed ESRD Beneficiary had a diagnosis of vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(1) of this section. Months in which an attributed ESRD Beneficiary received treatment with chemotherapy or radiation for vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(2) of this section.

(B) The numerator is the total number of attributed beneficiary years for which attributed ESRD Beneficiaries were on the kidney transplant waitlist. Months during which an attributed ESRD Beneficiary was on the kidney transplant waitlist are identified using data from the SRTR database.

(ii) Living donor transplant rate for Managing Clinicians. (A) The denominator is the sum of the total dialysis treatment beneficiary years for attributed ESRD Beneficiaries during the MY and the total Pre-emptive LDT beneficiary years for attributed beneficiaries during the MY.

(1) Dialysis treatment beneficiary years included in the denominator are composed of those months during which an attributed ESRD Beneficiary received maintenance dialysis at home or in an ESRD facility, such that 1-beneficiary year is comprised of 12-beneficiary months. For MY3 through MY7, months during which an attributed ESRD Beneficiary received maintenance dialysis are identified by claims with CPT codes 90957, 90958, 90959, 90960, 90961, 90962, 90965, or 90966, excluding claims for beneficiaries who were 75 years of age or older at any point during the month, or had a vital solid organ cancer diagnosis and were receiving treatment with chemotherapy or radiation for vital solid organ cancer during the MY. Months in which an attributed ESRD Beneficiary had a vital solid organ cancer diagnosis are identified as described in paragraph (c)(1)(i)(A)(1) of this section. Months in which an attributed ESRD Beneficiary received treatment with chemotherapy or radiation for vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(2) of this section.

(2) MY1 and MY2, Pre-emptive LDT beneficiary years included in the denominator are composed of those months during which a Pre-emptive LDT Beneficiary is attributed to a Managing Clinician, from the beginning of the MY up to and including the month of the living donor transplant. For MY3 through MY7, Pre-emptive LDT beneficiary years included in the denominator are composed of those months during which a Pre-emptive LDT Beneficiary is attributed to a Managing Clinician, from the beginning of the MY up to and including the month of the living donor transplant, excluding beneficiaries who had a vital solid organ cancer diagnosis and were receiving treatment with chemotherapy or radiation for vital solid organ cancer during the MY. Months in which an attributed ESRD Beneficiary had a vital solid organ cancer diagnosis are identified as described in paragraph (c)(1)(i)(A)(1) of this section. Months in which an attributed ESRD Beneficiary received treatment with chemotherapy or radiation for vital solid organ cancer are identified as described in paragraph (c)(1)(i)(A)(2) of this section. Pre-emptive LDT Beneficiaries are identified using information about living donor transplants from the SRTR Database and Medicare claims data.

(B) The numerator is the sum of the total number of attributed beneficiary years for LDT Beneficiaries during the MY and the total number of attributed beneficiary years for Pre-emptive LDT Beneficiaries during the MY.

(1) Beneficiary years for LDT Beneficiaries included in the numerator are composed of those months during which an LDT Beneficiary is attributed to a Managing Clinician, from the beginning of the MY up to and including the month of the transplant. LDT Beneficiaries are identified using information about living donor transplants from the SRTR Database and Medicare claims data.

(2) Beneficiary years for Pre-emptive LDT Beneficiaries included in the numerator are composed of those months during which a Pre-emptive LDT Beneficiary is attributed to a Managing Clinician, from the beginning of the MY up to and including the month of the transplant. Pre-emptive LDT Beneficiaries are identified using information about living donor transplants from the SRTR Database and Medicare claims data.

(iii) The Managing Clinician transplant waitlist rate is risk adjusted, as described in paragraph (d) of this section. The Managing Clinician transplant rate is aggregated, as described in paragraph (e)(2) of this section.

(d) Risk adjustment. (1) CMS risk adjusts the transplant waitlist rate based on beneficiary age with separate risk coefficients for the following age categories of beneficiaries, with age computed on the last day of each month of the MY:

(i) 18 to 55.

(ii) 56 to 70.

(iii) 71 to 74.

(2) CMS risk adjusts the transplant waitlist rate to account for the relative percentage of the population of beneficiaries attributed to the ETC Participant in each age category relative to the national age distribution of beneficiaries not excluded from attribution.

(e) Aggregation—(1) Aggregation for ESRD facilities. An ESRD facility's home dialysis rate and transplant rate are aggregated to the ESRD facility's aggregation group. The aggregation group for a Subsidiary ESRD facility includes all ESRD facilities owned in whole or in part by the same legal entity located in the HRR in which the ESRD facility is located. An ESRD facility that is not a Subsidiary ESRD facility is not included in an aggregation group.

(2) Aggregation for Managing Clinicians. A Managing Clinician's home dialysis rate and transplant rate are aggregated to the Managing Clinician's aggregation group. The aggregation group for a Managing Clinician who is—

(i) In a group practice is the practice group level, as identified by practice TIN; or

(ii) A solo practitioner is the individual clinician level, as identified by NPI.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62021, Nov. 8, 2021; 90 FR 53140, Nov. 24, 2025]

§ 512.370 Benchmarking and scoring.

(a) General. (1) CMS assesses the home dialysis rate and transplant rate for each ETC Participant against the applicable benchmarks to calculate an—

(i) Achievement score, as described in paragraph (b) of this section; and

(ii) Improvement score, as described in paragraph (c) of this section.

(2)(i) CMS calculates the ETC Participant's MPS as the weighted sum of the higher of the achievement score or the improvement score for the ETC Participant's home dialysis rate and transplant rate, as described in paragraph (d) of this section.

(ii) The ETC Participant's MPS determines the ETC Participant's PPA, as described in § 512.380.

(b) Achievement Scoring. CMS assesses ETC Participant performance at the aggregation group level on the home dialysis rate and transplant rate against achievement benchmarks constructed based on the home dialysis rate and transplant rate among aggregation groups of ESRD facilities and Managing Clinicians located in Comparison Geographic Areas during the Benchmark Year. Achievement benchmarks are calculated as described in paragraph (b)(1) of this section and, for MY3 through MY7, are stratified as described in paragraph (b)(2) of this section. For MY5 through MY7, the ETC Participant's achievement score is subject to the restriction described in paragraph (b)(3) of this section.

(1) Achievement benchmarks. CMS uses the following scoring methodology to assess an ETC Participant's achievement score.

Table 1 to § 512.370(b)(1)—ETC Model Schedule of PPA Achievement Benchmarks by Measurement Year

MY1 and MY2 | MY3 and MY4 | MY5 and MY6 | MY7 | Points

90th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year | 1.1 * (90th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.2 * (90th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.3 * (90th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 2

75th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year | 1.1 * (75th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.2 * (75th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.3 * (75th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.5

50th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year | 1.1 * (50th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.2 * (50th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.3 * (50th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1

30th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year | 1.1 * (30th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.2 * (30th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.3 * (30th+ Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 0.5

<30th Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year | 1.1 * (<30th Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.2 * (<30th Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 1.3 * (<30th Percentile of benchmark rates for Comparison Geographic Areas during the Benchmark Year) | 0

(2) Stratifying achievement benchmarks. For MY3 through MY7, CMS stratifies achievement benchmarks based on the proportion of beneficiary years attributed to the aggregation group for which attributed beneficiaries are dual eligible or LIS recipients during the MY. An ESRD Beneficiary or Pre-emptive LDT Beneficiary is considered to be dual eligible or a LIS recipient for a given month if at any point during the month the beneficiary was dual eligible or an LIS recipient based on Medicare administrative data. CMS stratifies the achievement benchmarks into the following two strata:

(i) Stratum 1: 50 percent or more of attributed beneficiary years during the MY are for beneficiaries who are dual eligible or LIS recipients.

(ii) Stratum 2: Less than 50 percent of attributed beneficiary years during the MY are for beneficiaries who are dual eligible or LIS recipients.

(3) For MY5 through MY7, CMS will assign an achievement score to an ETC Participant for the home dialysis rate or the transplant rate only if the ETC Participant's aggregation group has a home dialysis rate or a transplant rate greater than zero for the MY.

(c) Improvement scoring. CMS assesses ETC Participant improvement on the home dialysis rate and transplant rate against benchmarks constructed based on the ETC Participant's aggregation group's historical performance on the home dialysis rate and transplant rate during the Benchmark Year to calculate the ETC Participant's improvement score, as specified in paragraph (c)(1) of this section. For MY3 through MY7, CMS assesses ETC Participant improvement on the home dialysis rate and transplant rate for ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries, who are dual eligible or LIS recipients to determine whether to add the Health Equity Incentive to the ETC Participant's improvement score, as specified in paragraph (c)(2) of this section.

(1) Improvement score calculation. CMS uses the following scoring methodology to assess an ETC Participant's improvement score.

(i) Greater than 10 percent improvement relative to the Benchmark Year rate: 1.5 points

(ii) Greater than 5 percent improvement relative to the Benchmark Year rate: 1 point

(iii) Greater than 0 percent improvement relative to the Benchmark Year rate: 0.5 points

(iv) Less than or equal to the Benchmark Year rate: 0 points

(v) For MY3 through MY7, when calculating improvement benchmarks constructed based on the ETC Participant's aggregation group's historical performance on the home dialysis rate and transplant rate during the Benchmark Year, CMS adds one beneficiary month to the numerator of the home dialysis rate and adds one beneficiary month to the numerator of the transplant rate, such that the Benchmark Year rates cannot be equal to zero.

(2) Health Equity Incentive. CMS calculates the ETC Participant's aggregation group's home dialysis rate and transplant rate as specified in §§ 512.365(b) and 512.365(c), respectively, using only attributed beneficiary years comprised of months during the MY in which ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries, are dual eligible or LIS recipients. CMS also calculates the threshold for earning the Health Equity Incentive based on the ETC Participant's aggregation group's historical performance on the home dialysis rate and transplant rate during the Benchmark Year, using only attributed beneficiary years comprised of months during the Benchmark Year in which ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries, are dual eligible or LIS recipients. An ESRD Beneficiary or Pre-emptive LDT Beneficiary is considered to be dual eligible or a LIS recipient for a given month if at any point during the month the beneficiary was dual eligible or a LIS recipient. CMS determines whether a beneficiary was dual eligible or a LIS recipient based on Medicare administrative data.

(i) The ETC Participant earns the Health Equity Incentive for the home dialysis rate improvement score if the home dialysis rate for the MY, calculated as specified in this paragraph (c)(2), is at least 2.5-percentage points higher than the home dialysis rate for the Benchmark Year, calculated as specified in this paragraph (c)(2). If the ETC Participant earns the Health Equity Incentive for the home dialysis rate improvement score, CMS adds 0.5 points to the ETC Participant's home dialysis rate improvement score, calculated as specified in paragraph (c)(1) of this section, unless the ETC Participant is ineligible to receive the Home Equity Incentive as specified in paragraph (c)(2)(iii) of this section.

(ii) The ETC Participant earns the Health Equity Incentive for the transplant rate improvement score if the home dialysis rate for the MY, calculated as specified in this paragraph (c)(2), is at least 2.5-percentage points higher than the transplant rate for the Benchmark Year, calculated as specified in this paragraph (c)(2). If the ETC Participant earns the Health Equity Incentive for the transplant rate improvement score, CMS adds 0.5 points to the ETC Participant's transplant rate improvement score, calculated as specified in paragraph (c)(1) of this section, unless the ETC Participant is ineligible to receive the Home Equity Incentive as specified in paragraph (c)(2)(iii) of this section.

(iii) An ETC Participant in an aggregation group with fewer than 11-attributed beneficiary years comprised of months in which ESRD Beneficiaries and, if applicable, Pre-emptive LDT Beneficiaries, are dual eligible or LIS recipients, during either the Benchmark Year or the MY is ineligible to earn the Health Equity Incentive.

(d) Modality Performance Score. (1) For MY1 and MY2, CMS calculates the ETC Participant's MPS as the higher of ETC Participant's achievement score or improvement score for the home dialysis rate, together with the higher of the ETC Participant's achievement score or improvement score for the transplant rate, weighted such that the ETC Participant's score for the home dialysis rate constitutes 2/3 of the MPS and the ETC Participant's score for the transplant rate constitutes 1/3 of the MPS. CMS uses the following formula to calculate the ETC Participant's MPS for MY1 and MY2:

Modality Performance Score = 2 × (Higher of the home dialysis achievement or improvement score) + (Higher of the transplant achievement or improvement score)

(2) For MY3 through MY7, CMS calculates the ETC Participant's MPS as the higher of the ETC Participant's achievement score for the home dialysis rate or the sum of the ETC Participant's improvement score for the home dialysis rate calculated as specified in paragraph (c)(1) of this section and, if applicable, the Health Equity Incentive, calculated as described in paragraph (c)(2)(i) of this section, together with the higher of the ETC Participant's achievement score for the transplant rate or the sum of the ETC Participant's improvement score for the transplant rate calculated as specified in paragraph (c)(1) of this section and, if applicable, the Heath Equity Incentive, calculated as described in paragraph (c)(2)(ii) of this section, weighted such that the ETC Participant's score for the home dialysis rate constitutes 2/3 of the MPS and the ETC Participant's score for the transplant rate constitutes 1/3 of the MPS. CMS uses the following formula to calculate the ETC Participant's MPS for MY3 through MY7: Modality Performance Score = 2 × (Higher of the home dialysis achievement or (home dialysis improvement score + Health Equity Bonus †)) + (Higher of the transplant achievement or (transplant improvement score + Health Equity Bonus†))

† The Health Equity Incentive is applied to the home dialysis improvement score or transplant improvement score only if earned by the ETC Participant.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62023, Nov. 8, 2021; 87 FR 67302, Nov. 7, 2022; 90 FR 53141, Nov. 24, 2025]

§ 512.375 Payments subject to adjustment.

(a) Facility PPA. CMS adjusts the Adjusted ESRD PPS per Treatment Base Rate by the Facility PPA on claim lines with Type of Bill 072X, when the claim is submitted by an ETC Participant that is an ESRD facility and the beneficiary is at least 18 years old before the first day of the month, on claims with claim service dates during the applicable PPA Period as described in § 512.355(c).

(b) Clinician PPA. CMS adjusts the amount otherwise paid under Medicare Part B with respect to MCP claims on claim lines with CPT codes 90957, 90958, 90959, 90960, 90961, 90962, 90965 and 90966 by the Clinician PPA when the claim is submitted by an ETC Participant who is a Managing Clinician and the beneficiary is at least 18 years old before the first day of the month, on claims with claim service dates during the applicable PPA Period as described in § 512.355(c).

§ 512.380 PPA Amounts and schedules.

CMS adjusts the payments described in § 512.375 based on the ETC Participant's MPS calculated as described in § 512.370(d) according to the following amounts and schedules in Table 1 and Table 2 to § 512.380.

Table 1 to § 512.380—Facility PPA Amounts and Schedule

MPS | Performance payment adjustment period

1 and 2 (%) | 3 and 4 (%) | 5 and 6 (%) | 7 (%)

Facility Performance Payment Adjustment | ≤6 | +4.0 | +5.0 | +6.0 | +7.0

≤5 | +2.0 | +2.5 | +3.0 | +3.5

≤3.5 | 0 | 0 | 0 | 0

≤2 | −2.5 | −3.0 | −3.5 | −4.5

≤.5 | −5.0 | −6.0 | −7.0 | −9.0

Table 2 to § 512.380—Clinician PPA Amounts and Schedule

MPS | Performance payment adjustment period

1 and 2 (%) | 3 and 4 (%) | 5 and 6 (%) | 7 (%)

Clinician Performance Payment Adjustment | ≤6 | +4.0 | +5.0 | +6.0 | +7.0

≤5 | +2.0 | +2.5 | +3.0 | +3.5

≤3.5 | 0 | 0 | 0 | 0

≤2 | −2.5 | −3.0 | −3.5 | −4.0

≤.5 | −5.0 | −6.0 | −7.0 | −8.0

[85 FR 61362, Sept. 29, 2020, as amended at 90 FR 53142, Nov. 24, 2025]

§ 512.385 PPA exclusions.

(a) ESRD facilities. CMS excludes an aggregation group (as described in § 512.365(e)(1) of Subsidiary ESRD facilities with fewer than 11 attributed ESRD beneficiary years during an MY from the applicability of the Facility PPA for the corresponding PPA Period. CMS excludes ESRD facilities that are not Subsidiary ESRD facilities with fewer than 11 attributed ESRD beneficiary years during an MY from the applicability of the Facility PPA for the corresponding PPA Period.

(b) Managing Clinicians. CMS excludes an aggregation group (as described in § 512.365(e)(2)) of Managing Clinicians with fewer than 11 attributed ESRD beneficiary years during an MY from the applicability of the Clinician PPA for the corresponding PPA Period.

§ 512.390 Notification, data sharing, and targeted review.

(a) Notification. CMS will notify each ETC Participant, in a form and manner determined by CMS, of the ETC Participant's attributed beneficiaries, MPS, and PPA for a PPA Period no later than one month before the start of the applicable PPA Period.

(b) Data sharing with ETC Participants. CMS shares certain beneficiary-identifiable data as described in paragraph (b)(1) of this section and certain aggregate data as described in paragraph (b)(2) of this section with ETC Participants regarding their attributed beneficiaries and performance under the ETC Model. Data will not be shared after November 30, 2025.

(1) Beneficiary-identifiable data. CMS shares beneficiary-identifiable data with ETC Participants as follows:

(i) CMS will make available certain beneficiary-identifiable data for retrieval by ETC Participants no later than one month before the start of each PPA Period, in a form and manner specified by CMS. ETC Participants may retrieve this data at any point during the relevant PPA Period.

(ii) This beneficiary-identifiable data includes, when available, the following information for each PPA Period:

(A) The ETC Participant's attributed beneficiaries' names, Medicare Beneficiary Identifiers, dates of birth, dual eligible status, and LIS recipient status.

(B) Data regarding the ETC Participant's performance under the ETC Model, including, for each attributed beneficiary, as applicable: the number of months the beneficiary was attributed to the ETC Participant, home dialysis months, self-dialysis months, nocturnal in-center dialysis months, transplant waitlist months, and months following a living donor transplant.

(iii) CMS shares this beneficiary-identifiable data on the condition that the ETC Participants observe all relevant statutory and regulatory provisions regarding the appropriate use of data and the confidentiality and privacy of individually identifiable health information as would apply to a covered entity under the regulations found at 45 CFR parts 160 and 164 promulgated under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended, and comply with the terms of the data sharing agreement described in paragraph (b)(1)(iv) of this section.

(iv) If an ETC Participant wishes to retrieve the beneficiary-identifiable data specified in paragraph (b)(1)(ii) of this section, the ETC Participant must complete and submit, on at least an annual basis, a signed data sharing agreement, to be provided in a form and manner specified by CMS, under which the ETC Participant agrees:

(A) To comply with the requirements for use and disclosure of this beneficiary-identifiable data that are imposed on covered entities by the HIPAA regulations and the requirements of the ETC Model set forth in this part.

(B) To comply with additional privacy, security, breach notification, and data retention requirements specified by CMS in the data sharing agreement.

(C) To contractually bind each downstream recipient of the beneficiary-identifiable data that is a business associate of the ETC Participant to the same terms and conditions to which the ETC Participant is itself bound in its data sharing agreement with CMS as a condition of the business associate's receipt of the beneficiary-identifiable data retrieved by the ETC Participant under the ETC Model.

(D) That if the ETC Participant misuses or discloses the beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the data sharing agreement, CMS may deem the ETC Participant ineligible to retrieve beneficiary-identifiable data under paragraph (b)(1)(i) of this section for any amount of time, and the ETC Participant may be subject to additional sanctions and penalties available under the law.

(2) Aggregate data. CMS shares aggregate performance data with ETC Participants as follows:

(i) CMS will make available certain aggregate data for retrieval by the ETC Participant, in a form and manner to be specified by CMS, no later than one month before each PPA Period.

(ii) This aggregate data includes, when available, the following information for each PPA Period, de-identified in accordance with 45 CFR 164.514(b):

(A) The ETC Participant's performance scores on the home dialysis rate, transplant waitlist rate, living donor transplant rate, and the Health Equity Incentive.

(B) The ETC Participant's aggregation group's scores on the home dialysis rate, transplant waitlist rate, and living donor transplant rate, and the Health Equity Incentive.

(C) Information on how the ETC Participant's and ETC Participant's aggregation group's scores relate to the achievement benchmark and improvement benchmark.

(D) The ETC Participant's MPS and PPA for the corresponding PPA Period.

(c) Targeted review process. An ETC Participant may request a targeted review of the calculation of the MPS. Requests for targeted review are limited to the calculation of the MPS, and may not be submitted in regards to: The methodology used to determine the MPS; or the establishment of the home dialysis rate methodology, transplant rate methodology, achievement and improvement benchmarks and benchmarking methodology, or PPA amounts. The process for targeted reviews is as follows:

(1) An ETC Participant has 90 days (or a later date specified by CMS) to submit a request for a targeted review, which begins on the day CMS makes available the MPS.

(2) CMS will respond to each request for targeted review timely submitted and determine whether a targeted review is warranted.

(3) The ETC Participant may include additional information in support of the request for targeted review at the time the request is submitted. If CMS requests additional information from the ETC Participant, it must be provided and received within 30 days of the request. Non-responsiveness to the request for additional information may result in the closure of the targeted review request.

(4) If, upon completion of a targeted review, CMS finds that there was an error in the calculation of the ETC Participant's MPS such that an incorrect PPA has been applied during the PPA period, CMS shall notify the ETC Participant and must resolve any resulting discrepancy in payment that arises from the application of an incorrect PPA in a time and manner determined by CMS.

(d) Review of targeted review decisions. The Administrator may review a targeted review request when administrative review is requested by an ETC Participant within 15-calendar days of a targeted review request determination made by CMS.

(1) Administrative review. Within 45 days of the date of the ETC Participant's request for administrative review, the CMS Administrator may act as follows:

(i) Decline to review a targeted review request determination made by CMS;

(ii) Render a final decision based on the CMS Administrator's review of the targeted review request determination; or

(iii) Choose to take no action on the request for administrative review.

(2) Administrative review determinations. The targeted review determination made by the CMS Administrator is final if the CMS Administrator declines an ETC Participant's request for administrative review or if the CMS Administrator does not take any action on the ETC Participant's request for administrative review by the end of the 45-day period described in paragraph (d)(1) of this section. CMS-1782-F

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62024, Nov. 8, 2021; 88 FR 76506, Nov. 6, 2023; 90 FR 53142, Nov. 24, 2025]

§ 512.395 Quality measures.

CMS collects data on these two quality measures for ESRD facilities that are ETC Participants to monitor for changes in quality outcomes. CMS conducts data collection and measure calculation using claims data and other Medicare administrative data, including enrollment data:

(a) Standardized Mortality Ratio (SMR); NQF #0369.

(b) Standardized Hospitalization Ratio (SHR); NQF #1463.

§ 512.397 ETC Model Medicare program waivers and additional flexibilities.

The following provisions are waived solely for purposes of testing the ETC Model.

(a)(1) Medicare payment waivers. CMS waives the requirements of sections 1833(a), 1833(b), 1848(a)(1), 1881(b), and 1881(h)(1)(A) of the Act only to the extent necessary to make the payment adjustments under the ETC Model described in this subpart.

(2) Beneficiary cost sharing. The payment adjustments under the ETC Model described in this subpart do not affect the beneficiary cost-sharing amounts for Part B services furnished by ETC Participants under the ETC Model.

(b) CMS waives the following requirements of title XVIII of the Act solely for purposes of testing the ETC Model:

(1) CMS waives the requirement under section 1861(ggg)(2)(A)(i) of the Act and § 410.48(a) of this chapter that only doctors, physician assistants, nurse practitioners, and clinical nurse specialists can furnish kidney disease patient education services to allow kidney disease patient education services to be provided by clinical staff (as defined at § 512.310) under the direction of and incident to the services of the Managing Clinician who is an ETC Participant. The kidney disease patient education services may be furnished only by qualified staff (as defined at § 512.310). Beginning MY5, only clinical staff that are not leased from or otherwise provided by an ESRD facility or related entity may furnish kidney disease patient education services pursuant to the waiver described in this section.

(2) CMS waives the requirement that kidney disease patient education services are covered only for Stage IV chronic kidney disease (CKD) patients under section 1861(ggg)(1)(A) of the Act and § 410.48(b)(1) of this chapter to permit beneficiaries diagnosed with CKD Stage V or within the first 6 months of starting dialysis to receive kidney disease patient education services.

(3) CMS waives the requirement that the content of kidney disease patient education services include the management of co-morbidities, including for the purpose of delaying the need for dialysis, under § 410.48(d)(1) of this chapter when such services are furnished to beneficiaries with CKD Stage V or ESRD, unless such content is relevant for the beneficiary.

(4) CMS waives the requirement that an outcomes assessment designed to measure beneficiary knowledge about CKD and its treatment be performed as part of a kidney disease patient education service under § 410.48(d)(5)(iii) of this chapter, provided that such outcomes assessment is performed by qualified staff within one month of the final kidney disease patient education service.

(5) Beginning the upon the expiration of the Public Health Emergency (PHE) for the COVID-19 pandemic, CMS waives the geographic and site of service originating site requirements in sections 1834(m)(4)(B) and 1834(m)(4)(C) of the Act and § 410.78(b)(3) and (4) of this chapter for purposes of kidney disease patient education services furnished by qualified staff via telehealth in accordance with this section, regardless of the location of the beneficiary or qualified staff. Beginning the upon the expiration of the Public Health Emergency (PHE) for the COVID-19 pandemic, CMS also waives the requirement in section 1834(m)(2)(B) of the Act and § 414.65(b) of this chapter that CMS pay a facility fee to the originating site with respect to telehealth services furnished to a beneficiary in accordance with this section at an originating site that is not one of the locations specified in § 410.78(b)(3) of this chapter.

(c)(1) For kidney disease patient education services furnished on or after January 1, 2022, an ETC Participant may reduce or waive the 20 percent coinsurance requirement under section 1833 of the Act if all of the following conditions are satisfied:

(i) The individual or entity that furnished the kidney disease patient education services is qualified staff.

(ii) The qualified staff are not leased from or otherwise provided by an ESRD facility or related entity.

(iii) The kidney disease patient education services were furnished to a beneficiary described in § 410.48(b) or § 512.397(b)(2) who did not have secondary insurance that provides cost-sharing support for kidney disease patient education services on the date the services were furnished.

(iv) The kidney disease patient education services were furnished in compliance with the applicable provisions of § 410.48 and § 512.397(b).

(v) The ETC Participant bears the full cost of the reduction or waiver of the 20 percent coinsurance requirement under section 1833 of the Act. The reduction or waiver of the 20 percent coinsurance requirement under section 1833 of the Act shall not be financed by a third party, including but not limited to an ESRD facility or related entity.

(2) The ETC Participant must maintain and provide the government with access to records of the following information in accordance with § 512.135(b) and (c):

(i) The identity of the qualified staff who furnished the kidney disease patient education services for which the coinsurance was reduced or waived and the date such services were furnished.

(ii) The identity of the beneficiary who received the kidney disease patient education services for which the coinsurance was reduced or waived.

(iii) Evidence that the beneficiary who received the kidney disease patient education services coinsurance waiver was eligible to receive the kidney disease patient education services under the ETC Model and did not have secondary insurance that provides cost-sharing support for kidney disease patient education services.

(iv) The amount of the kidney disease patient education coinsurance reduction or waiver provided by the ETC Participant.

(3) The Federal anti-kickback statute safe harbor for CMS-sponsored model patient incentives (42 CFR 1001.952(ii)(2)) is available to protect the kidney disease patient education coinsurance waivers that satisfy the requirements of such safe harbor and paragraph (c)(1) of this section.

[85 FR 61362, Sept. 29, 2020, as amended at 86 FR 62025, Nov. 8, 2021; 87 FR 67302, Nov. 7, 2022]

§ 512.400 Basis and scope.

(a) Basis. This subpart implements the test of the Increasing Organ Transplant Access (IOTA) Model under section 1115A(b) of the Act.

(b) Scope. This subpart sets forth the following:

(1) The method for selecting IOTA participants.

(2) The patient population.

(3) The methodology for IOTA participant performance assessment and scoring for purposes of the achievement domain, efficiency domain, and quality domain, including beneficiary attribution and transplant target calculation.

(4) The schedule and methodologies for the upside risk payment and downside risk payment.

(5) Data sharing.

(6) Other IOTA Model requirements.

(7) Beneficiary protections.

(8) Financial arrangements.

(9) Monitoring.

(10) Evaluation.

(11) Termination.

(12) Except as specifically noted in this subpart, the regulations under this subpart do not affect the applicability of other provisions affecting providers and suppliers under Medicare fee for service, including the applicability of provisions regarding payment, coverage, or program integrity.

(c) Applicability. IOTA participants are subject to the standard provisions for Innovation Center models specified in subpart A of this part 512 and in subpart K of part 403 of this chapter.

§ 512.402 Definitions.

For purposes of this subpart, the following definitions apply:

Achievement domain means the performance assessment category in which CMS assesses the IOTA participant's performance based on the number of transplants performed relative to the transplant target.

Alignment payment means a payment from an IOTA collaborator to an IOTA participant that is made in accordance with a sharing arrangement.

Annual attribution reconciliation means the yearly process in which CMS—

(1) Creates the final list of each IOTA participant's attributed patients for the prior performance year by retrospectively de-attributing from each IOTA participant any attributed patients that satisfy a criterion for de-attribution under § 512.414(c); and

(2) Creates a final list of each IOTA participant's attributed patients who remain attributed for the performance year being reconciled, subject to the attribution criteria under §§ 512.414(b)(1) and (2).

Annual attribution reconciliation list means the final cumulative record of attributed patients that CMS generates annually for whom each IOTA participant is accountable for during the applicable PY as described at § 512.414(c)(2).

Attributed patient means an IOTA waitlist patient or an IOTA transplant patient.

Attribution means the process by which CMS identifies the patients for whom each IOTA participant is accountable during the model performance period, as described in § 512.414.

Baseline year means a 12-month period within a 3-year historical baseline period, that begins 48 months (or 4 years) before the start of each model PY and ends 12 months (or 1 year) before the start of each model PY, as described in § 512.424.

Bypassed response means an organ offer not received due to expedited placement or a decision by a kidney transplant hospital to have all of its kidney transplant waitlist patients skipped during the organ allocation process based on a set of pre-defined filters selected by the kidney transplant hospital matching the characteristics of the potential organ to be transplanted.

Change in control means at least one of the following:

(1) The acquisition by any “person” (as this term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934), directly or indirectly, of voting securities of the IOTA participant representing more than 50 percent of the IOTA participant's outstanding voting securities or rights to acquire such securities.

(2) The acquisition of the IOTA participant by any other individual or entity.

(3) Any merger, division, dissolution, or expansion of the IOTA participant.

(4) The sale, lease, exchange, or other transfer (in one transaction or a series of transactions) of all or substantially all the assets of the IOTA participant.

(5)(i) The approval and completion of a plan of liquidation of the IOTA participant; or

(ii) An agreement for the sale or liquidation of the IOTA participant.

Collaboration agent means an individual or entity that is not an IOTA collaborator and that is a member of a PGP, NPPGP, or TGP that has entered into a distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is an IOTA collaborator.

Composite graft survival rate means the rolling unadjusted total number of functioning grafts relative to the total number of adult kidney transplants performed, as described in § 512.428.

CORF stands for comprehensive outpatient rehabilitation facility.

Critical access hospital (CAH) means a hospital as defined in section 1861(mm)(1) of the Act.

Days means calendar days unless otherwise specified by CMS.

Distribution arrangement means a financial arrangement between an IOTA collaborator that is an PGP, NPPGP, or TGP and a collaboration agent for the sole purpose of distributing some or all of a gainsharing payment received by the PGP, NPPGP, or TGP.

Distribution payment means a payment from an IOTA collaborator that is a PGP, NPPGP, or TGP to a collaboration agent, under a distribution arrangement, composed only of gainsharing payments.

Donation service area (DSA) means a geographical area of sufficient size to ensure maximum effectiveness in the procurement and equitable distribution of organs and that either includes an entire metropolitan statistical area (MSA) or does not include any part of such an area and that meets the standards of 42 CFR part 486 subpart G as defined in 42 CFR 486.302.

Downside risk payment means the lump sum payment the IOTA participant must pay to CMS after the close of a performance year if the IOTA participant's final performance score falls within the ranges specified in § 512.430.

Efficiency domain means the performance assessment category in which CMS assesses the IOTA participant's performance using the organ offer acceptance rate ratio as described in § 512.426.

EFT stands for electronic funds transfer.

Eligible attributed patient means an attributed patient that receives immunosuppressive drug coverage through Part B or Part D but that does not have secondary insurance that could provide cost sharing support.

Final performance score means the sum total of the scores earned by the IOTA participant across the achievement domain, efficiency domain, and quality domain for a given PY.

Gainsharing payment means a payment that is made from an IOTA participant to an IOTA collaborator, under a sharing arrangement as set forth in § 512.452 and in accordance with § 512.452(c).

HHA means a Medicare-enrolled home health agency.

Hospital has the meaning set forth in section 1861(e) of the Act.

Improvement benchmark rate means 120 percent of the IOTA participants' performance on the organ offer acceptance rate ratio as specified under § 512.426(c)(1)(ii)(A).

Initial attribution means the process by which CMS identifies and prospectively attributes patients who meet the criteria specified under § 512.414(a)(2)(b) to an IOTA participant prior to the model start date.

IOTA activities mean the activities related to promoting accountability for the quality, cost, and overall care for attributed patients and performance across the achievement domain, efficiency domain and quality domain, including any of the following:

(1) Managing and coordinating care.

(2) Encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery.

(3) The provision of items and services pre- or post-transplant in a manner that reduces costs and improves quality.

(4) Carrying out any other obligation or duty under the IOTA Model.

IOTA collaborator means the following Medicare-enrolled providers and suppliers that enter into a sharing arrangement with an IOTA participant:

(1) Nephrologist.

(2) ESRD facility.

(3) Skilled nursing facility (SNF).

(4) Home health agency (HHA).

(5) Long-term care hospital (LTCH).

(6) Inpatient rehabilitation facility (IRF).

(7) Physician.

(8) Nonphysician practitioner.

(9) Therapist in a private practice.

(10) CORF.

(11) Provider or supplier of outpatient therapy services.

(12) Physician group practice (PGP).

(13) Hospital.

(14) CAH.

(15) Non-physician provider group practice (NPPGP).

(16) Therapy group practice (TGP).

IOTA participant means a kidney transplant hospital, as defined at § 512.402, that is required to participate in the IOTA Model under § 512.412.

IOTA transplant patient means a kidney transplant patient who receives a kidney transplant at the age of 18 years of age or older from an IOTA participant at any time during the model performance period and meets the criteria set forth in § 512.414(b)(2).

IOTA waitlist patient means a kidney transplant waitlist patient, regardless of payer type and waitlist status, who meets all of the following:

(1) Is alive.

(2) 18 years of age or older.

(3) Registered on a waitlist (as defined in § 512.402) to one or more IOTA participants, as identified by the OPTN computer match program.

IRF stands for inpatient rehabilitation facility which must meet all of the following:

(1) The general criteria set forth in § 412.22.

(2) The criteria to be classified as a rehabilitation hospital or rehabilitation unit set forth in §§ 412.23(b), 412.25, and 412.29 for exclusion from the inpatient hospital prospective payment systems specified in § 412.1(a)(1).

Kidney transplant means the procedure in which a kidney is surgically transplanted from a living or deceased donor to a transplant recipient, either alone or in conjunction with any other organ(s).

Kidney transplant hospital means a transplant hospital with a Medicare approved kidney transplant program.

Kidney transplant patient means a patient who was a transplant candidate, as defined in § 121.2, and received a kidney transplant furnished by a kidney transplant hospital, regardless of payer type.

Kidney transplant waitlist patient means a patient who is a transplant candidate, as defined in § 121.2, and who is registered to a waitlist for a kidney at one or more kidney transplant hospitals.

LTCH stands for long-term care hospital that meets the requirements as stated in 42 CFR part 483 subpart B.

MA stands for Medicare Advantage.

Match run means a computerized ranking of transplant candidates based upon donor and candidate medical compatibility and criteria defined in OPTN policies.

Medicare kidney transplant means a kidney transplant furnished to an attributed patient in the IOTA Model whose primary or secondary insurance is Medicare fee for service (FFS) or MA, as identified in Medicare FFS claims with MS-DRGs 008, 019, 650, 651, and 652, or through OPTN data.

Member of the NPPGP or NPPGP member means a nonphysician practitioner or therapist who is an owner or employee of an NPPGP and who has reassigned to the NPPGP their right to receive Medicare payment.

Member of the PGP or PGP member means a physician, nonphysician practitioner, or therapist who is an owner or employee of the PGP and who has reassigned to the PGP their right to receive Medicare payment.

Member of the TGP or TGP member means a therapist who is an owner or employee of a TGP and who has reassigned to the TGP their right to receive Medicare payment.

Missing responses means organ offers that a kidney transplant hospital received from the OPO but did not submit a response (accepting or rejecting) in the allotted 1-hour timeframe from the time the offer was made per OPTN policy 5.6.B.

Military medical treatment facility (MTF) means both of the following:

(1) Any fixed facility of the Department of Defense that is outside of a deployed environment and used primarily for health care.

(2) Any other location used for purposes of providing health care. services as designated by the Secretary of Defense as defined in 10 U.S.C. 1073c(j)(3).

Model performance period means the 72-month period from the model start date and is comprised of 6 individual performance years.

Model-specific payment means a payment made by CMS only to IOTA participants, or a payment adjustment made only to payments made to IOTA participants, under the terms of the IOTA Model that is not applicable to any other providers or suppliers and includes, unless otherwise specified, both of the following:

(1) The IOTA Model upside risk payment.

(2) The IOTA Model downside risk payment.

Model start date means the date on which the model performance period begins, July 1, 2025.

MPSC stands for Membership and Professional Standards Committee.

National growth rate means the percentage increase or decrease in the number of kidney transplants performed over a 12-month period by all kidney transplant hospitals except for pediatric kidney transplant hospitals, as defined at § 512.402.

National Provider Identifier (NPI) means the standard unique health identifier used by health care providers for billing payors, assigned by the National Plan and Provider Enumeration System (NPPES) in accordance with 45 CFR part 162.

Neutral zone means the final performance score range in which the IOTA participant neither owes a downside risk payment to CMS nor receives an upside-risk payment from CMS, in accordance with § 512.430(b)(2).

Non-pediatric facility means a kidney transplant hospital that furnishes more than 50 percent of their kidney transplants annually to patients 18 years of age or older.

Nonphysician practitioner means (except for purposes of 42 CFR part 510 subpart G) one of the following:

(1) A physician assistant who satisfies the qualifications set forth at § 410.74(a)(2)(i) and (ii) of this chapter.

(2) A nurse practitioner who satisfies the qualifications set forth at § 410.75(b) of this chapter.

(3) A clinical nurse specialist who satisfies the qualifications set forth at § 410.76(b) of this chapter.

(4) A certified registered nurse anesthetist (as defined at § 410.69(b)).

(5) A clinical social worker (as defined at § 410.73(a)).

(6) A registered dietician or nutrition professional (as defined at § 410.134).

NPPGP means an entity that is enrolled in Medicare as a group practice, includes at least one owner or employee who is a nonphysician practitioner, does not include a physician owner or employee, and has a valid and active TIN.

OPTN computer match program means a set of computer-based instructions which compares data on a cadaveric organ donor with data on transplant candidates on the waiting list and ranks the candidates according to OPTN policies to determine the priority for allocating the donor organ(s).

Organ procurement and transplantation network or OPTN means the network established under section 372 of the Public Health Service Act.

Organ procurement organization or OPO means an entity designated by the Secretary under section 1138(b) of the Act and under 42 CFR 486.304.

Part B and Part D immunosuppressive drug cost sharing support means cost sharing support related to immunosuppressive drugs covered by Medicare Part B, the Medicare Part B Immunosuppressive Drug Benefit (Part B-ID), or Medicare Part D that is provided by an IOTA participant to an eligible attributed patient as codified at § 512.456.

Pediatric kidney transplant hospital means a kidney transplant hospital that performs 50 percent or more of its transplants in a 12-month period on patients under the age of 18.

Performance year (PY) means a 12-month period beginning on July 1 and ending on June 30 of each year during the model performance period.

PGP stands for physician group practice.

Physician has the meaning set forth in section 1861(r) of the Act.

Post-transplant period means the 90-day period following an attributed patient's receipt of a kidney transplant.

Preliminary performance assessment and payment calculations means the process by which CMS—

(1) Assesses each IOTA participant's performance in accordance with §§ 512.424, 512.426, 512.428; and

(2) Calculates performance-based payments in accordance with § 512.430.

PRA stands for panel-reactive antibody.

Provider of outpatient therapy services means an entity that is enrolled in Medicare as a provider of therapy services and furnishes one or more of the following:

(1) Outpatient physical therapy services as defined in § 410.60 of this chapter.

(2) Outpatient occupational therapy services as defined in § 410.59 of this chapter.

(3) Outpatient speech-language pathology services as defined in § 410.62 of this chapter.

Quality domain means the performance assessment category in which CMS assesses the IOTA participant's performance using a performance measure focused on improving the quality of transplant care as described in § 512.428.

Quality Health Information Network (QHIN) means a network of organizations that agrees to common terms and conditions regarding data exchange with each other (a “Common Agreement”) and to the functional and technical requirements for such data exchange (as specified in the QHIN Technical Framework or “QTF”) under section 4003(b) of the 21st Century Cures Act (Pub. L. 114-255).

Quarterly attribution list means the quarterly CMS-generated attributed patient list that CMS provides to the IOTA participant in advance of each quarter during the model performance period in accordance with § 512.414(c)(ii)(2).

Scientific Registry of Transplant Recipients or SRTR means the registry of information on transplant recipients established under section 373 of the Public Health Service Act.

Selected DSAs means those DSAs selected by CMS for purposes of selecting kidney transplant hospitals for participation in the IOTA Model.

Sharing arrangement means a financial arrangement to only share the upside risk payment and the downside risk payment lump-sum amount as set forth in § 512.452.

Single-organ kidney transplant means the procedure in which a kidney alone is surgically transplanted from a living or deceased donor to a transplant recipient alone.

SNF stands for skilled nursing facility that meets all applicable requirements in section of 1819 of the Act.

Targeted review process means the process in which an IOTA participant may dispute performance and payment calculations made, and issued, by CMS as set forth in § 512.434.

Taxpayer identification number (TIN) means a Federal taxpayer identification number or employer identification number as defined by the Internal Revenue Service in 26 CFR 301.6109-1.

TGP means an entity that is enrolled in Medicare as a therapy group in private practice, includes at least one owner or employee who is a therapist in private practice, does not include an owner or employee who is a physician or nonphysician practitioner, and has a valid and active TIN.

Therapist means one of the following individuals as defined at § 484.4 of this chapter:

(1) Physical therapist.

(2) Occupational therapist.

(3) Speech-language pathologist.

Therapist in private practice means a therapist that complies with one of the following special provisions:

(1) For physical therapists in private practice in § 410.60(c) of this chapter.

(2) For occupational therapists in private practice in § 410.59(c) of this chapter.

(3) For speech-language pathologists in private practice in § 410.62(c) of this chapter.

Transplant hospital means a hospital that furnishes organ transplants as defined in 42 CFR 121.2.

Transplant organ offer acceptance criteria means individualized patient acceptance parameters that kidney waitlist patients, as defined at § 512.402, may elect regarding the categories of organ offers they are prepared to accept for transplantation.

Transplant physician means a physician who provides non-surgical care and treatment to transplant patients before and after transplant as defined in 42 CFR 121.2.

Transplant program means a component within a transplant hospital which provides transplantation of a particular type of organ as defined in 42 CFR 121.2.

Transplant recipient means a person who has received an organ transplant as defined in 42 CFR 121.2.

Transplant target means the target number of kidney transplants calculated by CMS for the IOTA participant to measure the IOTA participant's performance in the achievement domain, as described in § 512.424.

Upside risk payment means the lump sum payment CMS makes to an IOTA participant if the IOTA participant's final performance score for a performance year falls within the payment range specified in § 512.430.

VA medical facility means a VA hospital, a VA community-based outpatient clinic, or a VA health care center, any of which must have at least one full-time primary care physician as defined in 38 CFR 17.1505. A Vet Center, or Readjustment Counseling Service Center, is not a VA medical facility.

Waitlist means a list of transplant candidates, as defined in 42 CFR 121.2, registered to the waiting list, as defined in 42 CFR 121.2, maintained by a transplant hospital in accordance with 42 CFR 482.94(b).

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32869, June 1, 2026]

§ 512.412 Participant eligibility and selection.

(a) Participant eligibility. A kidney transplant hospital is eligible to be selected as an IOTA participant, in accordance with the methodology described in paragraph (c) of this section, if the kidney transplant hospital meets all of the following criteria:

(1) The kidney transplant hospital annually performed 15 or more kidney transplants for patients aged 18 years or older, regardless of payer, each of the baseline years.

(2) The kidney transplant hospital annually performed more than 50 percent of its kidney transplants on patients 18 years of age or older each of the baseline years.

(3) The kidney transplant hospital is not an MTF or VA medical facility as defined at § 512.402.

(b) IOTA participant selection. CMS uses the following process to select IOTA participants for inclusion in the model.

(1) DSA stratification criteria. CMS uses the following criteria to stratify DSAs using the list of DSAs as of January 1, 2024:

(i) Census division of the DSA.

(ii) Total number of adult kidney transplants performed per year across eligible kidney transplant hospitals in the DSA during PY 1's baseline years.

(2) DSA stratification process. Prior to sampling DSAs, CMS uses the following steps to group DSAs into mutually exclusive groups.

(i) CMS assigns each DSA to one of the nine Census Divisions. CMS assigns each DSA to the Census Division where the majority of the DSA's population resides. CMS determines each DSA's population, and the share of a DSA's population in the applicable Census Division(s) using data from the 2020 Census.

(A) CMS assigns the Puerto Rico DSA to the South Atlantic Census Divisions.

(B) CMS combines the Middle Atlantic and New England Census Divisions and all DSAs therewithin creating eight groups of Census Divisions.

(ii) CMS identifies all kidney transplant hospitals located in each DSA within each Census Division group.

(iii) For each DSA within its assigned Census Division group, CMS identifies the eligible kidney transplant hospitals using the criteria specified in paragraph (a) of this section.

(iv) Using data from each of the baseline years for PY 1, CMS determines the average number of adult kidney transplants performed annually by eligible transplant hospitals located in each DSA as follows:

(A) Sums the number of adult kidney transplants performed across eligible kidney transplant hospitals in a DSA during each of the baseline years for PY 1; and

(B) Divides each DSA's sum resulting from the calculation in paragraph (b)(2)(iv)(A) of this section by three to determine the average number of adult kidney transplants furnished during the baseline years for PY 1.

(v) CMS separates DSAs in each Census Division group into two mutually exclusive groups of the same size, based on the average number of adult kidney transplants performed annually across the baseline years for PY 1, except where there are an odd number of DSAs within a Census Division group:

(A) DSAs with a higher number of adult kidney transplants per year across the baseline years for PY 1.

(B) DSAs with a lower number of adult kidney transplants per year across the baseline years for PY 1.

(vi) Where there are an odd number of DSAs within a Census Division group CMS uses the methodology set forth in paragraph (b)(3) of this section.

(3) Random sampling of DSAs. (i) For each DSA group within a Census Division group containing an odd number of DSAs, CMS randomly selects one DSA and determines its participation in the IOTA Model with a 50 percent probability.

(ii) CMS randomly samples, without replacement, 50 percent of the remaining DSAs in each group within each Census Division group created in paragraph (b)(2)(v) of this section.

(c) Selection of IOTA participants in selected DSAs. All eligible kidney transplant hospitals in the selected DSAs are required to participate in the IOTA Model.

(d) Notification of participation. CMS notifies IOTA participants of their selection to participate in the IOTA Model in a form and manner chosen by CMS at least 3 months prior to the start of the model performance period.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32870, June 1, 2026]

§ 512.414 Patient population.

(a) General. (1) CMS attributes kidney transplant waitlist patients and kidney transplant patients to IOTA participants based on the attribution criteria as described in paragraphs (b)(1) and (b)(2) of this section, for all of the following purposes:

(i) Sharing Medicare claims data for attributed beneficiaries with IOTA participants.

(ii) Assessing each IOTA participant's performance across the achievement domain, efficiency domain, and quality domain.

(iii) Determining performance-based payments paid to or by IOTA participants.

(2) Once a kidney transplant waitlist patient or kidney transplant patient is attributed to an IOTA participant, that respective patient may not opt out of attribution to an IOTA participant and remains attributed to the IOTA participant for the duration of the model performance period, unless the attributed patient meets the de-attribution criteria under paragraph (b)(3) of this section during annual attribution reconciliation as described in paragraph (b)(3) of this section.

(b) Patient attribution and de-attribution criteria—(1) IOTA waitlist patient attribution. (i) At the time CMS conducts attribution, as described in paragraph (c) of this section, if a kidney transplant waitlist patient meets the definition of an IOTA waitlist patient, as defined at § 512.402, CMS attributes the kidney transplant waitlist patient as an IOTA waitlist patient to an IOTA participant.

(ii) [Reserved]

(2) IOTA transplant patient attribution. (i) At the time CMS conducts attribution, as described in paragraph (c) of this section, CMS attributes a kidney transplant patient as an IOTA transplant patient if the kidney transplant patient meets all of the following:

(A) The definition of an IOTA transplant patient, as defined at § 512.402.

(B) Is 18 years of age or older at the time of the patient's kidney transplant.

(C) Is alive.

(ii) [Reserved]

(3) De-attribution from an IOTA participant. During annual attribution reconciliation, CMS uses the fourth quarter attribution list for each IOTA participant and de-attributes any attributed patients who, as of the last day of the PY being reconciled, meet any of the following de-attribution criteria:

(i) An IOTA waitlist patient that was removed from and remains unregistered on an IOTA participant's kidney transplant waitlist.

(ii) An IOTA waitlist patient that has died at any point during the PY.

(iii) An IOTA transplant patient that has died at any point during the PY.

(iv) An IOTA transplant patient who experiences transplant failure at any point during the model performance period and has not rejoined an IOTA participant's kidney transplant waitlist or received another transplant from an IOTA participant before the last day of the respective PY.

(c) Attribution methodology. CMS employs the following methodology to attribute kidney waitlist patients and kidney transplant patients to an IOTA participant after identifying all kidney waitlist patients and kidney transplant patients that meet the attribution criteria as specified in paragraphs (b)(1) and (b)(2) of this section:

(1)(i) Initial attribution. Prior to the model start date, CMS conducts initial attribution, as defined at § 512.402.

(ii) Initial attribution list. (A) CMS provides the initial attribution list to the IOTA participant no later than 15 days prior to the start of PY 1 and in a form and manner as determined by CMS.

(B) The initial attribution list includes a list of IOTA waitlist patients identified through initial attribution, effective on the model start date.

(2)(i) Quarterly attribution. CMS conducts attribution, as defined at § 512.402, on a quarterly basis after the model start date, and updates the quarterly attribution list, as defined at § 512.402, for each IOTA participant, except in the event of termination in accordance with § 512.466.

(ii) Quarterly attribution list. CMS provides the quarterly attribution list, as defined at § 512.402, to the IOTA participant no later than 15 days prior to the start of each quarter and in a form and manner determined by CMS. The quarterly attribution list includes, at minimum, all of the following:

(A) A list of all newly attributed patients, whose attribution to the IOTA participant becomes effective on the first day of the relevant upcoming quarter.

(B) A list of all attributed patients who continue to be attributed to the IOTA participant from the previous quarter.

(C) The dates in which attribution began, changed, or ended, where applicable for attributed patients.

(D) The attributed patient's data sharing preferences under § 512.440(b).

(3)(i) Annual attribution reconciliation. After the fourth quarter of each PY, CMS conducts annual attribution reconciliation as defined at § 512.402.

(ii) Annual attribution reconciliation list. CMS provides the annual reconciliation list to the IOTA participant before the second quarter of the following PY. Using the fourth quarter quarterly attribution list for each IOTA participant, the annual attribution reconciliation list identifies, at a minimum, all of the following, where applicable:

(A) A list of all attributed patients who remain attributed to the IOTA participant because they satisfied the attribution criteria under §§ 512.414(b)(1) and (2) for the respective PY.

(B) The dates in which attribution began, changed, or ended, where applicable.

(C) A list of all attributed patients who are de-attributed because they failed to satisfy the attribution criteria under § 512.414(b)(1) and (2).

(D) A list of all attributed patients who are de-attributed because they satisfy a de-attribution criterion under § 512.414(b)(3).

(E) The dates on which each attributed patient satisfied a de-attribution criterion as specified under § 512.414(b)(3).

(F) A list of the de-attribution criterion each attributed patient satisfied under § 512.414(b)(3).

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32870, June 1, 2026]

§ 512.422 Overview of performance assessment and scoring.

(a) General. (1) CMS establishes the performances measures described in §§ 512.424, 512.426, and 512.428 to assess IOTA participants in the achievement domain, efficiency domain and quality domain.

(2) CMS assigns each set of metrics within a domain a point value with the total possible points awarded to an IOTA participant across the three domains equaling 100, as described in §§ 512.424, 512.426, and 512.428.

(b) Data sources. (1) CMS uses Medicare claims data and Medicare administrative data about beneficiaries, providers, suppliers, and data from the OPTN, to calculate performance for the IOTA participant based on the methodologies under §§ 512.424, 512.426, and 512.428.

(2) CMS may also use model-specific data reported by an IOTA participant to CMS under the IOTA Model to calculate IOTA participant performance in the domains.

§ 512.424 Achievement domain.

(a) General. (1) After each PY, CMS calculates the number of kidney transplants that each IOTA participant performed for the respective PY, in accordance with the provisions in paragraph (d) of this section.

(2) CMS compares the number of kidney transplants that an IOTA participant performed during the PY to the IOTA participant's transplant target to determine the IOTA participant's score for the achievement domain.

(b) Transplant target methodology. CMS determines the IOTA participant's transplant target for each PY as follows:

(1) Analysis of baseline years. CMS analyzes the baseline years for the relevant PY and identifies:

(i) The mean number of deceased donor kidney transplants furnished by the IOTA participant to patients 18 years of age or older across the baseline years, as defined at § 512.402; and

(ii) The mean number of living donor kidney transplants furnished by the IOTA participant to patients 18 years of age or older across the baseline years, as defined at § 512.402.

(2) Mean of kidney transplants. CMS sums the numbers in paragraphs (b)(1)(i) and (ii) of this section.

(3) National growth rate calculation. CMS calculates the national growth rate, as defined at § 512.402, using the baseline years for the relevant PY as follows:

(i) Subtracts the total number of kidney transplants furnished to patients 18 years of age or older during the second baseline year from the total number of kidney transplants furnished to patients 18 years of age or older during the third baseline year.

(ii) Divides the amount resulting from the calculation in paragraph (b)(3)(i) of this section by the total number of kidney transplants furnished to patients 18 years of age or older during the third baseline year. The resulting amount is the national growth rate for the relevant PY.

(4) Calculation of transplant target. If the national growth rate calculated in paragraph (b)(3) of this section is—

(i) Positive, CMS multiples that national growth rate by the sum calculated in paragraph (b)(2) of this section. The resulting amount is an IOTA participant's transplant target for the relevant PY; or

(ii) Negative, CMS does not multiply the national growth rate by the sum calculated in paragraph (b)(2) of this section. The IOTA participant's transplant target for the relevant PY is the sum calculated in paragraph (b)(2) of this section.

(c) Notification of transplant target. CMS notifies the IOTA participant of the transplant target by the first day of the start of each PY in a form and manner determined by CMS.

(d) Calculation of kidney transplants performed during the PY. (1)(i) After each PY, CMS counts the number of kidney transplants performed by the IOTA participant on patients who were 18 years of age or older at the time of transplant, during the PY.

(ii) CMS identifies kidney transplants performed by the IOTA participant using OPTN data, regardless of payer, and Medicare claims data.

(2) CMS counts each kidney transplant described in paragraph (d)(1) of this section as one transplant.

(e) [Reserved]

(f) Achievement domain scoring. For each PY, CMS awards the IOTA participant zero to 60 points for its performance in the achievement domain.

(1) CMS compares the total number of kidney transplants identified under paragraph (d)(2) of this section to the IOTA participant's transplant target, as described in paragraph (b) of this section.

(2) CMS uses the following scoring methodology to determine an IOTA participant's score on the achievement domain.

Table 1 to Paragraph (f)(2)—IOTA Model Achievement Domain Scoring Methodology

§ 512.426 Efficiency domain.

(a) General. For each PY, CMS assesses each IOTA participant on the metric described in paragraph (b) of this section to determine the IOTA participant's score for the efficiency domain.

(b) Metric included in the efficiency domain. For each PY, CMS assesses the IOTA participant on the following metric:

(1) Organ-offer acceptance rate ratio. For each PY, CMS calculates the organ-offer acceptance rate ratio by dividing the number of kidneys the IOTA participant accepted by the risk-adjusted number of expected organ-offer acceptances using SRTR's methodology as described in equation 1 to paragraph (b)(1) introductory text of this section.

Equation 1 to Paragraph (b)(1) Introductory Text—Organ Offer Acceptance Rate Ratio

(i) CMS uses both of the following:

(A) SRTR data to calculate the organ-offer acceptance rate ratio.

(B) SRTR's adult kidney model strata risk-adjustment methodology and most available set of coefficients to calculate the number of expected organ-offer acceptances.

(ii) CMS includes all of the following kidney offers when calculating the organ-offer acceptance rate ratio for the IOTA participant:

(A) Offers that are ultimately accepted and transplanted.

(B) Offers to candidates on a single organ waitlist (except for kidney/pancreas candidates that are also listed for kidney alone).

(iii) CMS excludes the following kidney offers when calculating the organ-offer acceptance rate:

(A) Offers with multiple match runs from the same donor combined and duplicate offers.

(B) Offers with no match run acceptances.

(C) Offers that occurred after the last acceptance in a match run.

(D) Offers with a missing or bypassed response.

(E) Offers to multi-organ candidates (except for kidney/pancreas candidates that are also listed for kidney alone).

(c) Efficiency domain scoring. For each PY, CMS awards the IOTA participant 0 to 20 points for its performance in the efficiency domain.

(1) General. CMS determines the IOTA participant's score for the efficiency domain for each PY by taking the IOTA participant's score for the organ offer acceptance rate ratio, as described under paragraph (c)(2) of this section. This number is the IOTA participant's score for the efficiency domain for the PY.

(2) Scoring for organ offer acceptance rate ratio. CMS calculates the IOTA participant's achievement score, as described in paragraph (c)(2)(i) of this section, and improvement score, as described under paragraph (c)(2)(ii) of this section, for the organ offer acceptance rate ratio, compares the IOTA participant's achievement score and improvement score and awards to the IOTA participant the points that correspond to the higher score.

(i) Achievement scoring. CMS calculates the IOTA participant's achievement score based on the IOTA participant's performance on organ offer acceptance rate ratio relative to national ranking, including all eligible kidney transplant hospitals, using the scoring methodology described in table 1 to paragraph (c)(1)(i) of this section.

Table 1 to Paragraph (c)(1)(i)—IOTA Model Organ Offer Acceptance Rate Ratio Achievement Scoring

(ii) Improvement scoring. CMS compares the IOTA participant's organ offer acceptance rate ratio during the PY, calculated as described under paragraph (c)(1)(i) of this section, to the IOTA participant's improvement benchmark rate, calculated as described under paragraph (c)(1)(ii)(A) of this section.

(A) Improvement benchmark rate. CMS calculates an improvement benchmark rate for the IOTA participant. To determine an IOTA participant's improvement benchmark rate for a given PY, CMS multiplies an IOTA participant's organ offer acceptance rate ratio during the third baseline year by 120 percent.

(B) Improvement score calculation. For each PY, CMS uses the following methodology to determine each IOTA participant's improvement score on the organ offer acceptance rate ratio:

(1) If the IOTA participant's organ-offer acceptance rate ratio is greater than or equal to the improvement benchmark rate, CMS awards the IOTA participant 15 points in the efficiency domain.

(2) If the IOTA participant's organ offer acceptance rate ratio is equal to or less than the IOTA participant's organ-offer acceptance rate ratio in the third baseline year for that respective PY, CMS awards the IOTA participant 0 points in the efficiency domain.

(3) If the IOTA participant's organ offer acceptance rate ratio is greater than the IOTA participant's organ-offer acceptance rate ratio in the third baseline year for that respective PY but less than the improvement benchmark rate, CMS uses the following equation:

Equation 2 to Paragraph (c)(2)(ii)(B)(3)—IOTA Model Organ Offer Acceptance Rate Ratio Improvement Scoring Equation

§ 512.428 Quality domain.

(a) General. For each PY, CMS assesses each IOTA participant on the metric described under paragraph (b)(1) of this section to determine the IOTA participant's quality domain score, as described under paragraphs (c) through (e) of this section, for the quality domain.

(b) Metrics included in the quality domain. For each PY, CMS assesses each IOTA participant using the following quality metrics:

(1) Post-transplant graft survival. For each PY, CMS calculates an IOTA participant's composite graft survival rate by dividing the cumulative number of all functioning kidney grafts for the IOTA participant's IOTA transplant patients by the cumulative number of all kidney transplants performed by the IOTA participant during the first PY and all subsequent PYs on patients 18 years or older at the time of the transplant, as described in equation 1 to paragraph (b)(1) introductory text of this section.

Equation 1 to Paragraph (b)(1) Introductory Text—Composite Graft Survival Rate

(i) For the first PY, CMS calculates the IOTA participant's composite graft survival rate based solely on the number of functioning grafts furnished to IOTA transplant patients during that PY and the number of completed kidney transplants during that PY, as described in paragraph (b)(1) of this section.

(ii) For all subsequent PYs, CMS calculates the IOTA participant's cumulative composite graft survival rate using the same calculation methodology described in paragraph (b)(1) of this section and in accordance with paragraph (b)(2) of this section.

(iii) CMS excludes the following from the numerator when calculating the composite graft survival rate:

(A) Graft failure, based on OPTN adult kidney transplant recipient follow-up forms for all completed kidney transplants to determine failed grafts as defined by SRTR.

(B) Re-transplant.

(C) Death.

(D) Patients who are under the age of 18 years of age at the time of the kidney transplant.

(E) Multi-organ transplants (except for kidney/pancreas transplants).

(iv)(A) When calculating the composite graft survival rate, CMS only includes single-organ kidney transplants, as defined at § 512.402, and kidney/pancreas transplants for patients who are 18 years of age and older at the time of the kidney transplant in the number of kidney transplants performed by the IOTA participant during each PY in the denominator.

(B) CMS identifies kidney transplants performed by the IOTA participant using OPTN data, regardless of payer, and Medicare claims data.

(2) Risk-adjustment transplant recipient and donor characteristics. In accordance with paragraphs (b)(1) through (3) of this section, CMS risk-adjusts the composite graft survival rate using SRTR's adult kidney graft survival first-year outcomes variables in accordance with paragraphs (3)(i) through (iii) of this section.

(3) Risk-adjustment methodology—(i) Calculation of Observed Composite Graft Survival Rate. In accordance with paragraph (b)(1) of this section, CMS calculates the observed composite graft survival rate by dividing the number of functioning grafts plus two by the total number of completed kidney transplants plus two, as described in equation 2 to paragraph (b)(3)(i) of this section.

Equation 2 to Paragraph (b)(3)(i): Observed Composite Graft Survival Rate Calculation.

(ii) Risk score calculation methodology. CMS calculates a risk score for each IOTA participant as follows:

(A) Expected graft failure rate Calculation.

(1) CMS calculates the expected graft failure rate using SRTR's methodology as described in equation 3 to paragraph (b)(3)(ii)(A)(1).

Equation 3 to Paragraph (b)(3)(ii)(A)(1): Expected Graft Failure Rate Calculation.

(2) CMS uses both of the following:

(i) SRTR adult kidney graft survival first-year post-transplant risk-adjustment models for both deceased donor and living donor kidney transplants.

(ii) SRTR's most available set of coefficients.

(B) National graft failure rate calculation. (1) CMS calculates the national graft failure rate by dividing the number of graft failures in a given PY by the number of completed kidney transplants in a given PY, as described in equation 4 to paragraph (b)(3)(ii)(B)(1) of this section.

Equation 4 to Paragraph (b)(3)(ii)(B)(1): National Graft Failure Rate Calculation.

(2) When calculating the national graft failure rate, CMS excludes all of the following:

(i) Patients who are under the age of 18 years of age at the time of the kidney transplant.

(ii) Pediatric kidney transplant hospitals as defined at § 512.402.

(iii) Multi-organ transplants (except for kidney/pancreas transplants).

(3) In accordance with the provisions in paragraph (b)(3)(ii)(B)(2) of this section, CMS includes kidney transplant patients who have experienced any of the following in the numerator when calculating the national graft failure rate:

(i) Graft failure, based on OPTN adult kidney transplant recipient follow-up forms for all completed kidney transplants to determine failed grafts as defined by SRTR.

(ii) Re-transplant.

(iii) Death.

(4) When calculating the national graft failure rate, CMS only includes single-organ kidney transplants, as defined at § 512.402, and kidney/pancreas transplants for patients who are 18 years of age and older at the time of the kidney transplant in the number of kidney transplants performed during the given PY in the denominator.

(C) Risk Score Calculation. CMS calculates the risk score for each IOTA participant by dividing the amount resulting from the calculation in paragraph (b)(3)(ii)(A) by the amount resulting from the calculation in paragraph (b)(3)(ii)(B) as described in equation 5 to paragraph (b)(3)(ii)(C) of this section.

Equation 5 to Paragraph (b)(3)(ii)(C): Risk Score Calculation.

(iii) Risk-Adjusted Composite Graft Survival Rate Calculation. CMS calculates the risk-adjusted composite graft survival rate for each IOTA participant by multiplying the amount resulting from the calculation in paragraph (b)(3)(i) of this section by the amount resulting from the calculation in paragraph (b)(3)(ii) of this section, as described in equation 6 to paragraph (b)(3)(iii) of this section.

Equation 6 to Paragraph (b)(3)(iii): Risk-Adjusted Composite Graft Survival Rate Calculation

(c) Quality domain scoring. For each PY, CMS awards the IOTA participant zero to 20 points for the IOTA participant's performance in the quality domain, in accordance with the following:

(1) For composite graft survival rate, as described under paragraph (d) of this section, the IOTA participant may receive up to 20 points.

(2) [Reserved]

(d) Composite graft survival rate scoring. CMS awards points to the IOTA participant based on the IOTA participant's performance on the composite graft survival rate, as described in paragraph (b)(1) of this section, ranked nationally, inclusive of all eligible kidney transplant hospitals. CMS awards points to the IOTA participant for composite graft survival rate as described in table 1 to paragraph (d) of this section:

Table 1 to Paragraph (d)—IOTA Model Composite Graft Survival Rate Scoring

Performance relative to national ranking | Lower bound condition | Upper bound condition | Points earned

87.5th percentile | Equals 87.5th percentile | Greater than 87.5th percentile | 20

75th percentile | Equals 75th percentile | Less than 87.5th percentile | 18

62.5th percentile | Equals 62.5th percentile | Less than 75th percentile | 15

50th percentile | Equals 50th percentile | Less than 62.5th percentile | 13

37.5th percentile | Equals 37.5th percentile | Less than 50th percentile | 10

25th percentile | Equals 25th percentile | Less than 37.5th percentile | 8

12.5th percentile | Equals 12.5th percentile | Less than 25th percentile | 5

12.5th percentile | N/A | Less than 12.5th percentile | 0

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32870, June 1, 2026]

§ 512.430 Upside risk payment, downside risk payment, and neutral zone.

(a) General. CMS determines if an IOTA participant qualifies for an upside risk payment, downside risk payment, or the neutral zone for each PY based on the IOTA participant's final performance score, in accordance with paragraphs (b)(1) through (3) of this section.

(b) Upside risk payment, neutral zone, and downside risk payment calculation methodology—(1) Upside risk payment calculation methodology. If in PYs 1-6 the IOTA participant's final performance score is above 60 points, CMS calculates the IOTA participant's upside risk payment as follows:

(i) Subtracts 60 from the IOTA participant's final performance score.

(ii) Divides the amount resulting from the calculation in paragraph (b)(1)(i) of this section by 40.

(iii) Multiplies the amount resulting from the calculation in paragraph (b)(1)(ii) of this section by $15,000.

(iv) Multiplies the amount resulting from the calculation in paragraph (b)(1)(iii) of this section by the total number of Medicare kidney transplants performed by the IOTA participant during the PY.

(2) Neutral zone. (i) For PY 1, an IOTA participant with a final performance score below 60 points qualifies for the neutral zone and neither owes a downside risk payment to CMS nor receives an upside risk payment from CMS.

(ii) For PYs 2 through 6, if an IOTA participant's final performance is between 40 to 60 points (inclusive), the IOTA participant qualifies for the neutral zone.

(3) Downside risk payment calculation methodology. If an IOTA participant is below 40 points in PYs 1 through 6, the IOTA participant qualifies for a downside risk payment. The downside risk payment is calculated as follows:

(i) For PY 1, this paragraph does not apply, and the IOTA participant does not owe a downside risk payment to CMS.

(ii) For PYs 2 through 6, CMS calculates the IOTA participant's downside risk payment as follows:

(A) Subtracts the IOTA participant's final performance score from 40.

(B) Divides the amount resulting from the calculation in paragraph (b)(3)(ii)(A) of this section by 40.

(C) Multiplies the amount resulting from the calculation in paragraph (b)(3)(ii)(B) of this section by $2,000.

(D) Multiplies the amount resulting from the calculation in paragraph (b)(3)(ii)(C) of this section by the total number of Medicare kidney transplants performed by the IOTA participant during the PY to calculate the amount of the IOTA participant's downside risk payment.

(c) [Reserved]

(d) Upside risk payment and downside risk payment timeline. (1) CMS conducts and calculates preliminary performance assessment and payment calculations at least 3 to 6 months after the end of each PY.

(2) CMS notifies the IOTA participant of their preliminary performance assessment and payment calculations in a form and manner determined by CMS at least 5 to 9 months after the end of each PY.

(3) CMS gives IOTA participants 30 days to review preliminary performance assessment and payment calculations and request targeted reviews under § 512.434.

(4) CMS notifies the IOTA participant of their final performance score and any associated upside risk payment or downside risk payment at least 30 days after notifying the IOTA participant of their preliminary performance assessment and payment calculations.

(5) Upside risk payment. After CMS notifies the IOTA participant of their final performance score and any associated upside risk payment, and by a date determined by CMS, CMS issues the upside risk payment to the tax identification number (TIN) on file for the IOTA participant in the Medicare Provider Enrollment, Chain, and Ownership System (PECOS).

(6) Downside risk payment. After CMS notifies the IOTA participant of their final performance score and any associated downside risk payment and by a date determined by CMS, CMS issues a demand letter to the TIN on file for the IOTA participant in PECOS for any downside risk payment owed to CMS.

(i) CMS includes all of the following details in the demand letter:

(A) IOTA participant performance in the model.

(B) Amount of downside risk payment owed to CMS by the IOTA participant.

(C) How the IOTA participant may make payments to CMS.

(ii) The IOTA participant must pay the downside risk payment to CMS in a single payment within 60 days after the date on which the demand letter is issued. If full payment is not received by CMS within 60 days after demand is made, CMS will invoke all legal means to collect the debt, including referral of the remaining debt to the United States Department of the Treasury, in accordance with 31 U.S.C. 3711(g).

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32871, June 1, 2026]

§ 512.434 Targeted review.

(a) General. Subject to the limitations on review in paragraph (c) of this section, an IOTA participant may submit a targeted review request for one or more calculations made, and issued by, CMS within the preliminary performance assessment and payment calculations, if either of the following occur:

(1) The IOTA participant believes an error occurred in calculations due to data quality or other issues.

(2) The IOTA participant believes an error occurred in calculations due to misapplication of methodology.

(b) Requirements. The request must satisfy the following criteria:

(1) Be submitted within 30 days, or another time period as specified by CMS, of receiving its preliminary performance assessment and payment calculations from CMS.

(2) Include supporting information in a form and manner as specified by CMS.

(c) Limitations on review. (1) CMS does not provide IOTA participants the ability to dispute the policy or methodology, as the targeted review process would be limited to the dispute of calculations. CMS would not consider targeted review requests regarding, without limitation, the following:

(i) The selection of the kidney transplant hospital to be an IOTA participant.

(ii) The attribution of IOTA waitlist patients and the attribution of IOTA transplant patients to the IOTA participant, or to any other kidney transplant hospital selected for participation in the IOTA Model, or to any kidney transplant hospital not selected for participation in the IOTA Model.

(iii) The methodology used for determining the achievement domain, efficiency domain, and quality domain.

(iv) The methodology used for calculating and assigning points for each metric within the achievement domain, efficiency domain, and quality domain.

(v) The methodology used for calculating the payment amount per Medicare kidney transplant paid to an IOTA participant.

(2) CMS may review a targeted review request that includes one or more of the limitations in paragraph (c)(1) of this section, provided that all remaining considerations of the request meet all other criteria for consideration by CMS in this section.

(d) Targeted review process. The IOTA participant must submit a request for targeted review in accordance with paragraphs (a) through (c) of this section. The process for a targeted review is as follows:

(1) Initial and final assessments. Upon receipt of a targeted review request from an IOTA participant CMS conducts an initial and final assessment as follows:

(i) Initial assessment. (A) CMS determines if the targeted review request meets the targeted review requirements in paragraph (b) of this section and contains sufficient information to substantiate the request.

(B) If the request is not compliant with paragraphs (a) through (c) of this section or requires additional information:

(1) CMS follows up with the IOTA participant to request additional information in a form and manner as specified by CMS.

(2) The IOTA participant must respond within 30 days of CMS's request for additional information in a form and manner as specified by CMS.

(3) An IOTA participant's non-responsiveness to the request for additional information from CMS may result in the closure of the targeted review request.

(ii) Final assessment. (A) Upon completion of an initial assessment, as described in paragraph (d)(1)(i) of this section, CMS determines whether it erred in calculation, as disputed by the IOTA participant.

(B) If a calculation error is found as a result of an IOTA participant's targeted review request—

(1) CMS—

(i) Notifies the IOTA participant within 30 days of any findings in a form and manner as specified by CMS; and

(ii) Resolves and corrects any resulting error or discrepancy in the amount of the upside risk payment or downside risk payment in a time and manner as determined by CMS.

(2) CMS' correction of any error or discrepancy may delay the effective date of an IOTA participant's upside risk payments or downside risk payments.

(2) Targeted review decisions. Targeted review decisions made by CMS are final, unless submitted for administrative review as described in § 512.190.

§ 512.436 Extreme and uncontrollable circumstances.

(a) General. CMS—

(1) Applies determinations made under the Quality Payment Program with respect to whether an extreme and uncontrollable circumstance has occurred and the affected area during the PY; and

(2) Has sole discretion to determine the period during which an extreme and uncontrollable circumstance occurred and the percentage of attributed patients residing in affected areas.

(b) Impact on payments. In the event of an extreme and uncontrollable circumstance, as described in paragraph (a) of this section, CMS may adjust the magnitude and direction of the IOTA participant's upside or downside risk payment, if applicable, prior to recoupment or payment, if the IOTA participant is participating in the IOTA Model when CMS has declared such an emergency period. CMS may determine any adjustment made based in part on the following:

(1) The percentage of total months during the PY affected by the extreme and uncontrollable circumstance.

(2) The percentage of attributed patients who reside in an area affected by the extreme and uncontrollable circumstance.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32871, June 1, 2026]

§ 512.440 Data sharing.

(a) General. CMS shares certain beneficiary-identifiable data as described in paragraph (b) of this section and certain aggregate data as described in paragraph (c) of this section with IOTA participants regarding attributed patients who are Medicare beneficiaries and performance under the model.

(b) Beneficiary-identifiable data. CMS shares beneficiary-identifiable data with IOTA participants as follows:

(1) CMS makes available certain beneficiary-identifiable data described in paragraphs (b)(4) and (5) of this section for IOTA participants to request for purposes of conducting health care operations work that falls within the first or second paragraph of the definition of health care operations at 45 CFR 164.501 on behalf of their attributed patients who are Medicare beneficiaries.

(2) An IOTA participant that wishes to receive beneficiary-identifiable data for its attributed patients who are Medicare beneficiaries must do all of the following:

(i) Submit a formal request for the data, on an annual basis in a manner and form and by a date specified by CMS, which identifies the data being requested and attests that—

(A) The IOTA participant is requesting this beneficiary-identifiable data as a HIPAA covered entity or as a business associate, as those terms are defined at 45 CFR 160.103, to the IOTA participant's providers and suppliers who are HIPAA covered entities; and

(B) The IOTA participant's request reflects the minimum data necessary, as set forth in paragraph (b)(6) of this section, for the IOTA participant to conduct health care operations work that falls within the first or second paragraph of the definition of health care operations at 45 CFR 164.501.

(ii) Limit the request to Medicare beneficiaries whose name appears on the quarterly attribution list who have been notified in compliance with § 512.450 that the IOTA participant has requested access to beneficiary-identifiable data, and who did not decline having their claims data shared with the IOTA participant as provided in paragraph (b)(7) of this section.

(iii) Sign and submit a data sharing agreement with CMS as set forth in paragraph (b)(8) of this section.

(3) CMS shares beneficiary-identifiable data with an IOTA participant on the condition that the IOTA participant, its IOTA collaborators, and other individuals or entities performing functions or services related to the IOTA participant's activities observe all relevant statutory and regulatory provisions regarding the appropriate use of data and the confidentiality and privacy of individually identifiable health information and comply with the terms of the data sharing agreement described in paragraph (b)(8) of this section.

(4) CMS omits from the beneficiary-identifiable data any information that is subject to the regulations in 42 CFR part 2 governing the confidentiality of substance use disorder patient records.

(5) The beneficiary-identifiable data will include, when available, the following information:

(i) Quarterly attribution lists. For the relevant PY, CMS shares with the IOTA participant the quarterly attribution lists, which will include but may not be limited to the following information for each attributed patient:

(A) The year that CMS attributed the patient to the IOTA participant.

(B) The effective date of the patient's attribution to the IOTA participant.

(C) The effective date of the patient's de-attribution from the IOTA participant and the reason for such removal (if applicable).

(D) For Medicare beneficiaries, the attributed patient's data sharing preference.

(ii) Beneficiary-identifiable claims data. CMS makes available certain beneficiary-identifiable claims data for retrieval by IOTA participants no later than 1 month after the start of each PY, in a form and manner specified by CMS. IOTA participants may retrieve the following data at any point during the relevant PY. This claims data includes all of the following:

(A) Three years of historical Parts A, B, and D claims data files from the 36 months immediately preceding the effective date of each attributed patient who is a Medicare beneficiary's attribution to the IOTA participant.

(B) Monthly Parts A, B, and D claims data files for attributed patients who are Medicare beneficiaries.

(C) Monthly Parts A, B, and D claims data files for Medicare beneficiaries who have been de-attributed from the IOTA participant for claims with a date of service before the date the Medicare beneficiary was de-attributed from the IOTA participant.

(6) The IOTA participant must limit its attributed Medicare beneficiary identifiable data requests to the minimum necessary to accomplish a permitted use of the data.

(i) The minimum necessary Parts A and B data elements may include but are not limited to the following data elements:

(A) Medicare beneficiary identifier (ID).

(B) Procedure code.

(C) Gender.

(D) Diagnosis code.

(E) Claim ID.

(F) The from and through dates of service.

(G) The provider or supplier ID.

(H) The claim payment type.

(I) Date of birth and death, if applicable.

(J) Tax identification number (TIN).

(K) National provider identifier (NPI).

(ii) The minimum necessary Part D data elements may include but are not limited to the following data elements:

(A) Beneficiary ID.

(B) Prescriber ID.

(C) Drug service date.

(D) Drug product service ID.

(E) Quantity dispensed.

(F) Days supplied.

(G) Brand name.

(H) Generic name.

(I) Drug strength.

(J) TIN.

(K) NPI.

(L) Indication if on formulary.

(M) Gross drug cost.

(7)(i)(A) IOTA participants must send Medicare beneficiaries a notification about the IOTA Model and the opportunity to decline claims data sharing as required under § 512.450.

(B) Such notifications must do both of the following:

(1) State that the IOTA participant may have requested beneficiary-identifiable claims data about the Medicare beneficiary for purposes of its care coordination, quality improvement work, and population-based activities relating to improving health or reducing health care costs.

(2) Inform the Medicare beneficiary how to decline having his or her claims information shared with the IOTA participant in the form and manner specified by CMS.

(ii) Medicare beneficiary requests to decline claims data sharing remain in effect unless and until a beneficiary subsequently contacts CMS to amend that request to permit claims data sharing with IOTA participants.

(iii) The opportunity to decline having claims data shared with an IOTA participant under paragraph (b)(7)(i) of this section does not apply to any of the following:

(A) The aggregate data that CMS provides to IOTA participants under paragraph (c) of this section.

(B) The initial attribution lists that CMS provides to IOTA participants as defined at § 512.402 and specified under § 512.414(c)(1)(ii).

(C) The quarterly attribution lists that CMS provides to IOTA participants as defined at § 512.402 and specified under § 512.414(c)(2)(ii).

(D) The annual attribution reconciliation list that CMS provides to IOTA participants as defined at § 512.402 and specified under § 512.414(c)(3)(ii).

(8)(i) If an IOTA participant wishes to retrieve any beneficiary-identifiable data specified in paragraph (b) of this section, the IOTA participant must complete and submit, on an annual basis, a signed data sharing agreement, to be provided in a form and manner specified by CMS, under which the IOTA participant agrees to all of the following:

(A) To comply with the requirements for use and disclosure of this beneficiary-identifiable data that are imposed on covered entities by the HIPAA regulations at 45 CFR part 160 and part 164, subparts A and E, and the requirements of the IOTA Model set forth in this part.

(B) To comply with additional privacy, security, breach notification, and data retention requirements specified by CMS in the data sharing agreement.

(C) To contractually bind each downstream recipient of the beneficiary-identifiable data that is a business associate of the IOTA participant, including all IOTA collaborators, to the same terms and conditions to which the IOTA participant is itself bound in its data sharing agreement with CMS as a condition of the business associate's receipt of the beneficiary-identifiable data retrieved by the IOTA participant under the IOTA Model.

(D) That if the IOTA participant misuses or discloses the beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the data sharing agreement, CMS may do all of the following:

(1) Deem the IOTA participant ineligible to retrieve the beneficiary-identifiable data under paragraph (b) of this section for any amount of time.

(2) Terminate the IOTA participant's participation in the IOTA Model under § 512.466.

(3) Subject the IOTA participant to additional sanctions and penalties available under the law.

(ii) An IOTA participant must comply with all applicable laws and the terms of the data sharing in order to retrieve beneficiary-identifiable data.

(c) Aggregate data. (1) CMS shares aggregate performance data with IOTA participants, in a form and manner to be specified by CMS, which has been de-identified in accordance with 45 CFR 164.514(b). This aggregate data includes, when available, certain de-identified data detailing the IOTA participant's performance against the transplant target information for each PY.

(2) [Reserved]

§ 512.442 Transparency requirements.

(a) Publication of selection criteria. (1) The IOTA participant must publicly post on its website the criteria used by the IOTA participant for evaluating and selecting patients for addition to their kidney transplant waitlist by the end of PY 1.

(2) For all subsequent PYs, the IOTA participant must review its publicly posted criteria used for evaluating and selecting patients for addition to its kidney transplant waitlist and ensure that the information is up to date on its website by the end of each relevant PY.

(3) IOTA participants performing living donor kidney transplants must—

(i) Publicly post on its website its living donor selection criteria for evaluating potential living donors for kidney transplant waitlist patients by the end of PY 2; and

(ii) For all subsequent PYs, review its living donor selection criteria for evaluating potential living donors for kidney transplant waitlist patients and ensure that the information on its website is correct by the end of each relevant PY.

(b) [Reserved]

(c) Review of acceptance criteria. IOTA participants must review transplant organ offer acceptance criteria (as defined at § 512.402) with their IOTA waitlist patients who are Medicare beneficiaries at least once every 6 months that the Medicare beneficiary is on their waitlist.

(1) The IOTA participant must conduct this review via patient visit, phone, email or mail on an individual basis, unless the Medicare beneficiary declines this review.

(i) Prior to reviewing transplant organ offer acceptance criteria, as defined at § 512.402, with IOTA waitlist patients who are Medicare beneficiaries, IOTA participants must give these beneficiaries an opportunity to decline this review.

(ii) If an IOTA waitlist patient who is a Medicare beneficiary declines this review, the IOTA participant must do both of the following:

(A) Record in the IOTA waitlist patient who is a Medicare beneficiary's medical record all of the following:

(1) The date on which this review was declined.

(2) The method by which this review was declined.

(B) Offer the IOTA waitlist patient who is a Medicare beneficiary the opportunity to review transplant organ offer acceptance criteria once every 6 months at which time the IOTA waitlist patient who is a Medicare beneficiary will have the opportunity to decline this review again.

(2) The IOTA participant must record in the IOTA waitlist patient who is a Medicare beneficiary's medical record all of the following:

(i) The information specified in paragraph (c) of this section was reviewed with the IOTA waitlist patient who is a Medicare beneficiary.

(ii) The date in which this review took place.

(iii) The method by which this review was delivered.

(d) Change in waitlist status notification. (1) The IOTA participant must do the following for all IOTA waitlist patients who are Medicare beneficiaries during the model performance period:

(i) Inform IOTA waitlist patients who are Medicare beneficiaries any time their status on the waitlist is changed that would impact their ability to receive an organ offer (that is, from active to inactive).

(ii) When there is a change in waitlist status, provide notifications to each IOTA waitlist patient who is a Medicare beneficiary that includes all of the following:

(A) The most recent date the IOTA waitlist patient who is a Medicare beneficiary became inactive.

(B) The reason for the change in waitlist status.

(C) That the IOTA waitlist patient who is a Medicare beneficiary cannot receive organ offers while inactive.

(D) Information on how the IOTA waitlist patient who is a Medicare beneficiary may become active on its waitlist again.

(E) How the IOTA waitlist patient who is a Medicare beneficiary may contact the IOTA participant for more information or with any questions.

(iii) The IOTA participant must provide this notification (as described in paragraph (d)(1)(i) of this section), and the information specified in paragraph (d)(1)(ii) of this section as follows:

(A) Electronically or by mail on an individual basis.

(B) Within 10 days of the IOTA waitlist patient who is a Medicare beneficiary's change in waitlist status.

(C) Annually, thereafter, for as long as the IOTA waitlist patient who is a Medicare beneficiary remains inactive (that is, 365 consecutive days).

(2) Record in the IOTA waitlist patient who is a Medicare beneficiary's medical record a copy of the notification that includes all of the following:

(i) The method by which the notification was delivered.

(ii) The date of when the notification was delivered.

(3) For IOTA waitlist patients who are Medicare beneficiaries and—

(i) ESRD patients, the IOTA participant must also notify the dialysis facility (as defined at 42 CFR 494.10) and managing clinician (as defined at § 512.310) or nephrologist.

(ii) Non-ESRD patients, the IOTA participant must also notify the referring provider or practitioner providing care to the IOTA waitlist patient who is a Medicare beneficiary.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32871, June 1, 2026]

§ 512.450 Required beneficiary notifications.

(a) General. (1) IOTA participants must provide notice to attributed patients who are Medicare beneficiaries that they are participating in the IOTA Model.

(2) CMS provides a notification template that IOTA participants must use. The template, at minimum does all of the following:

(i) Indicates content that the IOTA participant must not change.

(ii) Indicates where the IOTA participant may insert its own content.

(iii) Includes information regarding the attributed patient's opportunity to opt-out of data sharing with IOTA participants and how they may opt out if they choose to do so.

(3) To notify attributed patients of their rights and protections and that the IOTA participant is participating in the IOTA Model, the IOTA participant must do all of the following:

(i) Prominently display informational materials in each of their office or facility locations where attributed patients receive treatment.

(ii) Include this notification in a clear manner on its public facing website.

(iii)(A) Provide the notification described in paragraph (a) of this section to each applicable attributed patient in a paper format at their first office visit or other outpatient visit after the start of the IOTA Model; or

(B) If the applicable attributed patient has affirmatively opted out of receiving paper communication or has chosen to receive communication through electronic methods, the notification described in paragraph (a) of this section may be distributed through that agreed upon electronic method.

(b) Applicability of general Innovation Center model provisions. (1) The requirements described in § 512.120(c) do not apply to the CMS-provided materials described in paragraph (a) of this section.

(2) All other IOTA participant communications that are descriptive model materials and activities as defined under § 512.110 must meet the requirements described in § 512.120(c).

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32872, June 1, 2026]

§ 512.452 Financial sharing arrangements and attributed patient engagement incentives.

(a) General. (1) The IOTA participant—

(i) May enter into a sharing arrangement with an IOTA collaborator to make a gainsharing payment, or to receive an alignment payment, or both; and

(ii) Must not make a gainsharing payment or receive an alignment payment except in accordance with a sharing arrangement.

(2) A sharing arrangement must comply with the provisions of this section and all other applicable laws and regulations, including the applicable fraud and abuse laws and all applicable payment and coverage requirements.

(3) The IOTA participant must develop, maintain, and use a set of written policies for selecting providers and suppliers to be IOTA collaborators.

(i) The selection criteria must include the quality of care delivered by the potential IOTA collaborator.

(ii) The selection criteria cannot be based directly or indirectly on the volume or value of referrals or business otherwise generated by, between or among any of the following:

(A) The IOTA participant.

(B) Any IOTA collaborator.

(C) Any collaboration agent.

(D) Any individual or entity affiliated with an IOTA participant, IOTA collaborator, or collaboration agent.

(iii) The written policies must contain criteria related to, and inclusive of, the anticipated contribution to performance across the achievement domain, efficiency domain, and quality domain by the potential IOTA collaborator.

(4) The board or other governing body of the IOTA participant must have responsibility for overseeing the IOTA participant's participation in the IOTA Model, including but not limited to all of the following:

(i) Arrangements with IOTA collaborators.

(ii) Payment of gainsharing payments.

(iii) Receipt of alignment payments.

(iv) Use of beneficiary incentives in the IOTA Model.

(5) If an IOTA participant enters into a sharing arrangement, its compliance program must include oversight of sharing arrangements and compliance with the applicable requirements of the IOTA Model.

(b) Requirements. (1) A sharing arrangement must be—

(i) In writing;

(ii) Signed by the parties; and

(iii) Entered into before care is furnished to an attributed patient during the PY under the sharing arrangement.

(2) Participation in a sharing arrangement must be voluntary and without penalty for nonparticipation.

(3) Participation in the sharing arrangement must require the IOTA collaborator to comply with the requirements of this model, as those pertain to their actions and obligations.

(4) The sharing arrangement—

(i) Must set out the mutually agreeable terms for the financial arrangement between the parties to guide and reward model care redesign for future performance across the achievement domain, efficiency domain, and quality domain;

(ii) Must not reflect the results of model PYs that have already occurred; and

(iii) Where the financial outcome of the sharing arrangement terms are known before signing.

(5) The sharing arrangement must require the IOTA collaborator and its employees, contractors (including collaboration agents), and subcontractors to comply with all of the following:

(i) The applicable provisions of this part (including requirements regarding beneficiary notifications, access to records, record retention, and participation in any evaluation, monitoring, compliance, and enforcement activities performed by CMS or its designees).

(ii) All applicable Medicare provider enrollment requirements at § 424.500 of this chapter, including having a valid and active TIN or NPI, during the term of the sharing arrangement.

(iii) All other applicable laws and regulations.

(6) The sharing arrangement must require the IOTA collaborator to have or be covered by a compliance program that includes oversight of the sharing arrangement and compliance with the requirements of the IOTA Model that apply to its role as an IOTA collaborator, including any distribution arrangements.

(7) The sharing arrangement must not pose a risk to beneficiary access, beneficiary freedom of choice, or quality of care.

(8) The written agreement memorializing a sharing arrangement must specify all of the following:

(i) The purpose and scope of the sharing arrangement.

(ii) The identities and obligations of the parties, including specified IOTA activities and other services to be performed by the parties under the sharing arrangement.

(iii) The date of the sharing arrangement.

(iv) Management and staffing information, including type of personnel or contractors that would be primarily responsible for carrying out IOTA activities.

(v) The financial or economic terms for payment, including all of the following:

(A) Eligibility criteria for a gainsharing payment.

(B) Eligibility criteria for an alignment payment.

(C) Frequency of gainsharing or alignment payment.

(D) Methodology and accounting formula for determining the amount of a gainsharing payment that is substantially based on performance across the achievement domain, efficiency domain and quality domain, and the provision of IOTA activities.

(E) Methodology and accounting formula for determining the amount of an alignment payment.

(9) The sharing arrangement must not—

(i) Induce—

(A) The IOTA participant;

(B) The IOTA collaborator; or

(C) Any employees, contractors, or subcontractors of the IOTA participant or IOTA collaborator to reduce or limit medically necessary services to any attributed patient; or

(ii) Restrict the ability of an IOTA collaborator to make decisions in the best interests of its patients, including the selection of devices, supplies, and treatments.

(c) Gainsharing payments and alignment payments. (1) Gainsharing payments, if any, must meet all of the following:

(i) Be derived solely from upside risk payments.

(ii) Be distributed on an annual basis (not more than once per performance year).

(iii) Not be a loan, advance payment, or payment for referrals or other business.

(iv) Be clearly identified as a gainsharing payment at the time it is paid.

(2) To be eligible to receive a gainsharing payment an IOTA collaborator must contribute to performance across the achievement domain, efficiency domain or quality domain for the PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment. The contribution to performance across the achievement domain, efficiency domain, or quality domain criteria must be established by the IOTA participant and directly related to the care of attributed patients.

(3) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment:

(i) An IOTA collaborator other than PGP, NPPGP, or TGP must have directly furnished a billable item or service to an attributed patient that occurred in the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment or incurred a downside risk payment.

(ii) An IOTA collaborator that is a PGP, NPPGP, or TGP must meet the following criteria:

(A) The PGP, NPPGP, or TGP must have billed for an item or service that was rendered by one or more PGP member, NPPGP member, or TGP member respectively to an attributed patient that occurred during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment or incurred a downside risk payment.

(B) The PGP, NPPGP, or TGP must have contributed to IOTA activities and been clinically involved in the care of attributed patients during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment or incurred a downside risk payment.

(4) The total amount of a gainsharing payment for a PY paid to an IOTA collaborator that is a physician or nonphysician practitioner must not exceed 50 percent of the Medicare-approved amounts under the PFS for items and services billed by that physician or nonphysician practitioner to the IOTA participant's attributed patients during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment being made.

(5) The total amount of a gainsharing payment for a PY paid to an IOTA collaborator that is a PGP, NPPGP, or TGP must not exceed 50 percent of the Medicare-approved amounts under the PFS for items and services billed by that PGP, NPPGP, or TGP and furnished to the IOTA participant's attributed patients by the PGP members, NPPGP members, or TGP members respectively during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment being made.

(6) The amount of any gainsharing payments must be determined in accordance with a methodology that is substantially based on contribution to the performance across the achievement domain, efficiency domain or quality domain and the provision of IOTA activities. The methodology may take into account the amount of such IOTA activities provided by an IOTA collaborator relative to other IOTA collaborators.

(7) For a PY, the aggregate amount of all gainsharing payments that are derived from the upside risk payment the IOTA participant receives from CMS must not exceed the amount of that upside risk payment.

(8) No entity or individual, whether a party to a sharing arrangement or not, may condition the opportunity to make or receive gainsharing payments or to make or receive alignment payments directly or indirectly on the volume or value of referrals or business otherwise generated by, between or among the IOTA participant, any IOTA collaborator, any collaboration agent, or any individual or entity affiliated with an IOTA participant, IOTA collaborator, or collaboration agent.

(9) An IOTA participant must not make a gainsharing payment to an IOTA collaborator that is subject to any action for noncompliance with this part, or the fraud and abuse laws, or for the provision of substandard care to attributed patients or other integrity problems.

(10) The sharing arrangement must require the IOTA participant to recoup any gainsharing payment that contained funds derived from a CMS overpayment on an upside risk payment or was based on the submission of false or fraudulent data.

(11) Alignment payments from an IOTA collaborator to an IOTA participant may be made at any interval that is agreed upon by both parties, and must not be—

(i) Issued, distributed, or paid prior to the calculation by CMS of a payment amount reflected in the notification of the downside risk payment;

(ii) Loans, advance payments, or payments for referrals or other business; or

(iii) Assessed by an IOTA participant if the IOTA participant does not owe a downside risk payment.

(12) The IOTA participant must not receive any amounts under a sharing arrangement from an IOTA collaborator that are not alignment payments.

(13) For a PY, the aggregate amount of all alignment payments received by the IOTA participant must not exceed 50 percent of the IOTA participant's downside risk payment amount.

(14) The aggregate amount of all alignment payments from a single IOTA collaborator to the IOTA participant may not be greater than 25 percent of the IOTA participant's downside risk payment over the course of a single PY for an IOTA collaborator.

(15) The amount of any alignment payments must be determined in accordance with a methodology that does not directly account for the volume or value of referrals or business otherwise generated by, between or among the IOTA participant, any IOTA collaborator, any collaboration agent, or any individual or entity affiliated with an IOTA participant, IOTA collaborator, or collaboration agent.

(16) All gainsharing payments and any alignment payments must be administered by the IOTA participant in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(17) All gainsharing payments and alignment payments must be made by check, EFT, or another traceable cash transaction.

(d) Documentation requirements. (1) The IOTA participant must do all of the following:

(i) Document the sharing arrangement contemporaneously with the establishment of the arrangement.

(ii) Maintain accurate current and historical lists of all IOTA collaborators, including IOTA collaborator names and addresses. With respect to these lists the IOTA participant must—

(A) Update such lists on at least a quarterly basis; and

(B) On a web page on the IOTA participant's website, the IOTA participant must—

(1) Publicly report the current and historical lists of IOTA collaborators; and

(2) Include any written policies for selecting individuals and entities to be IOTA collaborators required by the IOTA participant.

(iii) Maintain and require each IOTA collaborator to maintain contemporaneous documentation with respect to the payment or receipt of any gainsharing payment or alignment payment that includes at a minimum all of the following:

(A) Nature of the payment (gainsharing payment or alignment payment).

(B) Identity of the parties making and receiving the payment.

(C) Date of the payment.

(D) Amount of the payment.

(E) Date and amount of any recoupment of all or a portion of an IOTA collaborator's gainsharing payment.

(F) Explanation for each recoupment, such as whether the IOTA collaborator received a gainsharing payment that contained funds derived from a CMS overpayment of an upside risk payment or was based on the submission of false or fraudulent data.

(2) The IOTA participant must keep records of all of the following:

(i) Its process for determining and verifying its potential and current IOTA collaborators' eligibility to participate in Medicare.

(ii) A description of current health information technology, including systems to track upside risk payments and downside risk payments.

(iii) Its plan to track gainsharing payments and alignment payments.

(3) The IOTA participant must retain and provide access to, and must require each IOTA collaborator to retain and provide access to, the required documentation in accordance with §§ 512.460 and 1001.952(ii).

§ 512.454 Distribution arrangements.

(a) General. (1) An IOTA collaborator may distribute all or a portion of any gainsharing payment it receives from the IOTA participant only in accordance with a distribution arrangement, as defined at § 512.402.

(2) All distribution arrangements must comply with the provisions of this section and all other applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All distribution arrangements must be in writing and signed by the parties, contain the date of the agreement, and be entered into before care is furnished to attributed patients under the distribution arrangement.

(2) Participation in a distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The distribution arrangement must require the collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a distribution payment must not be conditioned directly or indirectly on the volume or value of referrals or business otherwise generated by, between or among the IOTA participant, any IOTA collaborator, any collaboration agent, or any individual or entity affiliated with an IOTA participant, IOTA collaborator, or collaboration agent.

(5) The amount of any distribution payments from an NPPGP to an NPPGP member, or from a TGP to a TGP member must be determined in accordance with a methodology that is substantially based on contribution to performance across the achievement domain, efficiency domain, and quality domain and the provision of IOTA activities and that may take into account the amount of such IOTA activities provided by a collaboration agent relative to other collaboration agents.

(6) The amount of any distribution payments from a PGP must be determined either in a manner that complies with § 411.352(g) of this chapter or in accordance with a methodology that is substantially based on contribution to performance across the achievement domain, efficiency domain and quality domain and the provision of IOTA activities and that may take into account the amount of such IOTA activities provided by a collaboration agent relative to other collaboration agents.

(7) Except for a distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, a collaboration agent is eligible to receive a distribution payment only if the collaboration agent furnished or billed for an item or service rendered to an attributed patient that occurred during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment being distributed.

(8) Except for a distribution payment from a PGP to a PGP member that complies with § 411.352(g) of this chapter, the total amount of distribution payments for a PY paid to a collaboration agent must not exceed 50 percent of the total Medicare-approved amounts under the PFS for items and services billed by that PGP, NPPGP or TGP for items and services furnished by PGP members, NPPGP members or TGP members respectively to attributed patients that occurred during the same PY for which the IOTA participant earned the upside risk payment that comprises the gainsharing payment being distributed.

(9) With respect to the distribution of any gainsharing payment received by a PGP, NPPGP, or TGP, the total amount of all distribution payments must not exceed the amount of the gainsharing payment received by the IOTA collaborator from the IOTA participant.

(10) All distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(11) The collaboration agent must retain the ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments.

(12) The distribution arrangement must not—

(i) Induce the collaboration agent to reduce or limit medically necessary items and services to any Medicare beneficiary; or

(ii) Reward the provision of items and services that are medically unnecessary.

(13) The IOTA collaborator must maintain contemporaneous documentation regarding distribution arrangements in accordance with § 512.454, including the following:

(i) The relevant written agreements.

(ii) The date and amount of any distribution payment(s).

(iii) The identity of each collaboration agent that received a distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any distribution payment.

(14) The IOTA collaborator may not enter into a distribution arrangement with any collaboration agent that has a sharing arrangement with the same IOTA participant.

(15) The IOTA collaborator must retain and provide access to and must require collaboration agents to retain and provide access to, the required documentation in accordance with § 512.460.

§ 512.455 Enforcement authority.

(a) OIG authority. Nothing contained in the terms of the IOTA Model or this part limits or restricts the authority of the HHS Office of Inspector General, including its authority to audit, evaluate, investigate, or inspect the IOTA participant, IOTA collaborators, or any other person or entity or their records, data, or information, without limitation.

(b) Other authority. Nothing contained in the terms of the IOTA Model or this part limits or restricts the authority of any government agency permitted by law to audit, evaluate, investigate, or inspect the participant hospital, IOTA collaborators, or any other person or entity or their records, data, or information, without limitation.

§ 512.456 Beneficiary incentive: Part B and Part D immunosuppressive drug cost sharing support.

(a) Cost sharing support for Part B and Part D immunosuppressive drugs. For immunosuppressive drugs covered under Medicare Part B or Medicare Part D and prescribed to an attributed patient, the IOTA participant may subsidize, in whole or in part, the cost sharing associated with the immunosuppressive drugs under Part B and Part D immunosuppressive drug cost sharing support defined at § 512.402 if all of the following conditions are met:

(1) The attributed patient is an eligible attributed patient as defined at § 512.402.

(2) The IOTA participant must provide a written policy in a form and manner specified by CMS for the provision of Part B and Part D immunosuppressive drug cost sharing support that is approved by CMS before the PY in which the cost sharing support is made available.

(i) The IOTA participant must revalidate the written policy with CMS and in a form and manner specified by CMS for the provision of Part B and Part D immunosuppressive drug cost sharing support before its provision in a subsequent PY.

(ii) The IOTA participant's initial written policy and the revalidation of the written policy must establish and justify the criteria that qualify an eligible attributed patient to receive Part B and Part D immunosuppressive drug cost sharing support.

(iii) The IOTA participant's written policy and the revalidation of the written policy must include an attestation that the IOTA participant will not, in providing Part B and Part D immunosuppressive drug cost sharing support, take into consideration the type, cost, generic status, or manufacturer of the immunosuppressive drug(s) or limit an eligible attributed patients' choice of pharmacy.

(b) Restrictions. (1) An IOTA participant must not take into consideration the type, cost, generic status, or manufacturer of the immunosuppressive drug(s) or limit an eligible attributed patients' choice of pharmacy when providing Part B and Part D immunosuppressive drug cost sharing support.

(2) An IOTA participant may not receive financial or operational support for Part B and Part D immunosuppressive drug cost sharing support from pharmacies and pharmaceutical manufacturers.

(c) Documentation. (1) An IOTA participant must maintain contemporaneous documentation that includes all of the following:

(i) The identity of the eligible attributed patient to whom Part B and Part D immunosuppressive drug cost sharing support was provided.

(ii) The date or dates on which Part B and Part D immunosuppressive drug cost sharing support was provided.

(iii) The amount or amounts of Part B and Part B immunosuppressive drug cost sharing support that was provided.

(2) An IOTA participant must retain and make available records pertaining to Part B and Part D immunosuppressive drug cost sharing support to the Federal Government in accordance with § 512.460.

§ 512.458 Attributed patient engagement incentives.

(a) General. An IOTA participant may choose to provide any or all of the following types of attributed patient engagement incentives to an attributed patient under the conditions described in paragraph (b) of this section:

(1) Communication devices and related communication services directly pertaining to communication with an IOTA participant or IOTA collaborator to improve communication between an attributed patient and an IOTA participant or IOTA collaborator.

(2) Transportation to and from an IOTA participant and between other providers and suppliers involved in the provision of ESRD care.

(3) Mental health services to address an attributed patient's behavioral health symptoms pre- and post-transplant.

(4) In-home care to support the health of the attributed patient or the kidney transplant in the post-transplant period.

(b) Conditions. An IOTA participant may provide attributed patient engagement incentives of the type described in paragraphs (a)(1) through (4) of this section when all of the following conditions are met:

(1) An IOTA participant provides a written policy, in a form and manner specified by CMS, for the provision of attributed patient engagement incentives.

(2) CMS approves an IOTA participants written policy before the first PY in which an attributed patient engagement incentive is first made available.

(3) CMS revalidates the IOTA participant's written policy in a form and manner specified by CMS prior to each PY in which an attributed patient engagement incentive is offered subsequently.

(4) The IOTA participant includes in its written policy:

(i) A description of the items or services that will be provided as attributed patient engagement incentives.

(ii) An explanation of how each item or service that will be an attributed patient engagement incentive has a reasonable connection to any of the following:

(A) An attributed patient achieving and maintaining active status on a kidney transplant waitlist.

(B) An attributed patient accessing the kidney transplant procedure.

(C) The health of the attributed patient or the kidney transplant in the post-transplant period.

(D) A justification for the need for the attributed patient engagement incentives that is specific to the IOTA participant's attributed patient population.

(iii) An attestation that items that are attributed patient engagement incentives will be provided directly to an attributed patient.

(iv) An attestation that the IOTA participant will pay service providers directly for services that are attributed patient engagement incentives.

(v) An attestation that any items or services acquired by the IOTA participant that will be furnished as attributed patient engagement incentives will be acquired for the minimum amount necessary for an attributed patient to achieve the goals described in paragraphs (3)(ii)(A) through (C) of this paragraph.

(c) Restrictions. (1) An IOTA participant must provide items that are attributed patient engagement incentives directly to an attributed patient.

(2) An IOTA participant must pay service providers directly for any services that are offered as attributed patient engagement incentive.

(3) An IOTA participant must not offer an attributed patient engagement incentive that is tied to the receipt of items or services from a particular provider or supplier.

(4) An IOTA participant must not advertise or promote an item or service that is an attributed patient engagement incentive, except to make an attributed patient aware of the availability of the items or services at the time an attributed patient could reasonably benefit from them.

(5) An IOTA participant must not receive donations directly or indirectly to purchase attributed patient engagement incentives.

(6) An IOTA participant must retrieve items that that are attributed patient engagement incentives from the attributed patient when the attributed patient is no longer eligible for the that item or at the conclusion of the IOTA Model, whichever is earlier.

(i) Documented, diligent, good faith attempts to retrieve items that are attributed patient engagement incentives are deemed to meet the retrieval requirement.

(ii) [Reserved]

(7) Items that are communication devices:

(i) May not exceed $1,000 in retail value for any one attributed patient in any one PY;

(ii) Must remain the property of the IOTA participant;

(iii) Must be retrieved from the attributed patient by the IOTA participant—

(A) When the attributed patient is no longer eligible for the communication device or at the conclusion of the IOTA Model, whichever is earlier; and

(B) Before another communication device may be made available to the same attributed patient.

(d) Documentation. The IOTA participant must do all of the following:

(1) Maintain contemporaneous documentation of items and services furnished as attributed patient engagement incentives that includes, at minimum all of the following:

(i) The date the attributed patient engagement incentive is provided.

(ii) The identity of the attributed patient to whom the item or service was provided.

(2) Document all retrieval attempts of items that are attributed patient engagement incentives, including the ultimate date of retrieval.

(3)(i) Retain records pertaining to furnished attributed patient engagement incentives.

(ii) Make the records available to the Federal Government in accordance with § 512.460.

§ 512.459 Application of the CMS-sponsored model arrangements and patient incentives safe harbor.

(a) Application of the CMS-sponsored model arrangements safe harbor. CMS has determined that the Federal anti-kickback statute safe harbor for CMS-sponsored model arrangements (42 CFR 1001.952(ii)(1)) is available to protect remuneration furnished in the IOTA Model in the form of the Sharing Arrangement's gainsharing payments, the Sharing Arrangement's alignment payments, and the Distribution Arrangement's distribution payments that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii), 512.452, and 512.454.

(b) Application of the CMS-sponsored model patient incentives safe harbor. CMS has determined that the Federal anti-kickback statute safe harbor for CMS-sponsored model patient incentives (42 CFR 1001.952(ii)(2)) is available to protect remuneration furnished in the IOTA Model in the form of Part B and Part D immunosuppressive drug cost sharing support and the attributed patient engagement incentives that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii), 512.456 and 512.458.

§ 512.460 Audit rights and records retention.

(a) Right to audit. The Federal Government, including CMS, HHS, and the Comptroller General, or their designees, has the right to audit, inspect, investigate, and evaluate any documents and other evidence regarding implementation of the IOTA Model.

(b) Access to records. The IOTA participant and its IOTA collaborators must maintain and give the Federal Government, including, but not limited to, CMS, HHS, and the Comptroller General, or their designees, access to all such documents (including books, contracts, and records) and other evidence sufficient to enable the audit, evaluation, inspection, or investigation of the implementation of the IOTA Model, including without limitation, documents, and other evidence regarding all of the following:

(1) Compliance by the IOTA participant and its IOTA collaborators with the terms of the IOTA Model.

(2) The accuracy of model-specific payments made under the IOTA Model.

(3) The IOTA participant's downside risk payments owed to CMS under the IOTA Model.

(4) Quality measure information and the quality of services performed under the terms of the IOTA Model.

(5) Utilization of items and services furnished under the IOTA Model.

(6) The ability of the IOTA participant to bear the risk of potential losses and to repay any losses to CMS, as applicable.

(7) Contemporaneous documentation of cost sharing support furnished under Part B and Part D immunosuppressive drug cost sharing support that includes the following:

(i) The identity of the eligible attributed patient to whom Part B and Part D immunosuppressive drug cost sharing support was provided.

(ii) The date or dates on which Part B and Part D immunosuppressive drug cost sharing support was provided.

(iii) The amount or amounts of the cost sharing support provided to the attributed patient.

(8) Contemporaneous documentation of items and services furnished as attributed patient engagement incentives in accordance with § 512.458 that includes all of the following, at minimum:

(i) The date the attributed patient engagement incentive is provided.

(ii) The identity of the attributed patient to whom the item or service was provided.

(9) Patient safety.

(10) Any other program integrity issues.

(c) Record retention. (1) The IOTA participant and its IOTA collaborators must maintain the documents and other evidence described in paragraph (b) of this section and other evidence for a period of 6 years from the last payment determination for the IOTA participant under the IOTA Model or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless—

(i) CMS determines there is a special need to retain a particular record or group of records for a longer period and notifies the IOTA participant at least 30 days before the normal disposition date; or

(ii) There has been a termination, dispute, or allegation of fraud or similar fault against the IOTA participant or its IOTA collaborators, in which case the records must be maintained for an additional 6 years from the date of any resulting final resolution of the termination, dispute, or allegation of fraud or similar fault.

(2)(i) If CMS notifies the IOTA participant of the special need to retain a record or group of records in accordance with paragraph (c)(1)(i) of this section, the IOTA participant must maintain the records for such period of time as determined by CMS.

(ii) If CMS notifies the IOTA participant of a special need to retain records in accordance with paragraph (c)(1)(ii) of this section, the IOTA participant must notify its IOTA collaborators of this need to retain records for the additional period specified by CMS.

§ 512.462 Compliance and monitoring.

(a) Compliance with laws. The IOTA participant must comply with all applicable laws and regulations.

(b) CMS monitoring activities. (1) CMS, or its approved designee, may conduct monitoring activities to ensure compliance by the IOTA participant and IOTA collaborators with the terms of the IOTA Model under this subpart to—

(i) Understand IOTA participants' use of model-specific payments; and

(ii) Promote the safety of attributed patients and the integrity of the IOTA Model.

(2) Monitoring activities may include, without limitation, all of the following:

(i) Documentation requests sent to the IOTA participant and its IOTA collaborators, including surveys and questionnaires.

(ii) Audits of claims data, quality measures, medical records, and other data from the IOTA participant and its IOTA collaborators.

(iii) Interviews with the IOTA participant, including leadership personnel, medical staff, other associates, and its IOTA collaborators.

(iv) Interviews with attributed patients and their caregivers.

(v) Site visits to the IOTA participant and its IOTA collaborators, performed in a manner consistent with paragraph (c) of this section.

(vi) Monitoring quality outcomes and attributed patient data.

(vii) Tracking beneficiary complaints and appeals.

(viii) Monitoring the definition of and justification for the subpopulation of the IOTA participant's eligible attributed patients that may receive Part B and Part D immunosuppressive drug cost sharing support in accordance with § 512.456.

(ix) Monitoring the provision of attributed patient engagement incentives provided in accordance with § 512.458.

(x) Monitoring out of sequence allocation of kidneys by—

(A) Assessing the frequency at which IOTA waitlist patients, top-ranked on an IOTA participant's kidney transplant waitlist, receive the organ that was initially offered to them; and

(B) Determining the reasons behind cases where IOTA waitlist patients identified in paragraph (b)(x)(A) of this section, did not receive the kidney offered to them.

(xi) Monitoring the publication of selection criteria provision in accordance with § 512.442(a).

(xii) Monitoring the review of acceptance criteria provision in accordance with § 512.442(c).

(xiii) Monitoring the change in waitlist status provision in accordance with § 512.442(d).

(3) In conducting monitoring and oversight activities, CMS or its designees may use any relevant data or information including without limitation all Medicare claims submitted for items or services furnished to IOTA transplant patients or IOTA waitlist patients or both.

(c) Site visits. (1) The IOTA participant must cooperate in periodic site visits performed by CMS or its designees in order to facilitate the evaluation of the IOTA Model in accordance with section 1115A(b)(4) of the ACT and the monitoring of the IOTA participant's compliance with the terms of the IOTA Model, including this subpart.

(2) When scheduling the site visit, CMS or its designee provides, to the extent practicable, the IOTA participant with no less than 15 days advance notice of any site visit. CMS—

(i) Attempts, to the extent practicable, to accommodate a request for particular dates in scheduling site visits; and

(ii) Does not accept a date request from the IOTA participant that is more than 60 days after the date of the initial site visit notice from CMS.

(3) The IOTA participant must ensure that personnel with the appropriate responsibilities and knowledge associated with the purpose of the site visit are available during all site visits.

(4) CMS may perform unannounced site visits at the office of the IOTA participant at any time to investigate concerns about the health or safety of attributed patients or other program integrity issues.

(5) Nothing in this part may be construed to limit or otherwise prevent CMS from performing site visits permitted or required by applicable law.

(d) Reopening of payment determinations. (1) CMS may reopen an IOTA Model-specific payment determination on its own motion or at the request of the IOTA participant, within 4 years from the date of the determination, for good cause (as defined at § 405.986 of this chapter) except if there exists reliable evidence that the determination was procured by fraud or similar fault as defined at § 405.902 of this chapter. In the case of fraud or similar fault, CMS may reopen an IOTA Model specific payment determination at any time.

(2) CMS' decision regarding whether to reopen a model-specific payment determination is binding and not subject to appeal.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32872, June 1, 2026]

§ 512.464 Remedial action.

(a) Grounds for remedial action. CMS may impose one or more remedial actions described in paragraph (b) of this section if CMS determines that:

(1) The IOTA participant has failed to furnish 11 or more kidney transplants for patients aged 18 years or older, regardless of payer, during a PY or any baseline years.

(2) The IOTA participant or its IOTA collaborator has failed to comply with any of the terms of the IOTA Model, including this subpart.

(3) The IOTA participant has failed to comply with transparency requirements described at § 512.442.

(4) The IOTA participant or its IOTA collaborator has failed to comply with any applicable Medicare program requirement, rule, or regulation.

(5) The IOTA participant or its IOTA collaborator has taken any action that threatens the health or safety of an attributed patient.

(6) The IOTA participant or its IOTA collaborator has submitted false data or made false representations, warranties, or certifications in connection with any aspect of the IOTA Model.

(7) The IOTA participant or its IOTA collaborator has undergone a change in control that presents a program integrity risk.

(8) The IOTA participant or its IOTA collaborator is subject to any sanctions of an accrediting organization or a Federal, State, or local government agency.

(9) The IOTA participant or its IOTA collaborator is subject to investigation or action by HHS (including the HHS Office of Inspector General or CMS) or the Department of Justice due to an allegation of fraud or significant misconduct, including any of the following:

(i) Being subject to the filing of a complaint or filing of a criminal charge.

(ii) Being subject to an indictment.

(iii) Being named as a defendant in a False Claims Act qui tam matter in which the Federal Government has intervened, or similar action.

(10) The IOTA participant or its IOTA collaborator has failed to demonstrate improved performance following any remedial action imposed under this section.

(11) The IOTA participant has misused or disclosed beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the applicable data sharing agreement.

(b) Remedial actions. If CMS determines that one or more grounds for remedial action described in paragraph (a) of this section has taken place, CMS may take one or more of the following remedial actions:

(1) Notify the IOTA participant and, if appropriate, require the IOTA participant to notify its IOTA collaborators of the violation.

(2) Require the IOTA participant to provide additional information to CMS or its designees.

(3) Subject the IOTA participant to additional monitoring, auditing, or both.

(4) Prohibit the IOTA participant from distributing model-specific payments, as applicable.

(5) Require the IOTA participant to terminate, immediately or by a deadline specified by CMS, its sharing arrangement with an IOTA collaborator with respect to the IOTA Model.

(6) Terminate the IOTA participant from the IOTA Model.

(7) Suspend or terminate the ability of the IOTA participant to provide Part B and Part D immunosuppressive drug cost sharing support in accordance with § 512.456 or attributed patient engagement incentives in accordance with § 512.458.

(8) Require the IOTA participant to submit a corrective action plan in a form and manner and by a deadline specified by CMS.

(9) Discontinue the provision of data sharing and reports to the IOTA participant.

(10) Recoup model-specific payments.

(11) Reduce or eliminate a model-specific payment otherwise owed to the IOTA participant.

(12) [Reserved]

(13) Any other action as may be permitted under the terms of this part.

§ 512.466 Termination.

(a) Termination of IOTA participant from the IOTA Model by CMS. CMS may immediately or with advance notice terminate an IOTA participant from participation in the model if CMS does any of the following:

(1) Determines that it no longer has the funds to support the IOTA Model.

(2) Modifies or terminates the IOTA Model in accordance with section 1115A(b)(3)(B) of the Act.

(3) Determines that the IOTA participant has done any of the following:

(i) Failed to comply with any model requirements or any other Medicare program requirement, rule, or regulation.

(ii) Failed to comply with a monitoring or auditing plan or both.

(iii) Failed to submit, obtain approval for, implement or fully comply with the terms of a corrective action plan.

(iv) Failed to demonstrate improved performance following any remedial action.

(v) Taken any action that threatens the health or safety of a Medicare beneficiary or other patient.

(vi) Submitted false data or made false representations, warranties, or certifications in connection with any aspect of the IOTA Model.

(vii) Undergoes a change in control.

(viii) Assigns or purports to assign any of the rights or obligations under the IOTA Model, voluntarily or involuntarily, whether by merger, consolidation, dissolution, operation of law, or any other manner, without the written consent of CMS.

(ix) Poses significant program integrity risks, including but not limited to any of the following:

(A) Is subject to sanctions or other actions of an accrediting organization or a Federal, State, or local government agency.

(B) Is subject to investigation or action by HHS (including OIG and CMS) or the Department of Justice due to an allegation of fraud or significant misconduct, including any of the following:

(1) Being subject to the filing of a complaint or filing of a criminal charge.

(2) Being subject to an indictment.

(3) Being named as a defendant in a False Claims Act qui tam matter in which the government has intervened, or similar action.

(C) If HHS or the OPTN has determined that an IOTA participant has violated the OPTN's policies, OPTN's Management and Membership policies, or HHS regulations (42 CFR part 121) upon a review conducted under 42 CFR 121.10.

(b) Termination of Model participation by IOTA participant. The IOTA participant may not terminate their participation in the IOTA Model.

(c) Financial settlement upon termination. If CMS terminates the IOTA participant's participation in the IOTA Model, CMS calculates the final performance score and any upside risk payment or downside risk payment, if applicable, for the entire PY in which the IOTA participant's participation in the model was terminated.

(1) If CMS terminates the IOTA participant's participation in the IOTA Model, CMS determines the IOTA participant's effective date of termination.

(2) If CMS terminates the IOTA participant for any reasons listed under § 512.466:

(i) CMS does not make any payments of upside risk payment for the PY in which the IOTA participant was terminated; and

(ii) The IOTA participant will remain liable for payment of any downside risk payment up to and including the PY in which termination becomes effective.

(d) Termination of the IOTA Model by CMS. (1) The general provisions for the Innovation Center model termination by CMS listed under § 512.165 apply to the IOTA Model.

(i) CMS may terminate the IOTA Model for reasons including, but not limited to, those set forth in § 512.165(a).

(ii) If CMS terminates the IOTA Model, CMS provides written notice to IOTA participants specifying the grounds for model termination and the effective date of such termination.

(2) In accordance with section 1115A(d)(2) of the Act and § 512.170(e), termination of the IOTA Model under section 1115A(b)(3)(B) of the Act is not subject to administrative or judicial review.

(3) If CMS terminates the IOTA Model, the financial settlement terms described in paragraph (c) of this section apply.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32873, June 1, 2026]

§ 512.468 Bankruptcy and other notifications.

(a) Notice of bankruptcy. (1) If the IOTA participant has filed a bankruptcy petition, whether voluntary or involuntary, the IOTA participant must provide written notice of the bankruptcy to CMS and to the U.S. Attorney's Office in the district where the bankruptcy was filed, unless final payment has been made by either CMS or the IOTA participant under the terms of each model tested under section 1115A of the Act in which the IOTA participant is participating or has participated and all administrative or judicial review proceedings relating to any payments under such models have been fully and finally resolved.

(2) The notice of bankruptcy must meet all of the following:

(i) Be sent by certified mail no later than 5 days after the petition has been filed.

(ii) Contain—

(A) A copy of the filed bankruptcy petition (including its docket number); and

(B) A list of all models tested under section 1115A of the Act in which the IOTA participant is participating or has participated.

(b) Change in control. (1) The IOTA participant must provide written notice to CMS at least 90 days before the effective date of any change in control.

(2) CMS may terminate an IOTA participant from the IOTA Model under § 512.466 if the IOTA participant undergoes a change in control.

(c) Prohibition on assignment. (1) Unless CMS provides prior written consent, an IOTA participant must not transfer, including by merger (whether the IOTA participant is the surviving or disappearing entity), consolidation, dissolution, or otherwise any—

(i) Discretion granted it under the model;

(ii) Right that it has to satisfy a condition under the model;

(iii) Remedy that it has under the model; or

(iv) Obligation imposed on it under the model.

(2) The IOTA participant must provide CMS 90 days advance written notice of any such proposed transfer.

(3) This obligation remains in effect after the expiration or termination of the model, or the IOTA participant's participation in the model, and until final payment by the IOTA participant under the model has been made.

(4) CMS may condition its consent to such transfer on full or partial reconciliation of upside risk payments and downside risk payments.

(5) Any purported transfer in violation of this requirement is voidable at the discretion of CMS.

§ 512.470 Waivers.

CMS waives the requirements of sections 1881(b), 1833(a), 1833(b), and 1851(i)(2) of the Act, and 42 CFR 422.322(c) only to the extent necessary to make the payments under the IOTA Model described in this subpart.

[89 FR 96445, Dec. 4, 2024, as amended at 91 FR 32873, June 1, 2026]

§ 512.500 Basis and scope of subpart.

(a) Basis. This subpart implements the test of the Transforming Episode Accountability Model (TEAM) under section 1115A(b) of the Act. Except as specifically noted in this part, the regulations under this subpart do not affect the applicability of other provisions affecting providers and suppliers under Medicare FFS, including the applicability of provisions regarding payment, coverage, and program integrity.

(b) Scope. This subpart sets forth the following:

(1) Participation in TEAM.

(2) Scope of episodes being tested.

(3) Pricing methodology.

(4) Quality measures and quality reporting requirements.

(5) Reconciliation and review processes.

(6) Data sharing and other requirements

(7) Financial arrangements and beneficiary incentives.

(8) Medicare program waivers

(9) Beneficiary protections.

(10) Cooperation in model evaluation and monitoring.

(11) Audits and record retention.

(12) Rights in data and intellectual property.

(13) Monitoring and compliance.

(14) Remedial action.

(15) Limitations on review.

(16) Miscellaneous provisions on bankruptcy and other notifications.

(17) Model termination by CMS.

(18) [Reserved]

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37203, Aug. 4, 2025]

§ 512.505 Definitions.

For the purposes of this part, the following definitions are applicable unless otherwise stated:

AAPM stands for Advanced Alternative Payment Model.

AAPM option means the advanced alternative payment model option of TEAM for Track 2 and Track 3 TEAM participants that provide their CMS EHR Certification ID and attest to their use of CEHRT in accordance with § 512.522.

ACO means an accountable care organization, as defined at § 425.20 of this chapter.

ACO participant has the meaning set forth in § 425.20 of this chapter.

ACO provider/supplier has the meaning set forth in § 425.20 of this chapter.

Acute care hospital means a provider subject to the prospective payment system specified in § 412.1(a)(1) of this chapter.

Age bracket risk adjustment factor means the coefficient of risk associated with a patient's age bracket, calculated as described in § 512.545(a)(1).

Aggregated reconciliation target price refers to the sum of the reconciliation target prices for all episodes attributed to a given TEAM participant for a given performance year.

Alignment payment means a payment from a TEAM collaborator to a TEAM participant under a sharing arrangement, for the sole purpose of sharing the TEAM participant's responsibility for making repayments to Medicare.

AMI stands for acute myocardial infarction

Anchor hospitalization means the initial hospital stay upon admission for an episode category included in TEAM, as described in § 512.525(c), for which the institutional claim is billed through the inpatient prospective payment system (IPPS).

Anchor procedure means a procedure related to an episode category, as described in § 512.525(c), included in TEAM that is permitted and paid for by Medicare when performed in a hospital outpatient department (HOPD) and billed through the Hospital Outpatient Prospective Payment System (OPPS).

APC stands for Ambulatory Payment Classification.

APC update factor refers to a component applied to the prospective trend factor to ensure that the APC weights corresponding to the performance year are incorporated into the target price calculations, as set forth in § 512.540(b)(7).

APM stands for Alternative Payment Model.

APM Entity means an entity as defined in § 414.1305 of this chapter.

Baseline episode spending refers to total episode spending by all providers and suppliers associated with a given MS-DRG/HCPCS episode type for all hospitals in a given region during the baseline period.

Baseline period means the 3-year historical period used to construct the preliminary target price and reconciliation target price for a given performance year.

Baseline year means any one of the 3 years included in the baseline period.

Benchmark price means average standardized episode spending by all providers and suppliers associated with a given MS-DRG/HCPCS episode type for all hospitals in a given region during the applicable baseline period.

Beneficiary means an individual who is enrolled in Medicare FFS.

Beneficiary who is dually eligible means a beneficiary enrolled in both Medicare and full Medicaid benefits.

BPCI stands for Bundled Payments for Care Improvement, which was an episode_based payment initiative with four models tested by the CMS Innovation Center from April 2013 to September 2018.

BPCI Advanced stands for the Bundled Payments for Care Improvement Advanced Model, which is an episode-based payment model tested by the CMS Innovation Center from October 2018 to December 2025.

CABG (Coronary Artery Bypass Graft Surgery) means any coronary revascularization procedure paid through the IPPS under MS-DRGs 231-236, including both elective CABG and CABG procedures performed during initial acute myocardial infarction (AMI) treatment.

CCN stands for CMS certification number.

CDI stands for the Community Deprivation Index.

CEHRT means certified electronic health record technology that meets the requirements set forth in § 414.1305 of this chapter.

Change in control means any of the following:

(1) The acquisition by any “person” (as this term is used in sections 13(d) and 14(d) of the Securities Exchange Act of 1934) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934), directly or indirectly, of voting securities of the TEAM participant representing more than 50 percent of the TEAM participant's outstanding voting securities or rights to acquire such securities.

(2) The acquisition of the TEAM participant by any individual or entity.

(3) The sale, lease, exchange, or other transfer (in one transaction or a series of transactions) of all or substantially all of the assets of the TEAM participant.

(4) The approval and completion of a plan of liquidation of the TEAM participant, or an agreement for the sale or liquidation of the TEAM participant.

CJR stands for the Comprehensive Care for Joint Replacement Model, which is an episode-based payment model tested by the CMS Innovation Center from April 2016 to December 2024.

Clinician engagement list means the list of eligible clinicians or MIPS eligible clinicians that participate in TEAM activities and have a contractual relationship with the TEAM participant, and who are not listed on the financial arrangements list, as described in § 512.522(c).

CMS Electronic Health Record (EHR) Certification ID means the identification number that represents the combination of Certified Health Information Technology that is owned and used by providers and hospitals to provide care to their patients and is generated by the Certified Health Information Technology Product List.

Collaboration agent means an individual or entity that is not a TEAM collaborator and that is either of the following:

(1) A member of a PGP, NPPGP, or TGP that has entered into a distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a TEAM collaborator.

(2) An ACO participant or ACO provider/supplier that has entered into a distribution arrangement with the same ACO in which it is participating, and where the ACO is a TEAM collaborator.

Composite quality score (CQS) means a score computed for each TEAM participant to summarize the TEAM participant's level of quality performance and improvement on specified quality measures as described in § 512.547.

Core-based statistical area (CBSA) means a statistical geographic entity defined by the Office of Management and Budget (OMB) consisting of the county or counties associated with at least one core (urbanized area or urban cluster) of at least 10,000 population, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties containing the core.

CORF stands for comprehensive outpatient rehabilitation facility.

Covered services means the scope of health care benefits described in sections 1812 and 1832 of the Act for which payment is available under Part A or Part B of Title XVIII of the Act.

Critical access hospital (CAH) means a hospital designated under subpart F of part 485 of this chapter.

CQS adjustment amount means the amount subtracted from the positive or negative reconciliation amount to generate the reconciliation payment or repayment amount.

CQS adjustment percentage means the percentage CMS applies to the positive or negative reconciliation amount based on the TEAM participant's CQS performance.

CQS baseline period means the time period used to benchmark quality measure performance.

Days means calendar days.

Descriptive TEAM materials and activities means general audience materials such as brochures, advertisements, outreach events, letters to beneficiaries, web pages, mailings, social media, or other materials or activities distributed or conducted by or on behalf of the TEAM participant or its downstream participants when used to educate, notify, or contact beneficiaries regarding TEAM. All of the following communications are not descriptive TEAM materials and activities:

(1) Communications that do not directly or indirectly reference TEAM (for example, information about care coordination generally).

(2) Information on specific medical conditions.

(3) Referrals for health care items and services, except as required by § 512.564.

(4) Any other materials that are excepted from the definition of “marketing” as that term is defined at 45 CFR 164.501.

Discount factor means a set percentage included in the preliminary target price and reconciliation target price intended to reflect Medicare's potential savings from TEAM.

Distribution arrangement means a financial arrangement between a TEAM collaborator that is an ACO, PGP, NPPGP, or TGP and a collaboration agent for the sole purpose of distributing some or all of a gainsharing payment received by the ACO, PGP, NPPGP, or TGP.

Distribution payment means a payment from a TEAM collaborator that is an ACO, PGP, NPPGP, or TGP to a collaboration agent, under a distribution arrangement, composed only of gainsharing payments.

DME stands for durable medical equipment.

Downstream collaboration agent means an individual who is not a TEAM collaborator or a collaboration agent and who is a member of a PGP, NPPGP, or TGP that has entered into a downstream distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a collaboration agent.

Downstream distribution arrangement means a financial arrangement between a collaboration agent that is both a PGP, NPPGP, or TGP and an ACO participant and a downstream collaboration agent for the sole purpose of sharing a distribution payment received by the PGP, NPPGP, or TGP.

Downstream participant means an individual or entity that has entered into a written arrangement with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent under which the downstream participant engages in one or more TEAM activities.

EHR stands for electronic health record.

Eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Episode category means one of the five episodes tested in TEAM as described at § 512.525(d).

Episode means all Medicare Part A and B items and services described in § 512.525(e) (and excluding the items and services described in § 512.525(f)) that are furnished to a beneficiary described in § 512.535 during the time period that begins on the date of the beneficiary's admission to an anchor hospitalization or the date of the anchor procedure, as described at § 512.525(c), and ends on the 30th day following the date of discharge from the anchor hospitalization or anchor procedure, with the date of discharge or date of the anchor procedure itself being counted as the first day in the 30-day post-discharge period, as described at § 512.537. If an anchor hospitalization is initiated on the same day as or in the 3 days following an outpatient procedure that could initiate an anchor procedure for the same episode category, the outpatient procedure initiates an anchor hospitalization and the anchor hospitalization start date is that of the outpatient procedure.

Essential access community hospital means a hospital as defined under § 412.109 of this chapter.

Final normalization factor refers to the mean of the benchmark price for each MS-DRG/HCPCS episode type and region divided by the mean of the risk-adjusted benchmark price for the same MS-DRG/HCPCS episode type and region.

Financial arrangements list means the list of eligible clinicians or MIPS eligible clinicians that have a financial arrangement with the TEAM participant, TEAM collaborator, collaboration agent, and downstream collaboration agent, as described in § 512.522(b).

Gainsharing payment means a payment from a TEAM participant to a TEAM collaborator, under a sharing arrangement, composed of only reconciliation payments, internal cost savings, or both.

HCPCS stands for Healthcare Common Procedure Coding System, which is used to bill for items and services.

Health disparities mean preventable differences in the burden of disease, injury, violence, or opportunities to achieve optimal health, health quality, or health outcomes that are experienced by one or more underserved communities within the TEAM participant's population of TEAM beneficiaries that the TEAM participant will aim to reduce.

Health-related social need means an unmet, adverse social condition that can contribute to poor health outcomes and is a result of underlying social determinants of health, which refer to the conditions in the environments where people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.

HHA means a Medicare-enrolled home health agency.

High-cost outlier cap refers to the 99th percentile of regional spending for a given MS-DRG/HCPCS episode type, region, and baseline year, which is the amount at which episode spending would be capped for purposes of determining baseline and performance year episode spending.

Hospital means a hospital as defined in section 1886(d)(1)(B) of the Act.

Hospital discharge planning means the standards set forth in § 482.43 of this chapter.

ICD-CM stands for International Classification of Diseases, Clinical Modification.

Internal cost savings means the measurable, actual, and verifiable cost savings realized by the TEAM participant resulting from care redesign undertaken by the TEAM participant in connection with providing items and services to TEAM beneficiaries within an episode. Internal cost savings does not include savings realized by any individual or entity that is not the TEAM participant.

IPF stands for inpatient psychiatric facility.

IPPS stands for Inpatient Prospective Payment System, which is the payment system for subsection (d) hospitals as defined in section 1886(d)(1)(B) of the Act.

IRF stands for inpatient rehabilitation facility.

LIS stands for Medicare Part D Low-Income Subsidy.

Lower-Extremity Joint Replacement (LEJR) means any hip, knee, or ankle replacement that is paid under MS-DRG 469, 470, 521, or 522 through the IPPS or HCPCS code 27447, 27130, or 27702 through the OPPS.

LTCH stands for long-term care hospital.

Major Bowel Procedure means any small or large bowel procedure paid through the IPPS under MS-DRG 329-331.

Mandatory CBSA means a core-based statistical area selected by CMS in accordance with § 512.515 where all eligible hospitals are required to participate in TEAM.

MDC stands for Major Diagnostic Category.

Medically necessary means reasonable and necessary for the diagnosis or treatment of an illness or injury, or to improve the functioning of a malformed body member.

Medicare ID means the hospital CCN in the PECOS.

Medicare Severity Diagnosis-Related Group (MS-DRG) means, for the purposes of this model, the classification of inpatient hospital discharges updated in accordance with § 412.10 of this chapter.

Medicare-dependent, small rural hospital (MDH) means a specific type of hospital that meets the classification criteria specified under § 412.108 of this chapter.

Member of the NPPGP or NPPGP member means a nonphysician practitioner or therapist who is an owner or employee of an NPPGP and who has reassigned to the NPPGP his or her right to receive Medicare payment.

Member of the PGP or PGP member means a physician, nonphysician practitioner, or therapist who is an owner or employee of the PGP and who has reassigned to the PGP his or her right to receive Medicare payment.

Member of the TGP or TGP member means a therapist who is an owner or employee of a TGP and who has reassigned to the TGP his or her right to receive Medicare payment.

MIPS stands for Merit-based Incentive Payment System.

MIPS eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Model performance period means the 60-month period from January 1, 2026, to December 31, 2030, during which TEAM is being tested and the TEAM participant is held accountable for spending and quality.

Model start date means January 1, 2026, the start of the model performance period.

MS-DRG/HCPCS episode type refers to the subset of episodes within an episode category that are associated with a given MS-DRG/HCPCS, as set forth at § 512.540(a)(1).

Non-AAPM option means the option of TEAM for TEAM participants in Track 1 or for TEAM participants in Track 2 or Track 3 that do not attest to use of CEHRT as described in § 512.522.

Nonphysician practitioner means one of the following:

(1) A physician assistant who satisfies the qualifications set forth at § 410.74(a)(2)(i) and (ii) of this chapter.

(2) A nurse practitioner who satisfies the qualifications set forth at § 410.75(b) of this chapter.

(3) A clinical nurse specialist who satisfies the qualifications set forth at § 410.76(b) of this chapter.

(4) A certified registered nurse anesthetist (as defined at § 410.69(b) of this chapter).

(5) A clinical social worker (as defined at § 410.73(a) of this chapter).

(6) A registered dietician or nutrition professional (as defined at § 410.134 of this chapter).

NPI stands for National Provider Identifier.

NPPGP stands for Non-Physician Provider Group Practice, which means an entity that is enrolled in Medicare as a group practice, includes at least one owner or employee who is a nonphysician practitioner, does not include a physician owner or employee, and has a valid and active TIN.

NPRA stands for Net Payment Reconciliation Amount, which means the dollar amount representing the difference between the reconciliation target price and performance year spending, after adjustments for quality and stop-gain/stop-loss limits, but prior to the post-episode spending adjustment.

OIG stands for the Department of Health and Human Services Office of the Inspector General.

OP means an outpatient procedure for which the institutional claim is billed by the hospital through the OPPS.

OPPS stands for the Outpatient Prospective Payment System.

PAC stands for post-acute care.

PBPM stands for per-beneficiary-per-month.

PECOS stands for the Provider Enrollment, Chain, and Ownership System.

Performance year means a 12-month period beginning on January 1 and ending on December 31 of each year during the model performance period.

Performance year spending means the sum of standardized Medicare claims payments during the performance year for the items and services that are included in the episode in accordance with § 512.525(e), excluding the items and services described in § 512.525(f).

PGP stands for physician group practice.

Physician has the meaning set forth in section 1861(r) of the Act.

Post-episode spending amount means the sum of all Medicare Parts A and B payments for items and services furnished to a beneficiary within 30 days after the end of an episode and includes the prorated portion of services that began during the episode and extended into the 30-day post-episode period.

Preliminary target price refers to the target price provided to the TEAM participant prior to the start of the performance year, which is subject to adjustment at reconciliation, as set forth at § 512.540.

Primary care services has the meaning set forth in section 1842(i)(4) of the Act.

Prospective normalization factor refers to the multiplier incorporated into the preliminary target price to ensure that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, calculated as set forth in § 512.540(b)(6).

Prospective trend factor refers to the multiplier incorporated into the preliminary target price to estimate changes in spending patterns between the baseline period and the performance year, calculated as set forth in § 512.540(b)(7).

Provider means a “provider of services” as defined under section 1861(u) of the Act and codified in the definition of “provider” at § 400.202 of this chapter.

Provider of outpatient therapy services means an entity that is enrolled in Medicare as a provider of therapy services and furnishes one or more of the following:

(1) Outpatient physical therapy services as defined in § 410.60 of this chapter.

(2) Outpatient occupational therapy services as defined in § 410.59 of this chapter.

(3) Outpatient speech-language pathology services as defined in § 410.62 of this chapter.

QP stands for Qualifying APM Participant as defined in § 414.1305 of this chapter.

Quality-adjusted reconciliation amount refers to the dollar amount representing the difference between the reconciliation target price and performance year spending, after adjustments for quality, but prior to application of stop-gain/stop-loss limits and the post-episode spending adjustment.

Raw quality measure score means the quality measure value as obtained from the Hospital Inpatient Quality Reporting Program and the Hospital-Acquired Condition Reduction Program.

Reconciliation amount means the dollar amount representing the difference between the reconciliation target price and performance year spending, prior to adjustments for quality, stop-gain/stop-loss limits, and post-episode spending.

Reconciliation payment amount means the amount that CMS may owe to a TEAM participant after reconciliation as determined in accordance with § 512.550(g).

Reconciliation target price means the target price applied to an episode at reconciliation, as determined in accordance with § 512.545.

Region means one of the nine U.S. census divisions, as defined by the U.S. Census Bureau, with the U.S. territories included in Census Division 9.

Reorganization event refers to a merger, consolidation, spin off or other restructuring that results in a new hospital entity under a given CCN.

Repayment amount means the amount that the TEAM participant may owe to Medicare after reconciliation as determined in accordance with § 512.550(g).

Retrospective trend factor refers to the multiplier incorporated into the reconciliation target price to estimate realized changes in spending patterns during the performance year, calculated as set forth in § 512.545(f).

Rural hospital means an IPPS hospital that meets one of the following criteria:

(1) Is located in a rural area as defined under § 412.64 of this chapter.

(2) Is located in a rural census tract defined under § 412.103(a)(1) of this chapter.

Safety Net hospital means an IPPS hospital that meets at least one of the following criteria:

(1) Exceeds the 75th percentile of the proportion of Medicare beneficiaries considered dually eligible for Medicare and Medicaid across all PPS acute care hospitals in the baseline period.

(2) Exceeds the 75th percentile of the proportion of Medicare beneficiaries partially or fully eligible to receive Part D low-income subsidies across all PPS acute care hospitals in the baseline period.

Scaled quality measure score means the score equal to the percentile to which the TEAM participant's raw quality measure score would have belonged in the CQS baseline period.

Scaling factor means the ratio of the remapped MS-DRG or HCPCS/APC relative weight in the performance year, as applicable, to the original MS-DRG or HCPCS/APC relative weight in the baseline period.

Sharing arrangement means a financial arrangement between a TEAM participant and a TEAM collaborator for the sole purpose of making gainsharing payments or alignment payments under TEAM.

SNF stands for skilled nursing facility.

Sole community hospital (SCH) means a hospital that meets the classification criteria specified in § 412.92 of this chapter.

Spinal fusion means any cervical, thoracic, or lumbar spinal fusion procedure paid through either of the following:

(1) The IPPS under—

(i) MS-DRG 402, 426, 427, 428, 429, 430, 447, 448, 450, 451, 471, 472, or 473; and

(ii) On or after October 1, 2026 MS-DRG 523, 524, or 525.

(2) The OPPS under HCPCS codes 22551, 22554, 22612, 22630, or 22633.

Supplier means a supplier as defined in section 1861(d) of the Act and codified at § 400.202 of this chapter.

Surgical Hip and Femur Fracture Treatment (SHFFT) means a hip fixation procedure, with or without fracture reduction, but excluding joint replacement, that is paid through the IPPS under MS-DRGs 480-482.

TAA stands for total ankle arthroplasty.

TEAM activities mean any activity related to promoting accountability for the quality, cost, and overall care for TEAM beneficiaries and performance in the model, including managing and coordinating care; encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery; or carrying out any other obligation or duty under the model.

TEAM beneficiary means a beneficiary who meets the beneficiary inclusion criteria in § 512.535 and who is in an episode.

TEAM collaborator means an ACO or one of the following Medicare-enrolled individuals or entities that enters into a sharing arrangement:

(1) SNF.

(2) HHA.

(3) LTCH.

(4) IRF.

(5) Physician.

(6) Nonphysician practitioner.

(7) Therapist in private practice.

(8) CORF.

(9) Provider of outpatient therapy services.

(10) PGP.

(11) Hospital.

(12) CAH.

(13) NPPGP.

(14) Therapy Group Practice (TGP).

TEAM data sharing agreement means an agreement entered into between the TEAM participant and CMS that includes the terms and conditions for any beneficiary-identifiable data shared with the TEAM participant under § 512.562.

TEAM HCC count refers to the TEAM Hierarchical Condition Category count, which is a categorical risk adjustment variable designed to reflect a beneficiary's overall health status during a lookback period by grouping similar diagnoses into one related category and counting the total number of diagnostic categories that apply to the beneficiary.

TEAM participant means an acute care hospital that either—

(1) Initiates episodes and is paid under the IPPS and OPPS with a CCN primary address located in one of the mandatory CBSAs selected for participation in TEAM in accordance with § 512.515; or

(2) Makes a voluntary opt-in participation election to participate in TEAM in accordance with § 512.510 and is accepted to participate in TEAM by CMS.

TEAM payment means a payment made by CMS only to TEAM participants, or a payment adjustment made only to payments made to TEAM participants, under the terms of TEAM that is not applicable to any other providers or suppliers.

TEAM reconciliation report means the report prepared after each reconciliation that CMS provides to the TEAM participant notifying the TEAM participant of the outcome of the reconciliation.

TGP or therapy group practice means an entity that is enrolled in Medicare as a therapy group in private practice, includes at least one owner or employee who is a therapist in private practice, does not include an owner or employee who is a physician or nonphysician practitioner, and has a valid and active TIN.

THA means total hip arthroplasty.

Therapist means one of the following individuals as defined at § 484.4 of this chapter:

(1) Physical therapist.

(2) Occupational therapist.

(3) Speech-language pathologist.

Therapist in private practice means a therapist that—

(1) Complies with the special provisions for physical therapists in private practice in § 410.60(c) of this chapter;

(2) Complies with the special provisions for occupational therapists in private practice in § 410.59(c) of this chapter; or

(3) Complies with the special provisions for speech-language pathologists in private practice in § 410.62(c) of this chapter.

TIN stands for taxpayer identification number.

TKA stands for total knee arthroplasty.

Track 1 means a participation track in TEAM in which any TEAM participant may participate for the first performance year and only TEAM participants who are a safety net hospital, as defined in § 512.505, may participate for performance years 1 through 3 of the model. TEAM participants in Track 1 are subject to all of the following:

(1) CQS adjustment percentage described in § 512.550(d)(1)(i).

(2) Limitations on gain described in § 512.550(e)(2).

(3) The calculation of the reconciliation payment described in § 512.550(g).

Track 2 means a participation track in TEAM in which certain TEAM participants, as described in § 512.520(b)(4), may request to participate in for performance years 2 through 5. TEAM participants in Track 2 are subject to all of the following:

(1) CQS adjustment percentage described in § 512.550(d)(1)(ii).

(2) Limitations on gain and loss described in § 512.550(e)(2) and § 512.550(e)(3).

(3) The calculation of the reconciliation payment or repayment amount described in § 512.550(g).

Track 3 means a participation track in TEAM in which a TEAM participant may participate in for performance years 1 through 5. TEAM participants in Track 3 are subject to all of the following:

(1) CQS adjustment percentage described in § 512.550(d)(1)(iii).

(2) Limitations on loss and gain described in § 512.550(e)(1) and in § 512.550(e)(2).

(3) The calculation of the reconciliation payment or repayment amount described in § 512.550(g).

Trend year means either of the 2 years immediately prior to the 3-year baseline period used in combination with the baseline period to calculate the prospective trend factor.

Updated prospective trend factor refers to the multiplier incorporated into the preliminary target price to estimate changes in spending patterns between the baseline period and the corresponding calendar year and fiscal year in the performance year, calculated as set forth in § 512.540(b)(7).

U.S. Territories means American Samoa, the Federated States of Micronesia, Guam, the Marshall Islands, and the Commonwealth of the Northern Mariana Islands, Palau, Puerto Rico, U.S. Minor Outlying Islands, and the U.S. Virgin Islands.

Weighted scaled score means the scaled quality measure score multiplied by its normalized weight.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37203, Aug. 4, 2025; 91 FR 50347, Aug. 4, 2026]

§ 512.508 Mandatory participation.

(a) General. TEAM participants, as defined in § 512.505, must participate in TEAM for the full duration of the model performance period, unless CMS terminates TEAM or the TEAM participant receives notice of termination from TEAM in accordance with § 512.596.

(b) New hospital exception. New hospitals with a Medicare ID with an initial effective date after December 31, 2024, within the PECOS that initiate episodes and are paid under the IPPS and OPPS with a CCN primary address located in one of the mandatory CBSAs selected for participation in TEAM in accordance with § 512.515, must participate in TEAM at the beginning of the performance year that follows one full performance year since their Medicare ID initial effective date.

(1) As described in § 512.550(b)(2)(ii), CMS performs reconciliation calculations for any new or surviving TEAM participant that results from a TEAM participant's reorganization event, as defined in § 512.505, for episodes where the anchor hospitalization admission or anchor procedure occurred on or after the effective date of the reorganization event. Therefore, new hospitals that result from a TEAM participant's reorganization event begin participation in TEAM on the effective date of the reorganization event.

(2) [Reserved]

(c) Newly qualifying hospital exception. (1) Hospitals that begin to satisfy the definition of TEAM participant, as described in § 512.505, must participate in TEAM at the beginning of the performance year that follows one full performance year since the date on which they began to satisfy the definition of TEAM participant.

(2) Hospitals that no longer satisfy the definition of TEAM participant, as described in § 512.505, end TEAM participation on the date they no longer satisfy the definition.

(i) CMS notifies hospitals identified in this paragraph (c)(2) within 30 days of the hospital no longer satisfying the TEAM participant definition or as soon as is reasonably practicable.

(ii) [Reserved]

(d) Monitoring. CMS may monitor specifically for the potential shifting of patients with

high anticipated treatment costs from TEAM participants to new non-participant hospitals, including hospitals in the participation deferment period in accordance with § 512.505(b) and (c).

[90 FR 37204, Aug. 4, 2025]

§ 512.510 Voluntary opt-in participation.

(a) General. Hospitals that wish to voluntarily opt-in to TEAM for the full duration of the model performance period must submit a written participation election letter as described in paragraph (d) of this section during the voluntary participation election period specified in paragraph (c) of this section.

(b) Eligibility. A hospital must not be located in a mandatory CBSA selected for TEAM participation, in accordance with § 512.515, and must satisfy one of the following criteria to be eligible for voluntary opt-in participation election—

(1) Be a participant hospital in the CJR model that participates in CJR until the last day of the last performance year, December 31, 2024; or

(2) Be a hospital participating in the BPCI Advanced model, either as a participant or downstream episode initiator, that participates in BPCI Advanced until the last day of the last performance period, December 31, 2025.

(c) Voluntary participation election period. The voluntary participation election period begins on January 1, 2025 and ends on January 31, 2025.

(d) Voluntary participation election letter. The voluntary participation election letter serves as the model participation agreement. CMS may accept the voluntary participation election letter if the letter meets all of the following criteria:

(1) Includes all of the following:

(i) Hospital name.

(ii) Hospital address.

(iii) Hospital CCN.

(iv) Hospital contact name, telephone number, and email address.

(v) Model name (TEAM).

(2) Includes a certification that the hospital will—

(i) Comply with all applicable requirements of this part and all other laws and regulations applicable to its participation in TEAM; and

(ii) Submit data or information to CMS that is accurate, complete and truthful, including, but not limited to, the participation election letter and any other data or information that CMS uses for purposes of TEAM.

(3) Is signed by the hospital administrator, chief financial officer, or chief executive officer with authority to bind the hospital.

(4) Is submitted in the form and manner specified by CMS.

(e) CMS rejection of participation letter. CMS may reject a participation election letter for reasons including, but not limited to, program integrity concerns or ineligibility, and notifies the hospital of the rejection within 30 days of the determination.

§ 512.515 Geographic areas.

(a) General. CMS uses stratified random sampling to select the mandatory CBSAs included in TEAM.

(b) Exclusions. CMS excludes from the selection of geographic areas CBSAs that meet any of the following criteria:

(1) Are located entirely in the State of Maryland.

(2) Are located partially in Maryland, and in which more than 50 percent of the five episode categories tested in TEAM were initiated at a Maryland hospital between January 1, 2022 and June 30, 2023.

(3) Did not have at least one episode for at least one of the five episode categories tested in TEAM between January 1, 2022 and June 30, 2023.

(c) Stratification. (1) Based on the median for each of the following four metrics, CMS designates the CBSAs that are not excluded in accordance with paragraph (b) of this section as “high” and “low”:

(i) Average episode spend for a broad set of episode categories tested in the BPCI Advanced Model, as described in § 512.505, between January 1, 2022 and June 30, 2023.

(ii) Number of acute care hospitals paid under the IPPS between January 1, 2022 and June 30, 2023.

(iii) Past exposure to CMS' bundled payment models, which are Bundled Payments for Care Improvement (BPCI) Models 2, 3, and 4, as described in § 512.505, Comprehensive Care for Joint Replacement (CJR) as described in § 512.505, or BPCI Advanced between October 1, 2013 and December 31, 2022.

(iv) Number of Safety Net hospitals in 2022 that have initiated at least one episode between January 1, 2022 and June 30, 2023 for at least one of the five episode categories tested in TEAM.

(2)(i) CMS stratifies the CBSAs into mutually exclusive groups corresponding to the 16 unique combinations of these “high” and “low” designations.

(ii) CMS assigns selection probabilities ranging from 20 percent to 33.3 percent to each of the 16 strata, with a higher selection probability for strata containing CBSAs with a high number of safety net hospitals or low past exposure to bundles and a lower selection probability for all other strata.

(3)(i) CMS recategorizes outlier CBSAs in these 16 strata with a very high number of safety net hospitals into a 17th stratum.

(ii) CMS assigns a selection probability of 50 percent to the 17th stratum.

(4)(i) CMS recategorizes CBSAs still remaining in the first 16 strata with at least one hospital participating in BPCI Advanced or CJR as of January 1, 2024 or those located in the states of Vermont, Connecticut, or Hawaii into an 18th stratum.

(ii) CMS assigns a selection probability of 20 percent to the 18th stratum.

(d) Random selection into TEAM. CMS randomly selects mandatory CBSAs into TEAM from each of the 18 strata according to selection probabilities described in paragraph (c) of this section.

§ 512.520 Participation tracks.

(a) For performance year 1: (1) Any TEAM participant may choose to participate in Track 1 or Track 3.

(2) The TEAM participant must notify CMS of its track choice, prior to performance year 1, in a form and manner and by a date specified by CMS.

(3) CMS assigns the TEAM participant to Track 1 for performance year 1 if a TEAM participant does not choose a track in the form and manner and by the date specified by CMS.

(b) For performance years 2 through 5: (1) CMS assigns a TEAM participant to participate in Track 3 unless the TEAM participant requests to participate in Track 1 or Track 2 and receives approval from CMS to participate in Track 1 or Track 2, with the exception that a TEAM participant cannot request participation in Track 1 for performance years 4 and 5.

(2) The TEAM participant must notify CMS of its Track 1 or Track 2 request prior to performance year 2, and prior to every performance year thereafter, as applicable, in a form and manner and by a date specified by CMS.

(3) CMS does not approve a TEAM participant's request to participate in Track 1 submitted in accordance with paragraph (b)(2) of this section unless the TEAM participant is a safety net hospital, as defined in § 512.505, at the time of the request.

(4) CMS does not approve a TEAM participant's request to participate in Track 2 submitted in accordance with paragraph (b)(2) of this section unless the TEAM participant is one of the following hospital types at the time of the request:

(i) Medicare-dependent hospital (as defined in § 512.505) and the Medicare Dependent Hospital program, as authorized by statute, is not expired at the time Track 2 selections are due, as described in paragraph (b)(2) of this section.

(ii) Rural hospital (as defined in § 512.505).

(iii) Safety Net hospital (as defined in § 512.505).

(iv) Sole community hospital (as defined in § 512.505).

(v) Essential access community hospital (as defined in § 512.505).

(5) A TEAM participant who does not notify CMS of its Track 1 or Track 2 request prior to a given performance year in the form and manner and by the date specified by CMS or who is not a safety net hospital, as defined as defined in § 512.505, or one of the hospital types specified in paragraph (b)(4) of this section at the time of the request is assigned to Track 3 for the applicable performance year.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37204, Aug. 4, 2025]

§ 512.522 APM options.

(a) TEAM APM options. For performance years 1 through 5, a TEAM participant may choose either of the following options based on their CEHRT use and track participation:

(1) AAPM option. A TEAM participant participating in Track 2 or Track 3 may select the AAPM option by attesting in a form and manner and by a date specified by CMS to their use of CEHRT, as defined in § 414.1305 of this chapter, on an annual basis prior to the start of each performance year.

(i) A TEAM participant that selects the AAPM option as provided for in paragraph (a)(1) must provide their CMS electronic health record certification ID in a form and manner and by a date specified by CMS on annual basis prior to the end of each performance year.

(ii) A TEAM participant that selects the AAPM option as provided for in paragraph (a)(1) must retain documentation of their attestation to CEHRT use and provide access to the documentation in accordance with § 512.586.

(2) Non-AAPM option. CMS assigns the TEAM participant to the non-AAPM option if the TEAM participant is in Track 1 or if the TEAM participant is in Track 2 or Track 3 and does not attest in a form and manner and by a date specified by CMS to their use of CEHRT as defined in § 414.1305 of this chapter.

(b) Financial arrangements list. A TEAM participant with TEAM collaborators, collaboration agents, or downstream collaboration agents during a performance year must submit to CMS a financial arrangements list in a form and manner and by a date specified by CMS on a quarterly basis for each performance year. The financial arrangements list must include the following:

(1) TEAM collaborators. For each physician, nonphysician practitioner, or therapist who is a TEAM collaborator during the performance year:

(i) The name, TIN, and NPI of the TEAM collaborator.

(ii) The start date and, if applicable, end date, for the sharing arrangement between the TEAM participant and the TEAM collaborator.

(2) Collaboration agents. For each physician, nonphysician practitioner, or therapist who is a collaboration agent during the performance year:

(i) The name, TIN, and NPI of the collaboration agent and the name and TIN of the TEAM collaborator with which the collaboration agent has entered into a distribution arrangement.

(ii) The start date and, if applicable, end date, for the distribution arrangement between the TEAM collaborator and the collaboration agent.

(3) Downstream collaboration agents. For each physician, nonphysician practitioner, or therapist who is a downstream collaboration agent during the performance year:

(i) The name, TIN, and NPI of the downstream collaboration agent and the name and TIN of the collaboration agent with which the downstream collaboration agent has entered into a downstream distribution arrangement.

(ii) The start date and, if applicable, end date, for the downstream distribution arrangement between the collaboration agent and the downstream collaboration agent.

(c) Clinician engagement list. A TEAM participant must submit to CMS a clinician engagement list in a form and manner and by a date specified by CMS on a quarterly basis during each performance year. The clinician engagement list must include the following:

(1) For each physician, nonphysician practitioner, or therapist who is not on a TEAM participant's financial arrangements list during the performance year but who does have a contractual relationship with the TEAM participant and participates in TEAM activities during the performance year:

(i) The name, TIN, and NPI of the physician, nonphysician practitioner, or therapist.

(ii) The start date and, if applicable, the end date for the contractual relationship between the physician, nonphysician practitioner, or therapist and the TEAM participant.

(d) Attestation to no individuals. A TEAM participant with no individuals that meet the criteria specified in paragraphs (b)(1) through (3) of this section for the financial arrangements list or paragraph (c) of this section for the clinician engagement list must attest in a form and manner and by a date specified by CMS that there are no financial arrangements or clinician engagements to report.

(e) Documentation requirements. A TEAM participant that submits a financial arrangements list specified in paragraph (b) of this section or a clinician engagement list specified in paragraph (c) of this section must retain and provide access to the documentation in accordance with § 512.586.

§ 512.525 Episodes.

(a) Time periods. All episodes must begin on or after January 1, 2026 and end on or before December 31, 2030.

(b) Episode attribution. All items and services included in the episode are attributed to the TEAM participant at which the anchor hospitalization or anchor procedure, as applicable, occurs.

(c) Episode initiation. An episode is initiated by—

(1) A beneficiary's admission to a TEAM participant for an anchor hospitalization that is paid under a MS-DRG specified in paragraph (d) of this section; or

(2) A beneficiary's receipt of an anchor procedure billed under a HCPCS code specified in paragraph (d) of this section. If an anchor hospitalization is initiated on the same day as or in the 3 days following an outpatient procedure that could initiate an anchor procedure for the same episode category, the episode start date is that of the outpatient procedure rather than the admission date, and an anchor procedure is not initiated.

(d) Episode categories. The MS-DRGs and HCPCS codes included in the episodes are as follows:

(1) Lower Extremity Joint Replacement (LEJR): (i) IPPS discharge under MS-DRG 469, 470, 521, or 522; or

(ii) OPPS claim for HCPCS codes 27447, 27130, or 27702.

(2) Surgical Hip/Femur Fracture Treatment (SHFFT). IPPS discharge under MS-DRG 480 to 482.

(3) Coronary Artery Bypass Graft Surgery (CABG). IPPS discharge under MS-DRG 231 to 236.

(4) Spinal Fusion:

(i) IPPS discharge under—(A) MS-DRG 402, 426, 427, 428, 429, 430, 447, 448, 450, 451, 471, 472, or 473; and

(B) On or after October 1, 2026 MS-DRG 523, 524, or 525; or

(ii) OPPS claim for HCPCS codes 22551, 22554, 22612, 22630, or 22633.

(5) Major Bowel Procedure. IPPS discharge under MS-DRG 329 to 331.

(e) Included services. All Medicare Part A and B items and services are included in the episode, except as specified in paragraph (f) of this section. These services include, but are not limited to, the following:

(1) Physicians' services.

(2) Inpatient hospital services (including hospital readmissions).

(3) IPF services.

(4) LTCH services.

(5) IRF services.

(6) SNF services.

(7) HHA services.

(8) Hospital outpatient services.

(9) Outpatient therapy services.

(10) Clinical laboratory services.

(11) DME.

(12) Part B drugs and biologicals, except for those excluded under paragraph (f) of this section.

(13) Hospice services.

(14) Part B professional claims dated in the 3 days prior to an anchor hospitalization if a claim for the surgical procedure for the same episode category is not detected as part of the hospitalization because the procedure was performed by the TEAM participant on an outpatient basis, but the patient was subsequently admitted as an inpatient.

(f) Excluded services. The following items, services, and payments are excluded from the episode:

(1) Select items and services considered unrelated to the anchor hospitalization or the anchor procedure for episodes in the baseline period and performance year, including, but not limited to, the following:

(i) Inpatient hospital admissions for MS-DRGs that group to the following categories of diagnoses:

(A) Oncology.

(B) Trauma medical.

(C) Organ transplant.

(D) Ventricular shunt.

(ii) Inpatient hospital admissions that fall into the following Major Diagnostic Categories (MDCs):

(A) MDC 02 (Diseases and Disorders of the Eye).

(B) MDC 14 (Pregnancy, Childbirth, and Puerperium).

(C) MDC 15 (Newborns).

(D) MDC 25 (Human Immunodeficiency Virus).

(2) New technology add-on payments, as defined in part 412, subpart F of this chapter for episodes in the baseline period and performance year.

(3) Transitional pass-through payments for medical devices as defined in § 419.66 of this chapter for episodes initiated in the baseline period and performance year.

(4) Hemophilia clotting factors provided in accordance with § 412.115 of this chapter for episodes in the baseline period and performance year.

(5) Part B payments for low-volume drugs, high-cost drugs and biologicals, and blood clotting factors for hemophilia for episodes in the baseline period and performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biological HCPCS codes that are billed in fewer than 31 episodes in total across all episodes in TEAM during the baseline period;

(ii) Drug/biological HCPCS codes that are billed in at least 31 episodes in the baseline period and have a mean cost of greater than $25,000 per episode in the baseline period; and

(iii) HCPCS codes corresponding to clotting factors for hemophilia patients, identified in the quarterly average sales price file for certain Medicare Part B drugs and biologicals as HCPCS codes with clotting factor equal to 1, HCPCS codes for new hemophilia clotting factors not included in the baseline period, and other HCPCS codes identified as hemophilia.

(6) Part B payments for low-volume drugs, high-cost drugs and biologicals, and blood clotting factors for hemophilia for episodes initiated in the performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biological HCPCS codes that were not captured in the baseline period and appear in 10 or fewer episodes in the performance year;

(ii) Drug/biological HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the performance year, and have a mean cost of greater than $25,000 per episode in the performance year; and

(iii) Drug/biological HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the performance year, have a mean cost of $25,000 or less per episode in the performance year, and correspond to a drug/biological that appears in the baseline period but was assigned a new HCPCS code between the baseline period and the performance year.

(iv) HCPCS codes for new hemophilia clotting factors not included in the baseline period.

(g) TEAM exclusions List. The list of excluded MS-DRGs, MDCs, and HCPCS codes is posted on the CMS website.

(h) Updating the TEAM exclusions list. The list of excluded services is updated through rulemaking to reflect all of the following:

(1) Changes to the MS-DRGs under the IPPS.

(2) Coding changes.

(3) Other issues brought to CMS' attention.

[>89 FR 69914, Aug. 28, 2024, as amended at 91 FR 50347, Aug. 4, 2026]

§ 512.535 Beneficiary inclusion criteria.

(a) Episodes tested in TEAM include only those in which care is furnished to beneficiaries who meet all of the following criteria upon admission for an anchor procedure or anchor hospitalization:

(1) Are enrolled in Medicare Parts A and B.

(2) Are not eligible for Medicare on the basis of having end stage renal disease, as described in § 406.13 of this chapter.

(3) Are not enrolled in any managed care plan (for example, Medicare Advantage, health care prepayment plans, or cost-based health maintenance organizations).

(4) Are not covered under a United Mine Workers of America health care plan.

(5) Have Medicare as their primary payer.

(b) The episode is canceled in accordance with § 512.537(b) if at any time during the episode a beneficiary no longer meets all criteria in this section.

§ 512.537 Determination of the episode.

(a) Episode conclusion. (1) An episode ends on the 30th day following the date of the anchor procedure or the date of discharge from the anchor hospitalization, as applicable, with the date of the anchor procedure or the date of discharge from the anchor hospitalization being counted as the first day in the 30-day post-discharge period.

(b) Cancellation of an episode. The episode is canceled and is not included in the reconciliation calculation as specified in § 512.545 if any of the following occur:

(1) The beneficiary ceases to meet any criterion listed in § 512.535.

(2) The beneficiary dies during the anchor hospitalization or the outpatient stay for the anchor procedure.

(3) The episode qualifies for cancellation due to extreme and uncontrollable circumstances. An extreme and uncontrollable circumstance occurs if both of the following criteria are met:

(i) The TEAM participant has a CCN primary address that—

(A) Is located in an emergency area, as those terms are defined in section 1135(g) of the Act, for which the Secretary has issued a waiver under section 1135 of the Act; and

(B) Is located in a county, parish, or tribal government designated in a major disaster declaration or emergency disaster declaration under the Stafford Act.

(ii) The date of admission to the anchor hospitalization or the date of the anchor procedure is during an emergency period (as defined in section 1135(g) of the Act) or in the 30 days before the date that the emergency period (as defined in section 1135(g) of the Act) begins.

(4) The beneficiary is in a CJR-X episode and has a procedure performed at a TEAM participant during the 90-day post-discharge period after a CJR-X anchor hospitalization or CJR-X anchor procedure.

[>89 FR 69914, Aug. 28, 2024, as amended at 91 FR 50347, Aug. 4, 2026]

§ 512.540 Determination of preliminary target prices.

(a) Preliminary target price application. CMS establishes preliminary target prices for TEAM participants for each performance year of the model as follows:

(1) MS-DRG/HCPCS episode type. CMS uses the MS-DRGs and, as applicable, HCPCS codes specified in § 512.525(d) when calculating the preliminary target prices for each MS-DRG/HCPCS episode type.

(i) CMS determines a separate preliminary target price for each of the MS-DRGs specified in § 512.525(d).

(ii) Preliminary target prices for a subset of the MS-DRGs specified in § 512.525(d) include certain HCPCS codes as follows:

(A) HCPCS 27130 and 27447 are included in MS-DRG 470.

(B) HCPCS 27702 is included in MS-DRG 469.

(C) HCPCS 22551 and 22554 are included in MS-DRG 473.

(D) HCPCS 22612 and 22630 are included in MS-DRG 451.

(E) HCPCS 22633 is included in MS-DRG 402.

(2) Applicable time period for preliminary target prices. CMS calculates preliminary target prices for each MS-DRG/HCPCS episode type and region for each performance year and applies the preliminary target price to each episode based on the episode's date of discharge from the anchor hospitalization or the date of the anchor procedure, as applicable. CMS also does all of the following:

(i) Accounts for MS-DRG and HCPCS/APC code changes between the baseline period and performance year by identifying diagnosis or procedure codes that are being moved from one MS-DRG or HCPCS/APC to another for the relevant performance year and mapping the new or revised MS-DRG or HCPCS/APC codes to the original codes that were used in the baseline period.

(ii) Constructs preliminary target prices using the remapped MS-DRG or HCPCS/APC codes in the same manner described in paragraph (b) of this section, with target prices for each MS-DRG/HCPCS episode type, inclusive of episodes initiated by anchor hospitalizations and anchor procedures that would be related to the remapped MS-DRG or HCPCS/APC codes.

(iii) Adjusts the preliminary target price by calculating and applying the scaling factor to the standardized episode spending of the MS-DRG portion for the anchor hospitalization or standardized episode spending of the HCPCS/APC portion of the anchor procedure.

(3) Episodes that begin in one performance year and end in the subsequent performance year. CMS applies the preliminary target price to the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure, as applicable, and reconciles the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure.

(b) Preliminary target price calculation. (1) Calculation of the preliminary target price. CMS calculates preliminary target prices based on average baseline episode spending for the region where the TEAM participant is located.

(i) The region used for calculating the preliminary target price corresponds to the U.S. Census Division associated with the primary address of the CCN of the TEAM participant, and the regional episode spending amount is based on all hospitals in the region, except as specified in § 512.540(b)(1)(ii).

(ii) In cases where a TEAM participant is located in a mandatory CBSA selected for participation in TEAM which spans more than one region, the TEAM participant and all other hospitals in the mandatory CBSA are grouped into the region where the most populous city in the mandatory CBSA is located for pricing and payment calculations.

(2) Baseline periods and associated performance years. CMS uses the following baseline periods to determine baseline episode spending:

(i) Performance Year 1: Episodes with anchor hospitalization start dates or anchor procedure dates beginning on or after January 1, 2022, and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2022, and December 31, 2024.

(ii) Performance Year 2: Episodes with anchor hospitalization or anchor procedure start dates beginning on or after January 1, 2023, and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2023, and December 31, 2025.

(iii) Performance Year 3: Episodes with anchor hospitalization or anchor procedure start dates beginning on or after January 1, 2024, and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2024, and December 31, 2026.

(iv) Performance Year 4: Episodes with anchor hospitalization or anchor procedure start dates beginning on or after January 1, 2025, and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2025, and December 31, 2027.

(v) Performance Year 5: Episodes with anchor hospitalization or anchor procedure start dates beginning on or after January 1, 2026, and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2026, and December 31, 2028.

(3) Baseline episode spending weights. CMS calculates the benchmark price as the weighted average of baseline episode spending, applying the following weights:

(i) Baseline episode spending from baseline year 1 is weighted at 17 percent.

(ii) Baseline episode spending from baseline year 2 is weighted at 33 percent.

(iii) Baseline episode spending from baseline year 3 is weighted at 50 percent.

(4) Exclusion for high episode spending. CMS applies a high-cost outlier cap to baseline episode spending at the 99th percentile of regional spending for each of the MS-DRG/HCPCS episode types specified in paragraph (a)(1)(ii) of this section for each baseline year individually.

(5) Exclusion of incentive programs and add-on payments under existing Medicare payment systems. Certain Medicare incentive programs and add-on payments are excluded from baseline episode spending by using, with certain modifications, the CMS Price (Payment) Standardization Detailed Methodology used for the Medicare spending per beneficiary measure in the Hospital Value-Based Purchasing Program.

(6) Prospective normalization factor. Based on the episodes in the most recent calendar year of the baseline period for performance year 1 and for the entire baseline period starting in performance year 2, CMS calculates a prospective normalization factor at the MS-DRG/HCPCS region level, which is a multiplier that ensures that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, by doing the following:

(i) CMS applies risk adjustment multipliers, as specified in § 512.545(a)(1) through (3), to the most recent baseline year episodes for performance year 1 and to the entire baseline period episodes starting in performance year 2, to calculate the estimated risk-adjusted target price for all performance year episodes.

(ii) CMS divides the mean of the benchmark price for each episode across all hospitals and regions by the mean of the estimated risk-adjusted benchmark price calculated in § 512.540(b)(6)(i) for the same episode types across all hospitals and regions.

(7) Prospective and updated trend factors. (i) Prospective trend factor. The prospective trend factor for each MS-DRG/HCPCS episode type and region is the average (arithmetic mean) of the multiplier, as calculated in paragraph (b)(7)(i) of this section, for that MS-DRG/HCPCS episode type and region and the national average for that MS-DRG/HCPCS episode type.

(A) CMS calculates a multiplier for each MS-DRG/HCPCS episode type and region which is applied to the most recent calendar year of the applicable baseline period.

(B) The multiplier is calculated using linear regression on the logarithmically transformed average regional spending for each MS-DRG/HCPCS episode type in the baseline years and trend years at both the regional and national level.

(C) CMS exponentiates the coefficient from this regression to calculate the estimated annual change (where an exponentiated coefficient of 1 signifies no change) in average regional spending for each MS-DRG/HCPCS episode type from year to year.

(D) CMS squares the value in paragraph (C) to calculate the 2-year prospective trend factor.

(ii) Updated prospective trend factor. CMS calculates the updated prospective trend factor as the product of all the following factors:

(A) The prospective trend factor specified in paragraph (b)(7)(i) of this section.

(B) The APC update factor as specified in this paragraph (B). CMS calculates an APC update factor, after the corresponding calendar year inputs are published in the CY OPPS/ASC final rule, as the ratio of benchmark prices calculated with APC weights corresponding to the calendar year of the performance year to benchmark prices calculated with APC weights corresponding to the calendar year prior to the performance year.

(C) The MS-DRG update factor as specified in this paragraph (C). CMS calculates an MS-DRG update factor, after the corresponding fiscal year inputs are published in the FY IPPS/LTCH PPS final rule, for episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year as the ratio of benchmark prices calculated with the second fiscal year inputs to benchmark prices calculated with the first fiscal year inputs.

(8) Communication of preliminary target prices. CMS communicates the preliminary target prices for each MS-DRG/HCPCS episode type for each region, and the preliminary target prices for each MS-DRG/HCPCS episode type specific to the TEAM participant before the performance year in which they apply. CMS communicates the APC and MS-DRG update factors after the corresponding calendar year and second fiscal year inputs are published with the corresponding calendar year and fiscal year final payment rules.

(c) Discount factor. CMS incorporates an episode category specific discount factor of 1.5 percent for CABG and Major Bowel episodes and 2 percent for LEJR, SHFFT, and Spinal Fusion episodes to the TEAM participant's preliminary episode target prices intended to reflect Medicare's potential savings from TEAM.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37204, Aug. 4, 2025; 91 FR 50347, Aug. 4, 2026]

§ 512.545 Determination of reconciliation target prices.

CMS calculates the reconciliation target price as follows:

(a) CMS risk adjusts the preliminary episode target prices computed under § 512.540 at the beneficiary level using a TEAM Hierarchical Condition Category (HCC) count risk adjustment factor, an age bracket risk adjustment factor, a beneficiary economic risk adjustment factor, and at the hospital level using a hospital bed size risk adjustment factor and a safety net hospital risk adjustment factor, and at the episode category-specific beneficiary level using factors specified in paragraphs (a)(6)(i) through (v) of this section.

(1) The TEAM HCC count risk adjustment factor uses five variables, representing beneficiaries with zero, one, two, three, or four or more CMS-HCC conditions based on a 180-day lookback period that ends on the day prior to the anchor hospitalization or anchor procedure.

(2) The age bracket risk adjustment factor uses four variables, representing beneficiaries in the following age groups as of the first day of the episode:

(i) Less than 65 years.

(ii) 65 to less than 75 years.

(iii) 75 years to less than 85 years.

(iv) 85 years or more.

(3) The beneficiary economic risk adjustment factor uses two variables, representing beneficiaries that, as of the first day of the episode—

(i) Meet one or more of the following economic measures:

(A) [Reserved]

(B) National CDI above the 80th percentile.

(C) Eligibility for the low-income subsidy.

(D) Eligibility for full Medicaid benefits.

(ii) Do not meet any of the three economic measures in paragraph (a)(3)(i) of this section.

(4) The hospital bed size risk adjustment factor uses four variables based on the TEAM participant's characteristics:

(i) 250 beds or fewer.

(ii) 251-500 beds.

(iii) 501-850 beds.

(iv) 850 beds or more.

(5) The safety net hospital risk adjustment factor is based on the TEAM participant meeting the definition of safety net hospital, as defined in § 512.505.

(6) Episode category-specific beneficiary level risk adjustment factors represent the presence or absence in beneficiaries, based on a 180-day lookback period that ends on the day prior to the anchor hospitalization or anchor procedure, of each of the following conditions:

(i) CABG episode category.

(A) Prior post-acute care use.

(B) HCC 37: Diabetes with Chronic Complications.

(C) HCC 48: Morbid Obesity.

(D) HCC 125: Dementia, Severe.

(E) HCC 126: Dementia, Moderate.

(F) HCC 127: Dementia, Mild or Unspecified.

(G) HCC 155: Major Depression, Moderate or Severe, without Psychosis.

(H) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(I) HCC 213: Cardio-Respiratory Failure and Shock.

(J) HCC 224: Acute on Chronic Heart Failure.

(K) HCC 226: Heart Failure, Except End-Stage and Acute.

(L) HCC 228: Acute Myocardial Infarction.

(M) HCC 229: Unstable Angina and Other Acute Ischemic Heart Disease.

(N) HCC 238: Specified Heart Arrhythmias.

(O) HCC 249: Ischemic or Unspecified Stroke.

(P) HCC 253: Hemiplegia/Hemiparesis.

(Q) HCC 263: Atherosclerosis of Arteries of the Extremities with Ulceration or Gangrene.

(R) HCC 280: Chronic Obstructive Pulmonary Disease, Interstitial Lung Disorders, and Other Chronic Lung Disorders.

(S) HCC 298: Severe Diabetic Eye Disease, Retinal Vein Occlusion, and Vitreous Hemorrhage.

(T) HCC 326: Chronic Kidney Disease, Stage 5.

(U) HCC 327: Chronic Kidney Disease, Severe (Stage 4).

(V) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(W) [Reserved]

(X) HCC 409: Amputation Status, Lower Limb/Amputation Complications.

(ii) LEJR episode category.

(A) Ankle procedure or reattachment, partial hip procedure, partial knee arthroplasty, total hip arthroplasty or hip resurfacing procedure, and total knee arthroplasty.

(B) Disability as the original reason for Medicare enrollment.

(C) Prior post-acute care use.

(D) HCC 17: Cancer Metastatic to Lung, Liver, Brain, and Other Organs; Acute Myeloid Leukemia Except Promyelocytic.

(E) HCC 36: Diabetes with Severe Acute Complications.

(F) HCC 37: Diabetes with Chronic Complications.

(G) HCC 48: Morbid Obesity.

(H) HCC 125: Dementia, Severe.

(I) HCC 126: Dementia, Moderate.

(J) HCC 127: Dementia, Mild or Unspecified.

(K) HCC 151: Schizophrenia.

(L) HCC 155: Major Depression, Moderate or Severe, without Psychosis.

(M) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(N) HCC 224: Acute on Chronic Heart Failure.

(O) HCC 225: Acute Heart Failure (Excludes Acute on Chronic).

(P) HCC 226: Heart Failure, Except End-Stage and Acute.

(Q) HCC 238: Specified Heart Arrhythmias.

(R) HCC 253: Hemiplegia/Hemiparesis.

(S) HCC 267: Deep Vein Thrombosis and Pulmonary Embolism.

(T) HCC 280: Chronic Obstructive Pulmonary Disease, Interstitial Lung Disorders, and Other Chronic Lung Disorders.

(U) [Reserved]

(V) HCC 326: Chronic Kidney Disease, Stage 5.

(W) HCC 327: Chronic Kidney Disease, Severe (Stage 4).

(X) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(Y) HCC402: Hip Fracture/Dislocation.

(iii) Major Bowel Procedure episode category.

(A) Long-term institutional care use.

(B) HCC 17: Cancer Metastatic to Lung, Liver, Brain, and Other Organs; Acute Myeloid Leukemia Except Promyelocytic.

(C) HCC 22: Bladder, Colorectal, and Other Cancers.

(D) HCC 37: Diabetes with Chronic Complications.

(E) HCC 48: Morbid Obesity.

(F) HCC 78: Intestinal Obstruction/Perforation.

(G) HCC 125: Dementia, Severe.

(H) HCC 126: Dementia, Moderate.

(I) HCC 127: Dementia, Mild or Unspecified.

(J) HCC 151: Schizophrenia.

(K) HCC 155: Major Depression, Moderate or Severe, without Psychosis.

(L) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(M) HCC 201: Seizure Disorders and Convulsions.

(N) HCC 211: Respirator Dependence/Tracheostomy Status/Complications.

(O) HCC 213: Cardio-Respiratory Failure and Shock.

(P) HCC 224: Acute on Chronic Heart Failure.

(Q) HCC 226: Heart Failure, Except End-Stage and Acute.

(R) HCC 238: Specified Heart Arrhythmias.

(S) HCC 253: Hemiplegia/Hemiparesis.

(T) HCC 267: Deep Vein Thrombosis and Pulmonary Embolism.

(U) HCC 280: Chronic Obstructive Pulmonary Disease, Interstitial Lung Disorders, and Other Chronic Lung Disorders.

(V) HCC 326: Chronic Kidney Disease, Stage 5.

(W) HCC 327: Chronic Kidney Disease, Severe (Stage 4).

(X) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(Y) HCC 463: Artificial Openings for Feeding or Elimination.

(iv) SHFFT episode category.

(A) HCC 36: Diabetes with Severe Acute Complications.

(B) HCC 37: Diabetes with Chronic Complications.

(C) HCC 38: Diabetes with Glycemic, Unspecified, or No Complications.

(D) HCC 48: Morbid Obesity.

(E) HCC 63: Chronic Liver Failure/End-Stage Liver Disorders.

(F) HCC 93: Rheumatoid Arthritis and Other Specified Inflammatory Rheumatic Disorders.

(G) HCC 109: Acquired Hemolytic, Aplastic, and Sideroblastic Anemias.

(H) HCC 125: Dementia, Severe.

(I) HCC 126: Dementia, Moderate.

(J) HCC 127: Dementia, Mild or Unspecified.

(K) HCC 180: Quadriplegia.

(L) HCC 181: Paraplegia.

(M) HCC 191: Quadriplegic Cerebral Palsy.

(N) HCC 198: Multiple Sclerosis.

(O) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(P) HCC 211: Respirator Dependence/Tracheostomy Status/Complications.

(Q) HCC 213: Cardio-Respiratory Failure and Shock.

(R) HCC 226: Heart Failure, Except End-Stage and Acute.

(S) HCC 238: Specified Heart Arrhythmias.

(T) HCC 249: Ischemic or Unspecified Stroke.

(U) HCC 253: Hemiplegia/Hemiparesis.

(V) HCC 280: Chronic Obstructive Pulmonary Disease, Interstitial Lung Disorders, and Other Chronic Lung Disorders.

(W) HCC 326: Chronic Kidney Disease, Stage 5.

(X) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(Y) HCC 402: Hip Fracture/Dislocation.

(v) Spinal Fusion episode category.

(A) Prior post-acute care use.

(B) HCC 17: Cancer Metastatic to Lung, Liver, Brain, and Other Organs; Acute Myeloid Leukemia Except Promyelocytic.

(C) HCC 18: Cancer Metastatic to Bone, Other and Unspecified Metastatic Cancer; Acute Leukemia Except Myeloid.

(D) HCC 37: Diabetes with Chronic Complications.

(E) HCC 48: Morbid Obesity.

(F) HCC 93: Rheumatoid Arthritis and Other Specified Inflammatory Rheumatic Disorders.

(G) HCC 125: Dementia, Severe.

(H) HCC 126: Dementia, Moderate.

(I) HCC 127: Dementia, Mild or Unspecified.

(J) HCC 155: Major Depression, Moderate or Severe, without Psychosis.

(K) HCC 180: Quadriplegia.

(L) HCC 181: Paraplegia.

(M) HCC 182: Spinal Cord Disorders/Injuries.

(N) HCC 192: Cerebral Palsy, Except Quadriplegic.

(O) HCC 193: Chronic Inflammatory Demyelinating Polyneuritis and Multifocal Motor Neuropathy.

(P) HCC 199: Parkinson and Other Degenerative Disease of Basal Ganglia.

(Q) HCC 224: Acute on Chronic Heart Failure.

(R) HCC 226: Heart Failure, Except End-Stage and Acute.

(S) HCC 238: Specified Heart Arrhythmias.

(T) HCC 249: Ischemic or Unspecified Stroke.

(U) HCC 253: Hemiplegia/Hemiparesis.

(V) HCC 254: Monoplegia, Other Paralytic Syndromes.

(W) HCC 267: Deep Vein Thrombosis and Pulmonary Embolism.

(X) HCC 326: Chronic Kidney Disease, Stage 5.

(Y) HCC 383: Chronic Ulcer of Skin, Except Pressure, Not Specified as Through to Bone or Muscle.

(Z) HCC 401: Vertebral Fractures without Spinal Cord Injury.

(b) All risk adjustment factors are computed prior to the start of the performance year via a linear regression analysis. The regression analysis is computed using 3 years of claims data as follows:

(1) For performance year 1, CMS uses claims data with dates of service dated January 1, 2022 to December 31, 2024.

(2) For performance year 2, CMS uses claims data with dates of service dated January 1, 2023 to December 31, 2025.

(3) For performance year 3, CMS uses claims data with dates of service dated January 1, 2024 to December 31, 2026.

(4) For performance year 4, CMS uses claims data with dates of service dated January 1, 2025 to December 31, 2027.

(5) For performance year 5, CMS uses claims data with dates of service dated January 1, 2026 to December 30, 2028.

(c) The annual linear regression analysis produces exponentiated coefficients to determine the anticipated marginal effect of each risk adjustment factor on episode costs. CMS transforms, or exponentiates, these coefficients, and the resulting coefficients are the beneficiary and hospital-level risk adjustment factors, specified in paragraphs (a)(1) through (6) of this section, that would be used during reconciliation for the subsequent performance year.

(d) At the time of reconciliation, the preliminary target prices computed under § 512.540 are risk adjusted by applying the applicable beneficiary level and hospital-level risk adjustment factors specific to the beneficiary in the episode, as set forth in paragraphs (a)(1) through (6) of this section.

(e) The risk-adjusted preliminary target prices are normalized at reconciliation to ensure that the average of the total risk-adjusted preliminary target price does not exceed the average of the total non-risk adjusted preliminary target price.

(1) The final normalization factor at reconciliation—

(i) Is the mean benchmark price for each MS-DRG/HCPCS episode type and region divided by the mean risk-adjusted benchmark price for the same MS-DRG/HCPCS episode type and region.

(ii) Episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year are calculated specific to the assigned first and second fiscal year MS-DRG/HCPCS episode type and region combination, as determined in § 512.550(c)(1). The benchmark prices and risk adjustment coefficients are calculated with the assigned first fiscal year MS-DRG/HCPCS inputs and applied to the realized case mix of the second fiscal year MS-DRG/HCPCS.

(iii) As applied, cannot exceed ±5 percent of the prospective normalization factor (as specified in § 512.540(b)(6)).

(2) CMS applies the final normalization factor to the previously calculated, beneficiary and provider level, risk-adjusted target prices specific to each region and MS-DRG/HCPCS episode type.

(f) CMS calculates a multiplier, referred to as the capped retrospective trend factor, for each MS-DRG/HCPCS episode type and region, which is applied during reconciliation to the most recent calendar year of the applicable baseline period.

(1)(i) The retrospective trend factor is calculated as the average regional capped performance year episode spending for each MS-DRG/HCPCS episode type divided by the average regional capped baseline period episode spending for each MS-DRG/HCPCS episode type.

(ii) For episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year, CMS calculates the retrospective trend factor as the average regional capped performance year episode spending specific to the second fiscal year MS-DRG/HCPCS episode type divided by the average regional capped baseline period episode spending calculated with the assigned first fiscal year MS-DRG/HCPCS inputs.

(2) The retrospective trend factor is capped so that the maximum difference cannot exceed ±3 percent of the updated prospective trend factor (as specified in § 512.540(b)(7)).

(3)(i) CMS applies the capped retrospective trend factor to the previously calculated normalized, risk adjusted target prices specific to each region and MS-DRG/HCPCS episode type, as specified in paragraph (e)(2) of this section, to calculate the reconciliation target prices, which are compared to performance year spending at reconciliation, as specified in § 512.550(c).

(ii) For episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year, the capped retrospective trend factor is applied specific to each assigned first and second fiscal year MS-DRG/HCPCS episode type and region combination.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37205, Aug. 4, 2025; 91 FR 50348, Aug. 4, 2026]

Editorial Note:At 91 FR 50348, Aug. 4, 2026, § 512.545 was amended in part by revising paragraph (d)(1) and amending portions of paragraph (e); however, the amendments could not be incorporated due to inaccurate amendatory instruction.

§ 512.547 Quality measures, composite quality score, and display of quality measures.

(a) Quality measures. CMS calculates the quality measures used to evaluate the TEAM participant's performance using Medicare claims data or patient-reported outcomes data that TEAM participants report under the Hospital Inpatient Quality Reporting Program, the Hospital-Acquired Condition Reduction Program, and the Hospital Outpatient Quality Reporting Program. The following quality measures and CQS baseline periods are used for public reporting and for determining the TEAM participant's CQS as described in paragraph (b) of this section:

(1) For performance year 1:

(i) For all episode categories: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) with a July 1, 2024 through June 30, 2025 CQS baseline period;

(ii) For all episode categories: CMS Patient Safety and Adverse Events Composite (CMS PSI 90) (CMIT ID #135) with a July 1, 2023 through June 30, 2025 CQS baseline period; and

(iii) For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) with a July 1, 2024 through June 30, 2025 CQS baseline period.

(2) For performance year 2:

(i) For all episode categories: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) with a July 1, 2025 through June 30, 2026 CQS baseline period;

(ii) For all episode categories: Hospital Harm—Falls with Injury (CMIT ID #1518) with a CY 2026 CQS baseline period;

(iii) For all episode categories: Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) with a CY 2026 CQS baseline period;

(iv) For all episode categories: Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) (CMIT ID #134) with a July 1, 2024 through June 30, 2026 CQS baseline period; and

(v) For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) with a July 1, 2025 through June 30, 2026 CQS baseline period.

(3) For performance year 3:

(i) For all episode categories: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) with a July 1, 2026 through June 30, 2027 CQS baseline period.

(ii) For all episode categories: Hospital Harm—Falls with Injury (CMIT ID #1518) with a CY 2028 CQS baseline period.

(iii) For all episode categories: Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) with a CY 2028 CQS baseline period.

(iv) For all episode categories: Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) (CMIT ID #134) with a July 1, 2025 through June 30, 2027 CQS baseline period.

(v) For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) with a July 1, 2026 through June 30, 2027 CQS baseline period.

(vi) For LEJR and Spinal Fusion episodes: Information Transfer PRO-PM (CMIT ID #1797) with a January 1, 2028 through December 31, 2028 CQS baseline period.

(4) For performance year 4:

(i) For all episode categories: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) with a July 1, 2027 through June 30, 2028 CQS baseline period.

(ii) For all episode categories: Hospital Harm—Falls with Injury (CMIT ID #1518) with a January 1, 2029 through December 31, 2029 CQS baseline period.

(iii) For all episode categories: Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) with a January 1, 2029 through December 31, 2029 CQS baseline period.

(iv) For all episode categories: Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (ISCMR) (CMIT ID #134) with a July 1, 2026 through June 30, 2028 CQS baseline period.

(v) For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) with a July 1, 2027 through June 30, 2028 CQS baseline period.

(vi) For LEJR and Spinal Fusion episodes: Information Transfer PRO-PM (CMIT ID #1797) with a January 1, 2029 through December 31, 2029 CQS baseline period.

(5) For performance year 5:

(i) For all episode categories: Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) with a July 1, 2028 through June 30, 2029 CQS baseline period.

(ii) For all episode categories: Hospital Harm—Falls with Injury (CMIT ID #1518) with a January 1, 2030 through December 31, 2030 CQS baseline period.

(iii) For all episode categories: Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) with a January 1, 2030 through December 31, 2030 CQS baseline period.

(iv) For all episode categories: Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (ISCMR) (CMIT ID #134) with a July 1, 2027 through June 30, 2029 CQS baseline period.

(v) For LEJR episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) with a July 1, 2028 through July 30, 2029 CQS baseline period.

(vi) For LEJR and Spinal Fusion episodes: Information Transfer PRO-PM (CMIT ID #1797) with a January 1, 2030 through December 31, 2030 CQS baseline period.

(b) Calculation of the composite quality score (CQS). (1) CMS converts the TEAM participant's raw quality measure score for the performance year into a scaled quality measure score by comparing the raw quality measure score to the distribution of raw quality measure score percentiles among a national cohort of hospitals, consisting of TEAM participants and hospitals not participating in TEAM, in the CQS baseline period.

(i) CMS assigns a scaled quality measure score equal to the percentile to which the TEAM Participant's raw quality measure score would have belonged in the CQS baseline period.

(A) CMS assigns the higher scaled quality measure score if the TEAM participant's raw quality measure score straddles two percentiles in the CQS baseline period.

(B) For the Hospital-Level Total Hip and/or Total Knee Arthroplasty (THA/TKA) Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618) and the Information Transfer PRO-PM (CMIT ID # 1797):

(1) CMS assigns a scaled quality measure score of 100 if the TEAM participant's raw quality measure score is greater than the maximum of the raw quality measure scores in the CQS baseline period.

(2) CMS assigns a scaled quality measure score of 0 if the raw quality measure score is less than the minimum of the raw quality measure scores in the baseline period.

(C) For the Hybrid Hospital-Wide All-Cause Readmission Measure with Claims and Electronic Health Record Data (CMIT ID #356) measure, the CMS Patient Safety and Adverse Events Composite (CMS PSI 90) (CMIT ID #135) measure, the Hospital Harm—Falls with Injury (CMIT ID #1518) measure, the Hospital Harm—Postoperative Respiratory Failure (CMIT ID #1788) measure, and the Thirty-day Risk-Standardized Death Rate among Surgical Inpatients with Complications (Failure-to-Rescue) (CMIT ID #134) measure:

(1) CMS assigns a scaled quality measure score of 0 if the TEAM participant has a raw quality measure score greater than the maximum of the raw quality measure scores in the CQS baseline period.

(2) CMS assigns a scaled quality measure score of 100 if the TEAM participant has a raw quality score less than the minimum of the raw scores in the CQS baseline period.

(D) CMS assigns a scaled quality measure of 50 if the TEAM participant has no or an incomplete raw quality measure score for a given quality measure.

(2) CMS calculates a normalized weight for each quality measure by dividing the TEAM participant's volume of attributed episodes for a given quality measure by the total volume of all the TEAM participant's attributed episodes.

(3) CMS calculates a weighted scaled score for each quality measure by multiplying each quality measure's scaled quality measure score, computed under paragraph (b)(2) of this section, by its normalized weight, computed under paragraph (b)(3) of this section.

(4) CMS sums each quality measure's weighted scaled score, computed under paragraph (b)(4) of this section, to construct the CQS.

(c) Display of quality measures. CMS does all of the following:

(1) Displays quality measure results on the publicly available CMS website that is specific to TEAM, in a form and manner consistent with other publicly reported measures.

(2) Shares quality measures with the TEAM participant prior to display on the CMS website.

(3) Uses the following time periods to share quality measure performance:

(i) Quality measure performance in performance year 1 is reported in 2027.

(ii) Quality measure performance in performance year 2 is reported in 2028.

(iii) Quality measure performance in performance year 3 is reported in 2029.

(iv) Quality measure performance in performance year 4 is reported in 2030.

(v) Quality measure performance in performance year 5 is reported in 2031.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37207, Aug. 4, 2025; 91 FR 50348, Aug. 4, 2026]

§ 512.550 Reconciliation process and determination of the reconciliation payment or repayment amount.

(a) General. Providers and suppliers furnishing items and services included in the episode bill for such items and services in accordance with existing Medicare rules.

(b) Reconciliation process. Six months after the end of each performance year, CMS does the following:

(1) Performs a reconciliation calculation to establish a reconciliation payment or repayment amount for each TEAM participant.

(2) For TEAM participants that experience a reorganization event in which one or more hospitals reorganize under the CCN of a TEAM participant, performs—

(i) Separate reconciliation calculations for each predecessor TEAM participant for episodes where the anchor hospitalization admission or the anchor procedure occurred before the effective date of the reorganization event; and

(ii) Reconciliation calculations for each new or surviving TEAM participant for episodes where the anchor hospitalization admission or anchor procedure occurred on or after the effective date of the reorganization event.

(c)(1) CMS assigns a first fiscal year MS-DRG by identifying diagnosis or procedure codes that change between the first and second fiscal year of the performance year per the fiscal year final payment rule MS-DRG definitions, for each episode with an anchor hospitalization or anchor procedure end date in the fourth quarter of a performance year. The first fiscal year MS-DRG will match the second fiscal year MS-DRG if there are no mapping changes for an initiating MS-DRG.

(i) CMS does not assign mapping changs for episodes with anchor hospitalization or anchor procedure end dates in the first three quarters of a performance year.

(2) CMS cancels an episode with an anchor hospitalization or anchor procedure end date in the fourth quarter of a performance year, in accordance with § 512.537(b), if the assigned first fiscal year MS-DRG is not specified in § 512.525(d).

(3) CMS determines the performance year spending for each episode included in the performance year (other than episodes that have been canceled in accordance with § 512.537(b)) for each MS-DRG/HCPCS episode type using claims data that is available 6 months after the end of the performance year.

(4) CMS calculates and applies the high-cost outlier cap for performance year episode spending by applying the calculation described in § 512.540(b)(4) to performance year episode spending for each MS-DRG/HCPCS episode type.

(5)(i) CMS applies the adjustments specified in § 512.545 to the preliminary target prices computed in accordance with § 512.540 to calculate the reconciliation target prices for each MS-DRG/HCPCS episode type.

(ii) CMS calculates the reconciliation target prices for each assigned first and second fiscal year MS-DRG/HCPCS episode type for episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year.

(6)(i) CMS aggregates the reconciliation target prices computed in accordance with paragraph (c)(3) of this section for all episodes included in the performance year (other than episodes that have been canceled in accordance with § 512.537(b)) for each MS-DRG/HCPCS episode type.

(ii) CMS aggregates the reconciliation target prices for each assigned first and second fiscal year MS-DRG/HCPCS episode type for episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year.

(7)(i) CMS subtracts the performance year spending amount determined under paragraphs (c)(1) and (2) of this section from the reconciliation target price amount determined under paragraph (c)(4) of this section for each MS-DRG/HCPCS episode type.

(i) CMS first subtracts the performance year spending amount from the reconciliation target amount for each assigned first and second fiscal year MS-DRG/HCPCS episode type, then sums values for each MS-DRG/HCPCS episode type for episodes with anchor hospitalization or anchor procedure end dates in the fourth quarter of a performance year.

(8) CMS sums the values calculated under paragraph (c)(5) of this section across all MS-DRG/HCPCS episode types to determine the reconciliation amount.

(9)(i) CMS caps the performance year spending amount for each MS-DRG/HCPCS episode type determined under paragraphs (c)(3) and (4) of this section to equal the reconciliation target price computed in accordance with paragraph (c)(5) of this section for episode categories where the TEAM participant did not meet the low volume threshold of at least 31 episodes during the 3-year baseline period.

(ii) Low volume hospital episodes, including episode categories where CMS caps performance year spending, are included in the CQS, as calculated in § 512.547(b), and stop-loss/stop-gain thresholds, as applied at paragraph (e) of this section.

(d) Calculation of the quality-adjusted reconciliation amount. CMS adjusts the reconciliation amount based on the Composite Quality Score as follows:

(1) CMS calculates a CQS adjustment percentage based on a TEAM participant's CQS, computed in accordance with § 512.547(b).

(i) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts for TEAM participants in Track 1.

(ii) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts and up to 15 percent for negative reconciliation amounts for TEAM participants in Track 2.

(iii) CMS applies a CQS adjustment percentage up to 10 percent for positive reconciliation amounts and up to 10 percent for negative reconciliation amounts for TEAM participants in Track 3.

(2) CMS multiplies the CQS adjustment percentage, computed under paragraph (d)(1) of this section, by the TEAM participant's positive or negative reconciliation amount calculated in paragraph (c) of this section to construct the CQS adjustment amount.

(3) CMS subtracts the CQS adjustment amount, computed from paragraph (d)(2) of this section, from the positive or negative reconciliation amount calculated in paragraph (c) of this section to construct the quality-adjusted reconciliation amount.

(e) Calculation of the net payment reconciliation amount (NPRA). CMS applies stop-loss and stop gain limits to the quality-adjusted reconciliation amount computed in paragraph (d) of this section to calculate the NPRA as follows:

(1) Limitation on loss. For TEAM participants in Track 3, except as provided in paragraph (e)(3) of this section, the repayment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in paragraph (c)(3) of this section for the performance year. The post-episode spending calculation amount in paragraph (f) of this section is not subject to the limitation on loss.

(2) Limitation on gain. (i) For TEAM participants in Track 1, the reconciliation payment amount for a performance year cannot exceed 10 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.

(ii) For TEAM participants in Tracks 2, the reconciliation payment amount for a performance year cannot exceed 5 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.

(iii) For TEAM participants in Track 3, the reconciliation payment amount for a performance year cannot exceed 20 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section for the performance year.

(iv) The post-episode spending amount calculated in accordance with paragraph (f) of this section is not subject to the limitation on gain.

(3) Limitation on loss for certain providers. For performance years 2-5, the repayment amount for a TEAM participant in Track 2 defined at § 512.505, must not exceed 5 percent of the aggregated reconciliation target price amount calculated in accordance with paragraph (c)(3) of this section.

(f) Post-episode spending calculation. CMS calculates the post-episode spending amount as follows: If the average post-episode spending amount for a TEAM participant in the performance year being reconciled is greater than 3 standard deviations above the regional average post-episode spending amount for the performance year, then the post-episode spending amount that exceeds 3 standard deviations above the regional average post-episode spending amount for the performance year is subtracted from the NPRA for that performance year.

(g) Calculation of the reconciliation payment or repayment amount. (1) CMS applies the results of the post-episode spending calculation set forth in paragraph (f) of this section to the NPRA as follows:

(i) For TEAM participants whose post-episode spending amount does not exceed the limit calculated in paragraph (f) of this section, the reconciliation payment or repayment amount is equal to the NPRA.

(ii) If the TEAM participant's post-episode spending exceeds the limit calculated in paragraph (f) of this section, CMS subtracts the amount of post-episode spending exceeding the limit from the NPRA to calculate the reconciliation payment or repayment amount.

(2) If the amount calculated in paragraph (g)(1) of this section is positive, the TEAM participant is owed a reconciliation payment in that amount, to be paid by CMS in one lump sum payment.

(3) If the amount calculated in paragraph (g)(1) of this section is negative, CMS determines the repayment amount as follows:

(i) For TEAM participants in Track 1, the TEAM participant does not owe a repayment amount.

(ii) For TEAM participants in Track 2 or Track 3 for Performance Years 1-5, as applicable, the Team participant owes that amount as a repayment to CMS.

(h) TEAM reconciliation report. CMS issues each TEAM participant a TEAM reconciliation report for the performance year. Each TEAM reconciliation report contains the following:

(1) The total performance year spending for the TEAM participant.

(2) The TEAM participant's reconciliation target prices.

(3) The TEAM participant's reconciliation amount.

(4) The TEAM participant's composite quality score calculated in accordance with § 512.547(b).

(5) The TEAM participant's quality-adjusted reconciliation amount.

(6) The stop-loss and stop-gain limits that apply to the TEAM participant.

(7) The TEAM participant's NPRA.

(8) The TEAM participant's post-episode spending amount, if applicable.

(9) The amount of any reconciliation payment owed to the TEAM participant or repayment owed by the TEAM participant to CMS for the performance year, if applicable.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37207, Aug. 4, 2025; 91 FR 50349, Aug. 4, 2026]

Editorial Note:At 91 FR 50349, Aug. 4, 2026, § 512.550 was amended in part by revising paragraph (c), which included two paragraph (c)(7)(i) designations.

§ 512.552 Treatment of incentive programs or add-on payments under existing Medicare payment systems.

The TEAM does not replace any existing Medicare incentive programs or add-on payments. The TEAM payments are independent of, and do not affect, any incentive programs or add-on payments under existing Medicare payment systems.

§ 512.555 Proration of payments for services that extend beyond an episode.

(a) General. CMS prorates services included in the episode that extend beyond the episode so that only those portions of the services that were furnished during the episode are included in the calculation of the actual episode payments.

(b) Proration of services. CMS prorates payments for services that extend beyond the episode for the purposes of calculating both baseline episode spending and performance year spending using the following methodology:

(1) Non-IPPS inpatient services. Non-IPPS inpatient services that extend beyond the end of the episode are prorated according to the percentage of the actual length of stay (in days) that falls within the episode.

(2) Home health agency services. Home health agency services paid under the Medicare prospective payment system in accordance with part 484, subpart E of this chapter that extend beyond the episode are prorated according to the percentage of days, starting with the first billable service date and through and including the last billable service date, that occur during the episode.

(3) IPPS services. IPPS services that extend beyond the end of the episode are prorated according to the MS-DRG geometric mean length of stay, using the following methodology:

(i) The first day of the IPPS stay is counted as 2 days.

(ii) If the actual length of stay that occurred during the episode is equal to or greater than the MS-DRG geometric mean, the full MS-DRG payment is allocated to the episode.

(iii) If the actual length of stay that occurred during the episode is less than the MS-DRG geometric mean length of stay, the MS-DRG payment amount is allocated to the episode based on the number of inpatient days that fall within the episode.

(4) If the full amount of the payment is not allocated to the episode, any remainder amount is allocated to the post-episode spending calculation (defined in § 512.550(f)).

§ 512.560 Appeals process.

(a) Notice of calculation error (first level of appeal). Subject to the limitations on review in § 512.594, if a TEAM participant wishes to dispute calculations involving a matter related to payment, reconciliation amounts, repayment amounts, the use of quality measure results in determining the composite quality score, or the application of the composite quality score during reconciliation, the TEAM participant is required to provide written notice of the calculation error, in a form and manner and by a date specified by CMS.

(1) Unless the TEAM participant provides such written notice, CMS deems the TEAM reconciliation report to be final 30 calendar days after it is issued and proceeds with the payment or repayment processes as applicable.

(2) If CMS receives a notice of a calculation error within 30 calendar days of the issuance of the TEAM reconciliation report, CMS responds in writing within 30 calendar days to either confirm that there was an error in the calculation or verify that the calculation is correct. CMS reserves the right to extend the time for its response upon written notice to the TEAM participant.

(3) Only TEAM participants may use the calculation error process described in this part.

(b) Exception to the appeals process. If the TEAM participant contests a matter that does not involve an issue contained in, or a calculation that contributes to, a TEAM reconciliation report, a notice of calculation error is not required. In these instances, if CMS does not receive a request for reconsideration from the TEAM participant within 10 calendar days of the notice of the initial reconciliation, the initial determination is deemed final and CMS proceeds with the action indicated in the initial determination. This does not apply to the limitations on review in § 512.594.

§ 512.561 Reconsideration review processes.

(a) Applicability of this section. This section is applicable only where section 1869 of the Act has been waived or is not applicable for TEAM participants. This section is only applicable to TEAM participants.

(b) Right to reconsideration. The TEAM participant may request reconsideration of a determination made by CMS only if such reconsideration is not precluded by section 1115A(d)(2) of the Act or this subpart.

(1) A request for reconsideration by the TEAM participant must satisfy the following criteria:

(i) The request must be submitted to a designee of CMS (“Reconsideration Official”) who—

(A) Is authorized to receive such requests; and

(B) Did not participate in the determination that is the subject of the reconsideration request or, if applicable, the notice of calculation error process.

(ii) The request must include a copy of the initial determination issued by CMS and contain a detailed, written explanation of the basis for the dispute, including supporting documentation.

(iii) The request must be made within 30 days of the date of the initial determination for which reconsideration is being requested via email to an address as specified by CMS.

(2) Requests that do not meet the requirements of paragraph (b)(1) of this section are denied.

(3) Within 10 business days of receiving a request for reconsideration, the Reconsideration Official sends the parties a written acknowledgement of receipt of the reconsideration request. This acknowledgement sets forth the following:

(i) The review procedures.

(ii) A schedule that permits each party to submit position papers and supporting documentation in support of the party's position for consideration by the reconsideration official.

(4) The TEAM participant must satisfy the notice of calculation error requirements specified in this part before submitting a reconsideration request under paragraph (b) of this section.

(c) Standards for reconsideration. (1) The parties must continue to fulfill all responsibilities and obligations under TEAM during the course of any dispute arising under this part.

(2) The reconsideration consists of a review of documentation that is submitted timely and in accordance with the standards specified by the reconsideration official.

(3) The burden of proof is on the TEAM participant to demonstrate to the reconsideration official with clear and convincing evidence that the determination is inconsistent with the terms of this subpart.

(d) Reconsideration determination. (1) The reconsideration determination is based solely upon—

(i) Position papers and supporting documentation that are timely submitted to the reconsideration official per the schedule defined in paragraph (b)(3)(ii) and meet the standards for submission under paragraph (b)(1) of this section; and

(ii) Documents and data that were timely submitted to CMS in the required format before CMS made the determination that is the subject of the reconsideration request.

(2) The reconsideration official issues the reconsideration determination to CMS and to the TEAM participant in writing.

(3) Absent unusual circumstances, in which case the reconsideration official reserves the right to an extension upon written notice to the TEAM participant, the reconsideration determination is issued within 60 days of receipt of timely filed position papers and supporting documentation per the schedule defined in paragraph (b)(3)(ii) of this section.

(4) The reconsideration determination is final and binding 30 days after its issuance, unless the TEAM participant or CMS timely requests review of the reconsideration determination in accordance with paragraphs (e)(1) and (2) of this section.

(e) CMS Administrator review. The TEAM participant or CMS may request that the CMS Administrator review the reconsideration determination.

(1) The request must be made via email within 30 days of the date of the reconsideration determination to the address specified by CMS.

(2) The request must include a copy of the reconsideration determination and a detailed written explanation of why the TEAM participant or CMS disagrees with the reconsideration determination.

(3) The CMS Administrator promptly sends the parties a written acknowledgement of receipt of the request for review.

(4) The CMS Administrator sends the parties notice of the following:

(i) Whether the request for review is granted or denied.

(ii) If the request for review is granted, the review procedures and a schedule that permits each party to submit a brief in support of the party's position for consideration by the CMS Administrator.

(5) If the request for review is denied, the reconsideration determination is final and binding as of the date the request for review is denied.

(6) If the request for review is granted—

(i) The record for review consists solely of—

(A) Timely submitted briefs and the evidence contained in the record of the proceedings before the reconsideration official; and

(B) Evidence as set forth in the documents and data described in paragraph (d)(1)(ii) of this section;

(ii) The CMS Administrator reviews the record and issues to CMS and to the TEAM participant a written determination; and

(iii) The written determination of the CMS Administrator is final and binding as of the date the written determination is sent.

§ 512.562 Data sharing with TEAM participants.

(a) General. CMS shares certain beneficiary-identifiable data as described in paragraphs (b), (c), and (e) of this section and certain regional aggregate data as described in paragraph (d) of this section with TEAM participants regarding TEAM beneficiaries and performance under the model.

(b) Beneficiary-identifiable claims data. CMS shares beneficiary-identifiable claims data with TEAM participants as follows:

(1) CMS makes available certain beneficiary-identifiable claims data described in paragraph (b)(5) of this section for TEAM participants to request for purposes of conducting health care operations work that falls within the first or second paragraph of the definition of health care operations at 45 CFR 164.501 regarding their TEAM beneficiaries.

(2) A TEAM participant that wishes to receive beneficiary-identifiable claims data for its TEAM beneficiaries must do all of the following:

(i) Submit a formal request for the data on at least an annual basis in a manner and form and by a date specified by CMS, indicating their selection of summary beneficiary-identifiable data, raw beneficiary-identifiable data, or both, and attest that—

(A) The TEAM participant is requesting claims data of TEAM beneficiaries who would be in an episode during the baseline period or performance year, as a HIPAA covered entity.

(B) The TEAM participant's request reflects the minimum data necessary, as set forth in paragraph (c) of this section, for the TEAM participant to conduct health care operations work that falls within the first or second paragraph of the definition of health care operations at 45 CFR 164.501.

(C) The TEAM participant's use of claims data is limited to developing processes and engaging in appropriate activities related to coordinating care, improving the quality and efficiency of care, and conducting population-based activities relating to improving health or reducing health care costs that are applied uniformly to all TEAM beneficiaries, in an episode during the baseline period or performance year, and that these data are not to be used to reduce, limit or restrict care for specific Medicare beneficiaries.

(ii) Sign and submit a TEAM data sharing agreement, as defined in § 512.505, with CMS as set forth in paragraph (e) of this section.

(3) CMS shares this beneficiary-identifiable claims data with a TEAM participant in accordance with applicable privacy and security laws and established privacy and security protections.

(4) CMS omits from the beneficiary-identifiable claims data any information that is subject to the regulations in 42 CFR part 2 governing the confidentiality of substance use disorder patient records.

(5) The beneficiary-identifiable claims data includes, when available, the following:

(i) Unrefined (raw) Medicare Parts A and B beneficiary-identifiable claims data for TEAM beneficiaries in an episode during the 3-year baseline period and performance year.

(ii) Summarized (summary) Medicare Parts A and B beneficiary-identifiable claims data for TEAM beneficiaries in an episode during the 3-year baseline period and performance year.

(6) CMS makes available the beneficiary-identifiable claims data for retrieval by TEAM participants at the following frequency:

(i) Annually, at least 1 month prior to every performance year for baseline period data, based on the baseline periods described in § 512.540(b)(2).

(ii) Monthly during the performance year and for up to 6 months after the performance year for performance year data.

(c) Minimum necessary data. The TEAM participant must limit its request for beneficiary-identifiable data under paragraph (b) of this section to the minimum necessary Parts A and B data elements which may include, but are not limited to the following:

(1) Medicare beneficiary identifier (ID).

(2) Procedure code.

(3) Sex.

(4) Diagnosis code.

(5) Claim ID.

(6) The from and through dates of service.

(7) The provider or supplier ID.

(8) The claim payment type.

(9) Date of birth and death, if applicable.

(10) Tax identification number.

(11) National provider identifier.

(d) Regional aggregate data. (1) CMS shares regional aggregate data for the 3-year baseline period and performance years with TEAM participants as follows:

(i) Shares 3-year baseline period regional aggregate data annually at least 1 month before the performance year, based on the baseline periods described in § 512.540(b)(2).

(ii) Shares performance year regional aggregate data on a monthly basis during the performance year and for up to 6 months after the performance year.

(2) Regional aggregate data—

(i) Is aggregated based on all Parts A and B claims associated with episodes in TEAM for the U.S. Census Division in which the TEAM participant is located;

(ii) Summarizes average episode spending for episodes in TEAM in the U.S. Census Division in which the TEAM participant is located; and

(iii) Is de-identified in accordance with 45 CFR 164.514(b).

(e) TEAM data sharing agreement. (1) A TEAM participant who wishes to retrieve the beneficiary-identifiable data specified in paragraph (b) of this section, must complete and submit, on at least an annual basis, a signed TEAM data sharing agreement, as defined in § 512.505, to be provided in a form and manner and by a date specified by CMS, under which the TEAM participant agrees:

(i) To comply with the requirements for use and disclosure of this beneficiary-identifiable data that are imposed on covered entities by the HIPAA regulations and the requirements of the TEAM set forth in this part.

(ii) To comply with additional privacy, security, breach notification, and data retention requirements specified by CMS.

(iii) To contractually bind each downstream recipient of the beneficiary-identifiable data that is a business associate of the TEAM participant to the same terms and conditions to which the TEAM participant is itself bound in its TEAM data sharing agreement with CMS as a condition of the business associate's receipt of the beneficiary-identifiable data retrieved by the TEAM participant under TEAM.

(iv) That if the TEAM participant misuses or discloses the beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the TEAM data sharing agreement, CMS may deem the TEAM participant ineligible to retrieve beneficiary-identifiable data under paragraph (b) of this section for any amount of time, and the TEAM participant may be subject to additional sanctions and penalties available under the law.

(2) A TEAM participant must comply with all applicable laws and the terms of the TEAM data sharing agreement in order to retrieve the beneficiary-identifiable data.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37208, Aug. 4, 2025]

§ 512.563 Health data reporting.

(a)-(b) [Reserved]

(c) Demographic data collection and reporting. For all performance years, the TEAM participant may voluntarily collect and submit to CMS, in a form and manner and by the dates specified by CMS, demographic data of TEAM beneficiaries that are willing to share demographic data elements with the TEAM participant and CMS.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37208, Aug. 4, 2025]

§ 512.564 Referral to primary care services.

(a) A TEAM participant must include in hospital discharge planning a referral to an established supplier of primary care services, as recorded on admission to the hospital or hospital outpatient department, for a TEAM beneficiary, on or prior to discharge from an anchor hospitalization or anchor procedure. In the event an established supplier of primary care services is not recorded on admission to the hospital or hospital outpatient department, the TEAM participant must include in hospital discharge planning a referral to a supplier of primary care services for a TEAM beneficiary, on or prior to discharge from an anchor hospitalization or anchor procedure.

(b) In making the referral described in paragraph (a) of this section, the TEAM participant must comply with beneficiary freedom of choice, as described in § 512.582(a).

(c) A TEAM participant that does not comply with paragraph (a) of this section, may be subject to remedial action as described in § 512.592.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37208, Aug. 4, 2025]

§ 512.565 Sharing arrangements.

(a) General. (1) A TEAM participant may enter into a sharing arrangement with a TEAM collaborator to make a gainsharing payment, or to receive an alignment payment, or both. A TEAM participant must not make a gainsharing payment to a TEAM collaborator or receive an alignment payment from a TEAM collaborator except in accordance with a sharing arrangement.

(2) A sharing arrangement must comply with the provisions of this section and all other applicable laws and regulations, including the applicable fraud and abuse laws and all applicable payment and coverage requirements.

(3) TEAM participants must develop, maintain, and use a set of written policies for selecting individuals and entities to be TEAM collaborators.

(i) These policies must contain criteria related to, and inclusive of, the quality of care delivered by the potential TEAM collaborator and the provision of TEAM activities.

(ii) The selection criteria cannot be based directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the TEAM participant, any TEAM collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent.

(iii) A selection criterion that considers whether a potential TEAM collaborator has performed a reasonable minimum number of services that would qualify as TEAM activities, as determined by the TEAM participant, will be deemed not to violate the volume or value standard if the purpose of the criterion is to ensure the quality of care furnished to TEAM beneficiaries.

(4) If a TEAM participant enters into a sharing arrangement, its compliance program must include oversight of sharing arrangements and compliance with the applicable requirements of TEAM.

(b) Requirements. (1) A sharing arrangement must be in writing and signed by the parties, and entered into before care is furnished to TEAM beneficiaries under the sharing arrangement.

(2) Participation in a sharing arrangement must be voluntary and without penalty for nonparticipation.

(3) The sharing arrangement must require the TEAM collaborator and its employees, contractors (including collaboration agents), and subcontractors (including downstream collaboration agents) to comply with all of the following:

(i) The applicable provisions of this part (including requirements regarding beneficiary notifications, access to records, record retention, and participation in any evaluation, monitoring, compliance, and enforcement activities performed by CMS or its designees).

(ii) All applicable Medicare provider enrollment requirements at § 424.500 of this chapter, including having a valid and active TIN or NPI, during the term of the sharing arrangement.

(iii) All other applicable laws and regulations.

(4) The sharing arrangement must require the TEAM collaborator to have or be covered by a compliance program that includes oversight of the sharing arrangement and compliance with the requirements of TEAM that apply to its role as a TEAM collaborator, including any distribution arrangements.

(5) The sharing arrangement must not pose a risk to beneficiary access, beneficiary freedom of choice, or quality of care.

(6) The board or other governing body of the TEAM participant must have responsibility for overseeing the TEAM participant's participation in TEAM, its arrangements with TEAM collaborators, its payment of gainsharing payments, its receipt of alignment payments, and its use of beneficiary incentives in TEAM.

(7) The specifics of the agreement must be documented in writing and must be made available to CMS upon request (as outlined in § 512.590).

(8) The sharing arrangement must specify the following:

(i) The purpose and scope of the sharing arrangement.

(ii) The obligations of the parties, including specified TEAM activities and other services to be performed by the parties under the sharing arrangement.

(iii) The date range for which the sharing arrangement is effective.

(iv) The financial or economic terms for payment, including the following:

(A) Eligibility criteria for a gainsharing payment.

(B) Eligibility criteria for an alignment payment.

(C) Frequency of gainsharing or alignment payments.

(D) Methodology and accounting formula for determining the amount of a gainsharing payment or alignment payment.

(9) The sharing arrangement must not—

(i) Induce the TEAM participant, TEAM collaborator, or any employees, contractors, or subcontractors of the TEAM participant or TEAM collaborator to reduce or limit medically necessary services to any Medicare beneficiary; or

(ii) Restrict the ability of a TEAM collaborator to make decisions in the best interests of its patients, including the selection of devices, supplies, and treatments.

(c) Gainsharing payment, alignment payment, and internal cost savings conditions and restrictions. (1) Gainsharing payments, if any, must—

(i) Be derived solely from reconciliation payment amounts, or internal cost savings, or both;

(ii) Be distributed on an annual basis (not more than once per calendar year);

(iii) Not be a loan, advance payment, or payment for referrals or other business; and

(iv) Be clearly identified as a gainsharing payment at the time it is paid.

(2)(i) To be eligible to receive a gainsharing payment, a TEAM collaborator must meet quality of care criteria for the performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment that comprises the gainsharing payment. The quality-of-care criteria must be established by the TEAM participant and directly relate to the episode.

(ii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a TEAM collaborator other than ACO, PGP, NPPGP, or TGP must have directly furnished a billable item or service to a TEAM beneficiary during an episode that was attributed to the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment.

(iii) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a TEAM collaborator that is a PGP, NPPGP, or TGP must meet the following criteria:

(A) The PGP, NPPGP, or TGP must have billed for an item or service that was rendered by one or more PGP member, NPPGP member, or TGP member respectively to a TEAM beneficiary during an episode that was attributed to the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment.

(B) The PGP, NPPGP, or TGP must have contributed to TEAM activities and been clinically involved in the care of TEAM beneficiaries during the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment. A non-exhaustive list of examples where, a PGP, NPPGP, or TGP might have been clinically involved in the care of TEAM beneficiaries includes—

(1) Providing care coordination services to TEAM beneficiaries during or after inpatient admission;

(2) Engaging with a TEAM participant in care redesign strategies, and performing a role in implementing such strategies, that are designed to improve the quality of care for episodes and reduce episode spending; or

(3) In coordination with other providers and suppliers (such as PGP members, NPPGP members, or TGP members; the TEAM participant; and post-acute care providers), implementing strategies designed to address and manage the comorbidities of TEAM beneficiaries.

(iv) To be eligible to receive a gainsharing payment, or to be required to make an alignment payment, a TEAM collaborator that is an ACO must meet the following criteria:

(A) The ACO must have had an ACO provider/supplier that directly furnished, or an ACO participant that billed for, an item or service that was rendered to a TEAM beneficiary during an episode that was attributed to the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment; and

(B) The ACO must have contributed to TEAM activities and been clinically involved in the care of TEAM beneficiaries during the performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount or repayment amount that comprises the gainsharing payment or the alignment payment. A non-exhaustive list of ways in which an ACO might have been clinically involved in the care of TEAM beneficiaries could include—

(1) Providing care coordination services to TEAM beneficiaries during and/or after inpatient admission;

(2) Engaging with a TEAM participant in care redesign strategies and performing a role in implementing such strategies that are designed to improve the quality of care and reduce spending for episodes; or

(3) In coordination with providers and suppliers (such as ACO participants, ACO providers/suppliers, the TEAM participant, and post-acute care providers), implementing strategies designed to address and manage the comorbidities of TEAM beneficiaries.

(3) The methodology for accruing, calculating and verifying internal cost savings will be determined by the TEAM participant. The methodology—

(i) Must be transparent, measurable, and verifiable in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(ii) Used to calculate internal cost savings must reflect the actual, internal cost savings achieved by the TEAM participant through the documented implementation of TEAM activities identified by the TEAM participant and must exclude—

(A) Any savings realized by any individual or entity that is not the TEAM participant; and

(B) “Paper” savings from accounting conventions or past investment in fixed costs.

(4) The amount of any gainsharing payments must be determined in accordance with a methodology that is based solely on quality of care and the provision of TEAM activities. The methodology may take into account the amount of TEAM activities provided by a TEAM collaborator relative to other TEAM collaborators.

(5) For a performance year, the aggregate amount of all gainsharing payments that are derived from reconciliation payment amounts must not exceed the amount of that year's reconciliation payment amount.

(6) No entity or individual, whether a party to a sharing arrangement or not, may condition the opportunity to make or receive gainsharing payments or to make or receive alignment payments directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the TEAM participant, any TEAM collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent.

(7) A TEAM participant must not make a gainsharing payment to a TEAM collaborator if CMS has notified the TEAM participant that such TEAM collaborator is subject to any action by CMS, HHS or any other governmental entity, or its designees, for noncompliance with this part or the fraud and abuse laws, for the provision of substandard care to TEAM beneficiaries or other integrity problems, or for any other program integrity problems or noncompliance with any other laws or regulations.

(8) The sharing arrangement must require the TEAM participant to recoup any gainsharing payment that contained funds derived from a CMS overpayment on a reconciliation payment amount or was based on the submission of false or fraudulent data.

(9) Alignment payments from a TEAM collaborator to a TEAM participant may be made at any interval that is agreed upon by both parties, and must not be—

(i) Issued, distributed, or paid prior to the calculation by CMS of a repayment amount; payment;

(ii) Loans, advance payments, or payments for referrals or other business; or

(iii) Assessed by a TEAM participant in the absence of a repayment amount.

(10) The TEAM participant must not receive any amounts under a sharing arrangement from a TEAM collaborator that are not alignment payments.

(11) For a performance year, the aggregate amount of all alignment payments received by the TEAM participant must not exceed 50 percent of the TEAM participant's repayment amount.

(12) The aggregate amount of all alignment payments from a TEAM collaborator to the TEAM participant may not be greater than—

(i) With respect to a TEAM collaborator other than an ACO, 25 percent of the TEAM participant's repayment amount.

(ii) With respect to a TEAM collaborator that is an ACO, 50 percent of the TEAM participant's repayment amount.

(13) The amount of any alignment payments must be determined in accordance with a methodology that does not directly account for the volume or value of past or anticipated referrals or business otherwise generated by, between or among the TEAM participant, any TEAM collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent.

(14) All gainsharing payments and any alignment payments must be administered by the TEAM participant in accordance with generally accepted accounting principles (GAAP) and Government Auditing Standards (The Yellow Book).

(15) All gainsharing payments and alignment payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(d) Documentation requirements. (1) TEAM participants must—

(i) Document the sharing arrangement contemporaneously with the establishment of the arrangement;

(ii) Publicly post (and update on at least a quarterly basis) on a web page on the TEAM participant's website—

(A) Accurate lists of all current TEAM collaborators, including the TEAM collaborators' names and addresses as well as accurate historical lists of all TEAM collaborators.

(B) Written policies for selecting individuals and entities to be TEAM collaborators as required by § 512.565(a)(3).

(iii) Maintain, and require each TEAM collaborator to maintain, contemporaneous documentation with respect to the payment or receipt of any gainsharing payment or alignment payment that includes, at a minimum—

(A) Nature of the payment (gainsharing payment or alignment payment);

(B) Identity of the parties making and receiving the payment;

(C) Date of the payment;

(D) Amount of the payment; and

(E) Date and amount of any recoupment of all or a portion of a TEAM collaborator's gainsharing payment.

(F) Explanation for each recoupment, such as whether the TEAM collaborator received a gainsharing payment that contained funds derived from a CMS overpayment of a reconciliation payment or was based on the submission of false or fraudulent data.

(2) The TEAM participant must keep records of all of the following:

(i) Its process for determining and verifying its potential and current TEAM collaborators' eligibility to participate in Medicare.

(ii) Its plan to track internal cost savings.

(iii) Information on the accounting systems used to track internal cost savings.

(iv) A description of current health information technology, including systems to track reconciliation payment amounts, repayment amounts, and internal cost savings.

(v) Its plan to track gainsharing payments and alignment payments.

(3) The TEAM participant must retain and provide access to and must require each TEAM collaborator to retain and provide access to, the required documentation in accordance with § 512.586.

§ 512.568 Distribution arrangements.

(a) General. (1) An ACO, PGP, NPPGP, or TGP that is a TEAM collaborator and has entered into a sharing arrangement with a TEAM participant may distribute all or a portion of any gainsharing payment it receives from the TEAM participant only in accordance with a distribution arrangement.

(2) All distribution arrangements must comply with the provisions of this section and all other applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All distribution arrangements must be in writing and signed by the parties, contain the effective date of the agreement, and be entered into before care is furnished to TEAM beneficiaries under the distribution arrangement.

(2) Participation in a distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The distribution arrangement must require the collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the TEAM participant, any TEAM collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any distribution payments from an ACO, from an NPPGP to an NPPGP member, or from a TGP to a TGP member, must be determined in accordance with a methodology that is solely based on quality of care and the provision of TEAM activities and that may take into account the amount of such TEAM activities provided by a collaboration agent relative to other collaboration agents.

(6) The amount of any distribution payments from a PGP must be determined in accordance with a methodology that is solely based on quality of care and the provision of TEAM activities and that may take into account the amount of such TEAM activities provided by a collaboration agent relative to other collaboration agents.

(7) A collaboration agent is eligible to receive a distribution payment only if the collaboration agent furnished or billed for an item or service rendered to a TEAM beneficiary during an episode that was attributed to the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount that comprises the gainsharing payment being distributed.

(8) With respect to the distribution of any gainsharing payment received by an ACO, PGP, NPPGP, or TGP, the total amount of all distribution payments for a performance year must not exceed the amount of the gainsharing payment received by the TEAM collaborator from the TEAM participant for the same performance year.

(9) All distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(10) The collaboration agent must retain the ability to make decisions in the best interests of the patient, including the selection of devices, supplies, and treatments.

(11) The distribution arrangement must not—

(i) Induce the collaboration agent to reduce or limit medically necessary items and services to any Medicare beneficiary; or

(ii) Reward the provision of items and services that are medically unnecessary.

(12) The TEAM collaborator must maintain contemporaneous documentation regarding distribution arrangements in accordance with § 512.586, including all of the following:

(i) The relevant written agreements.

(ii) The date and amount of any distribution payment(s).

(iii) The identity of each collaboration agent that received a distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any distribution payment.

(13) The TEAM collaborator may not enter into a distribution arrangement with any individual or entity that has a sharing arrangement with the same TEAM participant.

(14) The TEAM collaborator must retain and provide access to and must require collaboration agents to retain and provide access to, the required documentation in accordance with § 512.586.

§ 512.570 Downstream distribution arrangements.

(a) General. (1) An ACO participant that is a PGP, NPPGP, or TGP and that has entered into a distribution arrangement with a TEAM collaborator that is an ACO, may distribute all or a portion of any distribution payment it receives from the TEAM collaborator only in accordance with a downstream distribution arrangement.

(2) All downstream distribution arrangements must comply with the provisions of this section and all applicable laws and regulations, including the fraud and abuse laws.

(b) Requirements. (1) All downstream distribution arrangements must be in writing and signed by the parties, contain the effective date of the agreement, and be entered into before care is furnished to TEAM beneficiaries under the downstream distribution arrangement.

(2) Participation in a downstream distribution arrangement must be voluntary and without penalty for nonparticipation.

(3) The downstream distribution arrangement must require the downstream collaboration agent to comply with all applicable laws and regulations.

(4) The opportunity to make or receive a downstream distribution payment must not be conditioned directly or indirectly on the volume or value of past or anticipated referrals or business otherwise generated by, between or among the TEAM participant, any TEAM collaborator, any collaboration agent, any downstream collaboration agent, or any individual or entity affiliated with a TEAM participant, TEAM collaborator, collaboration agent, or downstream collaboration agent.

(5) The amount of any downstream distribution payments from an NPPGP to an NPPGP member or from a TGP to a TGP member must be determined in accordance with a methodology that is solely based on quality of care and the provision of TEAM activities and that may take into account the amount of such TEAM activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(6) The amount of any downstream distribution payments from a PGP must be determined in accordance with a methodology that is solely based on quality of care and the provision of TEAM activities and that may take into account the amount of such TEAM activities provided by a downstream collaboration agent relative to other downstream collaboration agents.

(7) A downstream collaboration agent is eligible to receive a downstream distribution payment only if the downstream collaboration agent furnished an item or service to a TEAM beneficiary during an episode that is attributed to the same performance year for which the TEAM participant accrued the internal cost savings or earned the reconciliation payment amount that comprises the gainsharing payment from which the ACO made the distribution payment to the PGP, NPPGP, or TGP that is an ACO participant.

(8) The total amount of all downstream distribution payments made to downstream collaboration agents must not exceed the amount of the distribution payment received by the PGP, NPPGP, or TGP from the ACO.

(9) All downstream distribution payments must be made by check, electronic funds transfer, or another traceable cash transaction.

(10) The downstream collaboration agent must retain his or her ability to make decisions in the best interests of the beneficiary, including the selection of devices, supplies, and treatments.

(11) The downstream distribution arrangement must not—

(i) Induce the downstream collaboration agent to reduce or limit medically necessary services to any Medicare beneficiary; or

(ii) Reward the provision of items and services that are medically unnecessary.

(12) The PGP, NPPGP, or TGP must maintain contemporaneous documentation regarding downstream distribution arrangements in accordance with § 512.586, including the following:

(i) The relevant written agreements.

(ii) The date and amount of any downstream distribution payment.

(iii) The identity of each downstream collaboration agent that received a downstream distribution payment.

(iv) A description of the methodology and accounting formula for determining the amount of any downstream distribution payment.

(13) The PGP, NPPGP, or TGP may not enter into a downstream distribution arrangement with any PGP member, NPPGP member, or TGP member who has—

(i) A sharing arrangement with a TEAM participant.

(ii) A distribution arrangement with the ACO that the PGP, NPPGP, or TGP is a participant in.

(14) The PGP, NPPGP, or TGP must retain and provide access to, and must require downstream collaboration agents to retain and provide access to, the required documentation in accordance with § 512.586.

§ 512.575 TEAM beneficiary incentives.

(a) General. TEAM participants may choose to provide in-kind patient engagement incentives including but not limited to items of technology to TEAM beneficiaries in an episode, subject to the following conditions:

(1) The incentive must be provided directly by the TEAM participant or by an agent of the TEAM participant under the TEAM participant's direction and control to the TEAM beneficiary during an episode.

(2) The item or service provided must be reasonably connected to medical care provided to a TEAM beneficiary during an episode.

(3) The item or service must be a preventive care item or service or an item or service that advances a clinical goal, as listed in paragraph (c) of this section, for a TEAM beneficiary in an episode by engaging the TEAM beneficiary in better managing his or her own health.

(4) The item or service must not be tied to the receipt of items or services outside the episode.

(5) The item or service must not be tied to the receipt of items or services from a particular provider or supplier.

(6) The availability of the items or services must not be advertised or promoted, except that a TEAM beneficiary may be made aware of the availability of the items or services at the time the TEAM beneficiary could reasonably benefit from them.

(7) The cost of the items or services must not be shifted to any Federal health care program, as defined at section 1128B(f) of the Act.

(b) Technology provided to a TEAM beneficiary. TEAM beneficiary engagement incentives involving technology are subject to the following additional conditions:

(1) Items or services involving technology provided to a TEAM beneficiary may not exceed $1,000 in retail value for any one TEAM beneficiary during any one episode.

(2) Items or services involving technology provided to a TEAM beneficiary must be the minimum necessary to advance a clinical goal, as listed in paragraph (c) of this section, for a beneficiary in an episode.

(3) Items of technology exceeding $75 in retail value must—

(i) Remain the property of the TEAM participant; and

(ii) Be retrieved from the TEAM beneficiary at the end of the episode, with documentation of the ultimate date of retrieval. The TEAM participant must document all retrieval attempts. In cases when the item of technology is not able to be retrieved, the TEAM participant must determine why the item was not retrievable. If it was determined that the item was misappropriated (if it were sold, for example), the TEAM participant must take steps to prevent future beneficiary incentives for that TEAM beneficiary. Following this process, documented, diligent, good faith attempts to retrieve items of technology will be deemed to meet the retrieval requirement.

(c) Clinical goals of TEAM. The following are the clinical goals of TEAM, which may be advanced through TEAM beneficiary incentives:

(1) Beneficiary adherence to drug regimens.

(2) Beneficiary adherence to a care plan.

(3) Reduction of readmissions and complications following an episode.

(4) Management of chronic diseases and conditions that may be affected by the TEAM procedure.

(d) Documentation of TEAM beneficiary incentives. (1) TEAM participants must maintain documentation of items and services furnished as beneficiary incentives that exceed $25 in retail value.

(2) The documentation must be established contemporaneously with the provision of the items and services with a record established and maintained to include at least the following:

(i) The date the incentive is provided.

(ii) The identity of the TEAM beneficiary to whom the item or service was provided.

(3) The documentation regarding items of technology exceeding $75 in retail value must also include contemporaneous documentation of any attempt to retrieve technology at the end of an episode, or why the items were not retrievable, as described in paragraph (b)(3) of this section.

(4) The TEAM participant must retain and provide access to the required documentation in accordance with § 512.586.

§ 512.576 Application of the CMS-sponsored model arrangements and patient incentives safe harbor.

(a) Application of the CMS-sponsored model arrangements safe harbor. CMS has determined that the Federal Anti-Kickback Statute Safe Harbor for CMS-sponsored model arrangements (42 CFR 1001.952(ii)(1)) is available to protect remuneration furnished in TEAM in the form of the sharing arrangement's gainsharing payments and alignment payments, the distribution arrangement's distribution payments, and the downstream distribution arrangement's distribution payments that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii), and §§ 512.565, 512.568, 512.570.

(b) Application of the CMS-sponsored model patient incentives safe harbor. CMS has determined that the Federal Anti-Kickback Statute Safe Harbor for CMS-sponsored model patient incentives (42 CFR 1001.952(ii)(2)) is available to protect TEAM beneficiary incentives that meet all safe harbor requirements set forth in 42 CFR 1001.952(ii) and § 512.575.

§ 512.580 TEAM Medicare Program Waivers.

(a) Waiver of certain telehealth requirements—(1) Waiver of the geographic site requirements. Except for the geographic site requirements for a face-to-face encounter for home health certification, CMS waives the geographic site requirements of section 1834(m)(4)(C)(i)(I) through (III) of the Act for episodes being tested in TEAM solely for services that—

(i) May be furnished via telehealth under existing Medicare program requirements; and

(ii) Are included in the episode in accordance with § 512.525(e).

(2) Waiver of the originating site requirements. Except for the originating site requirements for a face-to-face encounter for home health certification, CMS waives the originating site requirements under section 1834(m)(4)I(ii)(I) through (VIII) of the Act for episodes to permit a telehealth visit to originate in the beneficiary's home or place of residence solely for services that—

(i) May be furnished via telehealth under existing Medicare program requirements; and

(ii) Are included in the episode in accordance with § 512.525(e).

(3) Waiver of selected payment provisions. (i) CMS waives the payment requirements under section 1834(m)(2)(A) of the Act so that the facility fee normally paid by Medicare to an originating site for a telehealth service is not paid if the service is originated in the beneficiary's home or place of residence.

(ii) CMS waives the payment requirements under section 1834(m)(2)(B) of the Act to allow the distant site payment for telehealth home visit HCPCS codes unique to TEAM.

(4) Other requirements. All other requirements for Medicare coverage and payment of telehealth services continue to apply, including the list of specific services approved to be furnished by telehealth.

(b) Waiver of the SNF 3-day rule—(1) Episodes initiated by an anchor hospitalization. CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of discharge from the anchor hospitalization for a beneficiary who is a TEAM beneficiary on the date of discharge from the anchor hospitalization if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the TEAM beneficiary's admission to the SNF.

(2) Episodes initiated by an anchor procedure. CMS waives the SNF 3-day rule for coverage of a SNF stay within 30 days of the date of service of the anchor procedure for a beneficiary who is a TEAM beneficiary on the date of service of the anchor procedure if the SNF is identified on the applicable calendar quarter list of qualified SNFs at the time of the TEAM beneficiary's admission to the SNF.

(3) Determination of qualified SNFs. CMS determines the qualified SNFs for each calendar quarter based on a review of the most recent rolling 12 months of overall star ratings on the Five-Star Quality Rating System for SNFs on the Nursing Home Compare website.

(i) Qualified SNFs are rated an overall of 3 stars or better for at least 7 of the 12 months.

(ii) Qualified SNFs include providers furnishing SNF services under swing bed agreements, which will not be subject to the star ratings requirement.

(4) Posting of qualified SNFs. CMS posts to the CMS website the list of qualified SNFs in advance of the calendar quarter.

(5) Financial liability for non-covered SNF services. If CMS determines that the waiver requirements specified in paragraph (b) of this section were not met, the following apply:

(i) CMS makes no payment to a SNF for SNF services if the SNF admits a TEAM beneficiary who has not had a qualifying anchor hospitalization or anchor procedure.

(ii) In the event that CMS makes no payment for SNF services furnished by a SNF as a result of paragraph (b)(5)(i) of this section, the beneficiary protections specified in paragraph (b)(5)(iii) of this section apply, unless the TEAM participant has provided the beneficiary with a discharge planning notice in accordance with § 512.582(b)(3).

(iii) If the TEAM participant does not provide the beneficiary with a discharge planning notice in accordance with § 512.582(b)(3)—

(A) The SNF must not charge the beneficiary for the expenses incurred for such services;

(B) The SNF must return to the beneficiary any monies collected for such services; and

(C) The TEAM participant is financially liable for the expenses incurred for such services.

(6) Coverage of SNF services and discharge planning notification. If the TEAM participant provided a discharge planning notice to the beneficiary in accordance with § 512.582(b)(3), then normal SNF coverage requirements apply, and the beneficiary may be financially liable for non-covered SNF services.

(c) Other requirements. All other Medicare rules for coverage and payment of Part A-covered services continue to apply except as otherwise waived in this part.

[89 FR 69914, Aug. 28, 2024, as amended at 90 FR 37208, Aug. 4, 2025]

§ 512.582 Beneficiary protections.

(a) Beneficiary freedom of choice. (1) A TEAM participant, TEAM collaborators, collaboration agents, downstream collaboration agent and downstream participants must not restrict Medicare beneficiaries' ability to choose to receive care from any provider or supplier.

(2) The TEAM participant and its downstream participants must not commit any act or omission, nor adopt any policy that inhibits beneficiaries from exercising their freedom to choose to receive care from any provider or supplier or from any health care provider who has opted out of Medicare. The TEAM participant and its downstream participants may communicate to TEAM beneficiaries the benefits of receiving care with the TEAM participant, if otherwise consistent with the requirements of this part and applicable law.

(3) As part of discharge planning and referral, TEAM participants must provide a complete list of HHAs, SNFs, IRFs, or LTCHs that are participating in the Medicare program, and that serve the geographic area (as defined by the HHA) in which the patient resides, or in the case of a SNF, IRF, or LTCH, in the geographic area requested by the patient.

(i) This list must be presented to TEAM beneficiaries for whom home health care, SNF, IRF, or LTCH services are medically necessary.

(ii) TEAM participants must specify on the list those post-acute care providers on the list with whom they have a sharing arrangement.

(iii) TEAM participants may recommend preferred providers and suppliers, consistent with applicable statutes and regulations.

(iv) TEAM participants may not limit beneficiary choice to any list of providers or suppliers in any manner other than as permitted under applicable statutes and regulations.

(v) TEAM participants must take into account patient and family preferences for choice of provider and supplier when they are expressed.

(4) TEAM participants may not charge any TEAM collaborator a fee to be included on any list of preferred providers or suppliers, nor may the TEAM participant accept such payments.

(b) Required beneficiary notification—(1) TEAM participant beneficiary notification—(i) Notification to beneficiaries. Each TEAM participant must provide written notification to any TEAM beneficiary that meets the criteria in § 512.535 of his or her inclusion in the TEAM model.

(ii) Timing of notification. Prior to discharge from the anchor hospitalization, or prior to discharge from the anchor procedure, as applicable, the TEAM participant must provide the TEAM beneficiary with a beneficiary notification as described in paragraph (b)(1)(iv) of this section.

(iii) List of beneficiaries who have received a notification. The TEAM participant must be able to generate a list of all beneficiaries who have received such notification, including the date on which the notification was provided to the beneficiary, to CMS or its designee upon request.

(iv) Content of notification. The beneficiary notification must contain all of the following:

(A) A detailed explanation of TEAM and how it might be expected to affect the beneficiary's care.

(B) Notification that the beneficiary retains freedom of choice to choose providers and services.

(C) Explanation of how patients can access care records and claims data through an available patient portal, if applicable, and how they can share access to their Blue Button® electronic health information with caregivers.

(D) Explanation of the type of beneficiary-identifiable claims data the TEAM participant may receive.

(E) A statement that all existing Medicare beneficiary protections continue to be available to the TEAM beneficiary. These include the ability to report concerns of substandard care to Quality Improvement Organizations or the 1-800-MEDICARE helpline.

(F) A list of the providers, suppliers, and ACOs with whom the TEAM participant has a sharing arrangement. This requirement may be fulfilled by the TEAM participant including in the detailed notification a Web address where beneficiaries may access the list.

(2) TEAM collaborator notice. A TEAM participant must require every TEAM collaborator to provide written notice to applicable TEAM beneficiaries of TEAM, including information on the quality and payment incentives under TEAM, and the existence of its sharing arrangement with the TEAM participant.

(i) With the exception of ACOs, PGPs, NPPGPs, and TGPs, a TEAM participant must require every TEAM collaborator that furnishes an item or service to a TEAM beneficiary during an episode to provide written notice to the beneficiary of TEAM, including basic information on the quality and payment incentives under TEAM, and the existence of the TEAM collaborator's sharing arrangement.

(A) The notice must be provided no later than the time at which the beneficiary first receives an item or service from the TEAM collaborator during an episode. In circumstances where, due to the patient's condition, it is not feasible to provide notification at such time, the notification must be provided to the beneficiary or his or her representative as soon as is reasonably practicable.

(B) The TEAM collaborator must be able to provide a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(ii) A TEAM participant must require every PGP, NPPGP, or TGP that is a TEAM collaborator where a member of the PGP, member of the NPPGP, or member of the TGP furnishes an item or service to a TEAM beneficiary during an episode to provide written notice to the beneficiary of TEAM, including basic information on the quality and payment incentives under TEAM, and the existence of the entity's sharing arrangement.

(A)(1) The notice must be provided no later than the time at which the beneficiary first receives an item or service from any member of the PGP, member of the NPPGP, or member of the TGP, and the required PGP, NPPGP, or TGP notice may be provided by that member respectively.

(2) In circumstances where, due to the patient's condition, it is not feasible to provide notice at such times, the notice must be provided to the beneficiary or his or her representative as soon as is reasonably practicable.

(B) The PGP, NPPGP, or TGP must be able to provide a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(iii) A TEAM participant must require every ACO that is a TEAM collaborator where an ACO participant or ACO provider/supplier furnishes an item or service to a TEAM beneficiary during an episode to provide written notice to the beneficiary of TEAM, including basic information on the quality and payment incentives under TEAM, and the existence of the entity's sharing arrangement.

(A)(1) The notice must be provided no later than the time at which the beneficiary first receives an item or service from any ACO participant or ACO provider/supplier and the required ACO notice may be provided by that ACO participant or ACO provider/supplier respectively.

(2) In circumstances where, due to the patient's condition, it is not feasible to provide notice at such times, the notice must be provided to the beneficiary or his or her representative as soon as is reasonably practicable.

(B) The ACO must be able to provide a list of all beneficiaries who received such a notice, including the date on which the notice was provided to the beneficiary, to CMS upon request.

(3) Discharge planning notice. A TEAM participant must provide the beneficiary with a written notice of any potential financial liability associated with non-covered services recommended or presented as an option as part of discharge planning, no later than the time that the beneficiary discusses a particular post-acute care option or at the time the beneficiary is discharged from an anchor procedure or anchor hospitalization, whichever occurs earlier.

(i) If the TEAM participant knows or should have known that the beneficiary is considering or has decided to receive a non-covered post-acute care service or other non-covered associated service or supply, the TEAM participant must notify the beneficiary in writing that the service would not be covered by Medicare.

(ii) If the TEAM participant is discharging a beneficiary to a SNF after an inpatient hospital stay, and the beneficiary is being transferred to or is considering a SNF that would not qualify under the SNF 3-day waiver in § 512.580, the TEAM participant must notify the beneficiary in accordance with paragraph (b)(3)(i) of this section that the beneficiary will be responsible for payment for the services furnished by the SNF during that stay, except those services that would be covered by Medicare Part B during a non-covered inpatient SNF stay.

(4) Access to records and retention. Lists of beneficiaries that receive notifications or notices must be retained, and access provided to CMS, or its designees, in accordance with § 512.586.

(c) Availability of services. (1) The TEAM participant and its downstream participants must continue to make medically necessary covered services available to beneficiaries to the extent required by applicable law. TEAM beneficiaries and their assignees retain their rights to appeal claims in accordance with part 405, subpart I of this chapter.

(2) The TEAM participant and its downstream participants must not take any action to select or avoid treating certain Medicare beneficiaries based on their income levels or based on factors that would render the beneficiary an “at-risk beneficiary” as defined at § 425.20 of this chapter.

(3) The TEAM participant and its downstream participants must not take any action to selectively target or engage beneficiaries who are relatively healthy or otherwise expected to improve the TEAM participant's or downstream participant's financial or quality performance.

(d) Descriptive TEAM materials and activities. (1) The TEAM participant and its downstream participants must not use or distribute descriptive TEAM materials and activities that are materially inaccurate or misleading.

(2) The TEAM participant and its downstream participants must include the following statement on all descriptive TEAM materials and activities: “The statements contained in this document are solely those of the authors and do not necessarily reflect the views or policies of the Centers for Medicare & Medicaid Services (CMS). The authors assume responsibility for the accuracy and completeness of the information contained in this document.”

(3) The TEAM participant and its downstream participants must retain copies of all written and electronic descriptive TEAM materials and activities and appropriate records for all other descriptive TEAM materials and activities in a manner consistent with § 512.135(c).

(4) CMS reserves the right to review, or have a designee review, descriptive TEAM materials and activities to determine whether or not the content is materially inaccurate or misleading. This review takes place at a time and in a manner specified by CMS once the descriptive TEAM materials and activities are in use by the TEAM participant.

§ 512.584 Cooperation in model evaluation and monitoring.

The TEAM participant and its TEAM collaborators must comply with the requirements of § 403.1110(b) of this chapter and must otherwise cooperate with CMS' TEAM evaluation and monitoring activities as may be necessary to enable CMS to evaluate TEAM in accordance with section 1115A(b)(4) of the Act and to conduct monitoring activities under § 512.590, including producing such data as may be required by CMS to evaluate or monitor TEAM, which may include protected health information as defined in 45 CFR 160.103 and other individually-identifiable data.

§ 512.586 Audits and record retention.

(a) Right to audit. The Federal government, including CMS, HHS, and the Comptroller General, or their designees, has the right to audit, inspect, investigate, and evaluate any documents and other evidence regarding implementation of TEAM.

(b) Access to records. The TEAM participant and its TEAM collaborators must maintain and give the Federal government, including CMS, HHS, and the Comptroller General, or their designees, access to all such documents and other evidence sufficient to enable the audit, evaluation, inspection, or investigation of the implementation of TEAM, including without limitation, documents and other evidence regarding all of the following:

(1) The TEAM participant's and its downstream participants' compliance with the terms of TEAM.

(2) The accuracy of TEAM reconciliation payment amounts and repayment amounts.

(3) The TEAM participant's payment of amounts owed to CMS under TEAM.

(4) Quality measure information and the quality of services performed under the terms of TEAM.

(5) Utilization of items and services furnished under TEAM.

(6) The ability of the TEAM participant to bear the risk of potential losses and to repay any losses to CMS, as applicable.

(7) Patient safety.

(8) Other program integrity issues.

(c) Record retention. (1) The TEAM participant and its downstream participants must maintain the documents and other evidence described in paragraph (b) of this section and other evidence for a period of 6 years from the last payment determination for the TEAM participant under TEAM or from the date of completion of any audit, evaluation, inspection, or investigation, whichever is later, unless—

(i) CMS determines there is a special need to retain a particular record or group of records for a longer period and notifies the TEAM participant at least 30 days before the normal disposition date; or

(ii) There has been a termination, dispute, or allegation of fraud or similar fault against the TEAM participant or its downstream participants, in which case the records must be maintained for an additional 6 years from the date of any resulting final resolution of the termination, dispute, or allegation of fraud or similar fault.

(2) If CMS notifies the TEAM participant of the special need to retain records in accordance with paragraph (c)(1)(i) of this section or there has been a termination, dispute, or allegation of fraud or similar fault against the TEAM participant or its downstream participants described in paragraph (c)(1)(ii) of this section, the TEAM participant must notify its downstream participants of this need to retain records for the additional period specified by CMS.

§ 512.588 Rights in data and intellectual property.

(a) CMS may—

(1) Use any data obtained under §§ 512.584, 512.586, or 512.590 to evaluate and monitor TEAM; and

(2) Disseminate quantitative and qualitative results and successful care management techniques, including factors associated with performance, to other providers and suppliers and to the public. Data disseminated may include patient—

(i) De-identified results of patient experience of care and quality of life surveys, and patient; and

(ii) De-identified measure results calculated based upon claims, medical records, and other data sources.

(b) Notwithstanding any other provision of this part, for all data that CMS confirms to be proprietary trade secret information and technology of the TEAM participant or its downstream participants, CMS or its designee(s) will not release this data without the express written consent of the TEAM participant or its downstream participant, unless such release is required by law.

(c) If the TEAM participant or its downstream participant wishes to protect any proprietary or confidential information that it submits to CMS or its designee, the TEAM participant or its downstream participant must label or otherwise identify the information as proprietary or confidential. Such assertions are subject to review and confirmation by CMS prior to CMS' acting upon such assertions.

§ 512.590 Monitoring and compliance.

(a) Compliance with laws. The TEAM participant and each of its downstream participants must comply with all applicable laws and regulations.

(b) CMS monitoring and compliance activities. (1) CMS staff, or its approved designee, may conduct monitoring activities to ensure compliance by the TEAM participant and each of its downstream participants with the terms of TEAM under this subpart to—

(i) Understand TEAM participants' use of TEAM payments; and

(ii) Promote the safety of beneficiaries and the integrity of TEAM.

(2) Monitoring activities may include, without limitation, all of the following:

(i) Documentation requests sent to the TEAM participant and its downstream participants, including surveys and questionnaires.

(ii) Audits of claims data, quality measures, medical records, and other data from the TEAM participant and its downstream participants.

(iii) Interviews with members of the staff and leadership of the TEAM participant and its downstream participants.

(iv) Interviews with beneficiaries and their caregivers.

(v) Site visits to the TEAM participant and its downstream participants, performed in a manner consistent with paragraph (c) of this section.

(vi) Monitoring quality outcomes and clinical data, if applicable.

(vii) Tracking patient complaints and appeals.

(3) In conducting monitoring and oversight activities, CMS or its designees may use any relevant data or information including without limitation all Medicare claims submitted for items or services furnished to TEAM beneficiaries.

(c) Site visits. (1) In a manner consistent with § 512.584, the TEAM participant and its downstream participants must cooperate in periodic site visits performed by CMS or its designees in order to facilitate the evaluation of TEAM and the monitoring of the TEAM participant's compliance with the terms of TEAM.

(2) CMS or its designee provides, to the extent practicable, the TEAM participant or downstream participant with no less than 15 days advance notice of any site visit. CMS—

(i) Attempts, to the extent practicable, to accommodate a request for particular dates in scheduling site visits; and

(ii) Does not accept a date request from a TEAM participant or downstream participant that is more than 60 days after the date of the CMS initial site visit notice.

(3) The TEAM participant and its downstream participants must ensure that personnel with the appropriate responsibilities and knowledge associated with the purpose of the site visit are available during all site visits.

(4) CMS may perform unannounced site visits at the office of the TEAM participant and any of its downstream participants at any time to investigate concerns about the health or safety of beneficiaries or other patients or other program integrity issues.

(5) Nothing in this part shall be construed to limit or otherwise prevent CMS from performing site visits permitted or required by applicable law.

(d) Reopening of payment determinations. (1) CMS may reopen a TEAM payment determination on its own motion or at the request of a TEAM participant, within 4 years from the date of the determination, for good cause (as defined at § 405.986 of this chapter).

(2) CMS may reopen a TEAM payment determination at any time if there exists reliable evidence (as defined in § 405.902 of this chapter) that the determination was procured by fraud or similar fault (as defined in § 405.902 of this chapter).

(3) CMS's decision regarding whether to reopen a TEAM payment determination is binding and not subject to appeal.

(e) OIG authority. Nothing contained in the terms of TEAM limits or restricts the authority of the HHS Office of Inspector General or any other Federal government authority, including its authority to audit, evaluate, investigate, or inspect the TEAM participant or its downstream participants for violations of any Federal statutes, rules, or regulations.

§ 512.592 Remedial action.

(a) Grounds for remedial action. CMS may take one or more remedial actions described in paragraph (b) of this section if CMS determines that the TEAM participant or a downstream participant:

(1) Has failed to comply with any of the terms of TEAM, included in this subpart.

(2) Has failed to comply with any applicable Medicare program requirement, rule, or regulation.

(3) Has taken any action that threatens the health or safety of a beneficiary or other patient.

(4) Has submitted false data or made false representations, warranties, or certifications in connection with any aspect of TEAM.

(5) Has undergone a change in control that presents a program integrity risk.

(6) Is subject to any sanctions of an accrediting organization or a Federal, State, or local government agency.

(7) Is subject to investigation or action by HHS (including the HHS Office of Inspector General and CMS) or the Department of Justice due to an allegation of fraud or significant misconduct, including any of the following:

(i) Being subject to the filing of a complaint or filing of a criminal charge.

(ii) Being subject to an indictment.

(iii) Being named as a defendant in a False Claims Act qui tam matter in which the Federal government has intervened, or similar action.

(8) Has failed to demonstrate improved performance following any remedial action imposed under this section.

(9) Has misused or disclosed beneficiary-identifiable data in a manner that violates any applicable statutory or regulatory requirements or that is otherwise non-compliant with the provisions of the TEAM data sharing agreement.

(b) Remedial actions. If CMS determines that one or more grounds for remedial action described in paragraph (a) of this section has taken place, CMS may take one or more of the following remedial actions:

(1) Notify the TEAM participant and, if appropriate, require the TEAM participant to notify its downstream participants of the violation.

(2) Require the TEAM participant to provide additional information to CMS or its designees.

(3) Subject the TEAM participant to additional monitoring, auditing, or both.

(4) Prohibit the TEAM participant from distributing TEAM payments, as applicable.

(5) Require the TEAM participant to terminate, immediately or by a deadline specified by CMS, its agreement with a downstream participant with respect to TEAM.

(6) Require the TEAM participant to submit a corrective action plan in a form and manner and by a date specified by CMS.

(7) Discontinue the provision of data sharing and reports to the TEAM participant.

(8) Recoup TEAM payments.

(9) Reduce or eliminate a TEAM payment otherwise owed to the TEAM participant.

(10) Such other action as may be permitted under the terms of this part.

§ 512.594 Limitations on review.

There is no administrative or judicial review under sections 1869 or 1878 of the Act or otherwise for all of the following:

(a) The selection of models for testing or expansion under section 1115A of the Act.

(b) The selection of organizations, sites, or participants to test TEAM, including a decision by CMS to remove a TEAM participant or to require a TEAM participant to remove a downstream participant from TEAM.

(c) The elements, parameters, scope, and duration of testing or dissemination, including without limitation the following:

(1) The selection of quality performance standards for TEAM by CMS.

(2) The methodology used by CMS to assess the quality of care furnished by the TEAM participant.

(3) The methodology used by CMS to attribute TEAM beneficiaries to the TEAM participant, if applicable.

(d) Determinations regarding budget neutrality under section 1115A(b)(3) of the Act.

(e) The termination or modification of the design and implementation of TEAM under section 1115A(b)(3)(B) of the Act.

(f) Determinations about expansion of the duration and scope of TEAM under section 1115A(c) of the Act, including the determination that TEAM is not expected to meet criteria described in paragraph (a) or (b) of this section.

§ 512.595 Bankruptcy and other notifications.

(a) Notice of bankruptcy. If the TEAM participant has filed a bankruptcy petition, whether voluntary or involuntary, the TEAM participant must provide written notice of the bankruptcy to CMS and to the U.S. Attorney's Office in the district where the bankruptcy was filed, unless final payment has been made by either CMS or the TEAM participant under the terms of TEAM and all administrative or judicial review proceedings relating to any TEAM payments have been fully and finally resolved.

(1) The notice of bankruptcy must be sent by certified mail no later than 5 days after the petition has been filed and must contain a copy of the filed bankruptcy petition (including its docket number).

(2) The notice to CMS must be addressed to the CMS Office of Financial Management at 7500 Security Boulevard, Mailstop C3-01-24, Baltimore, MD 21244 or such other address as may be specified on the CMS website for purposes of receiving such notices.

(b) Notice of legal name change. A TEAM participant must furnish written notice to CMS within 30 days of any change in its legal name becomes effective. The notice of legal name change must meet all of the following:

(1) Be in a form and manner specified by CMS.

(2) Include a copy of the legal document effecting the name change, which must be authenticated by the appropriate State official.

(c) Notice of change in control. (1) A TEAM participant must furnish written notice to CMS in a form and manner specified by CMS at least 90 days before any change in control becomes effective.

(2) If CMS determines, in accordance with § 512.592(a)(5), that a TEAM participant's change in control would present a program integrity risk, CMS may—

(i) Take remedial action against the TEAM participant under § 512.160(b).

(ii) Require immediate reconciliation and payment of all monies owed to CMS by a TEAM participant that is subject to a change in control.

§ 512.596 Termination of TEAM or TEAM participant from model by CMS.

(a) Termination of TEAM. (1) CMS may terminate TEAM for reasons including, but not limited to, the following:

(i) CMS determines that it no longer has the funds to support TEAM.

(ii) CMS terminates TEAM in accordance with section 1115A(b)(3)(B) of the Act.

(2) If CMS terminates TEAM, CMS provides written notice to the TEAM participant specifying the grounds for termination and the effective date of such termination.

(b) Notice of a TEAM participant's termination from TEAM. If a TEAM participant receives notification that it has been terminated from TEAM and wishes to dispute the termination, it must provide a written notice to CMS requesting review of the termination within 10 calendar days of the notice.

(1) CMS has 30 days to respond to the TEAM participant's request for review.

(2) If the TEAM participant fails to notify CMS, the termination is deemed final.

§ 512.600 Basis and scope of subpart.

(a) Basis. This subpart implements the expansion of the Comprehensive Care for Joint Replacement (CJR) Model under section 1115A(c) of the Act. Except as specifically noted in this subpart, the regulations under this subpart do not affect the applicability of other provisions affecting providers and suppliers under Medicare FFS, including the applicability of provisions regarding payment, coverage, and program integrity.

(b) Scope. This subpart sets forth the following:

(i) Participation in CJR-X.

(ii) Scope of episodes.

(iii) Pricing methodology.

(iv) Quality measures and quality reporting requirements.

(v) Reconciliation and review processes.

(vi) Data Sharing and other requirements.

(vii) Financial arrangements and beneficiary incentives.

(viii) Medicare program waivers.

(c) Applicability. Except as otherwise specified in this subpart, CJR-X participants are subject to the standard provisions for Innovation Center models specified in subpart A of this part 512 and in subpart K of part 403 of this chapter.

§ 512.605 Definitions.

For the purposes of this subpart, the following definitions are applicable unless otherwise stated:

AAPM stands for Advanced Alternative Payment Model.

AAPM option means the advanced alternative payment model option for CJR-X participants that provide their CMS EHR Certification ID and attest to their use of CEHRT in accordance with § 512.615.

ACO means an accountable care organization, as defined at § 425.20 of this chapter.

ACO participant has the meaning set forth in § 425.20 of this chapter.

ACO provider/supplier has the meaning set forth in § 425.20 of this chapter.

Acute care hospital means a provider subject to the prospective payment system specified in § 412.1(a)(1) of this chapter.

Age bracket risk adjustment factor means the coefficient of risk associated with a patient's age bracket, calculated as described in § 512.645(a)(1).

Aggregated reconciliation target price means the sum of the reconciliation target prices for all episodes attributed to a CJR-X participant for the applicable performance year.

Alignment payment means a payment from a CJR-X collaborator to a CJR-X participant under a sharing arrangement, for the sole purpose of sharing the CJR-X participant's responsibility for making repayments to Medicare.

Anchor hospitalization means the initial hospital stay upon admission for a lower extremity joint replacement for which the institutional claim is billed through the inpatient prospective payment system (IPPS).

Anchor procedure means a TKA or THA procedure that is permitted and paid for by Medicare when performed in a hospital outpatient department (HOPD) and billed through the Hospital Outpatient Prospective Payment System (OPPS).

APM stands for Alternative Payment Model as defined in § 414.1305 of this chapter.

Baseline episode spending means the total episode spending by all providers and suppliers associated with a given MS-DRG/HCPCS episode type for all hospitals in a given region during the baseline period.

Baseline period means the 3-year historical period CMS uses to construct the preliminary target price and reconciliation target price for a given performance year.

Baseline year means any one of the three years included in the baseline period.

Benchmark price means the average standardized episode spending by all providers and suppliers associated with an MS-DRG/HCPCS episode type for all hospitals in a defined region during the applicable baseline period.

Beneficiary economic risk adjustment factor means the coefficient of risk associated with a patient's economic status, calculated as described in § 512.645(a)(3).

CCN stands for CMS certification number.

CDI stands for Community Deprivation Index.

CEHRT means certified electronic health record technology that meets the requirements set forth in § 414.1305 of this chapter.

CJR stands for the Comprehensive Care for Joint Replacement Model, that was the Phase I episode-based payment model test by the Innovation Center from April 2016 to December 2024.

CJR-X stands for the Comprehensive Care for Joint Replacement Expanded Model.

CJR-X activities mean any activity related to promoting accountability for the quality, cost, and overall care for CJR-X beneficiaries and performance in the model, including managing and coordinating care, encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery, or carrying out any other obligation or duty under the model.

CJR-X beneficiary means a beneficiary who meets the beneficiary inclusion criteria in § 512.620.

CJR-X collaborator means an ACO or one of the following Medicare-enrolled individuals or entities that enters into a sharing arrangement:

(1) Skilled Nursing Facility (SNF).

(2) Home Health Agency (HHA).

(3) Long-Term Care Hospital (LTCH).

(4) Inpatient Rehabilitation Facility (IRF).

(5) Physician.

(6) Nonphysician practitioner.

(7) Therapist in private practice.

(8) Comprehensive Outpatient Rehabilitation Facility (CORF).

(9) Provider of outpatient therapy services.

(10) Physician Group Practice (PGP).

(11) Hospital.

(12) Critical Access Hospital (CAH).

(13) Non-Physician Provider Group Practice (NPPGP).

(14) Therapy Group Practice (TGP).

CJR-X data sharing agreement means an agreement between the CJR-X participant and CMS that includes the terms and conditions for any beneficiary-identifiable data shared with the CJR-X participant under § 512.665.

CJR-X HCC count risk adjustment factor means the CJR-X Hierarchical Condition Category count that is a categorical risk adjustment variable that reflects a beneficiary's overall health status during a 180-day lookback period that groups similar diagnoses into one related category and counts the total number of diagnostic categories that apply to the beneficiary.

CJR-X participant means an acute care hospital located in any of the 50 United States, District of Columbia, or U.S. Territories that initiates LEJR episodes and is eligible to be paid under both the IPPS and OPPS, unless it meets an exception in § 512.610(b).

CJR-X payment means a payment made by CMS only to CJR-X participants, or a payment adjustment made only to payments made to CJR-X participants, under the terms of CJR-X that is not applicable to any other providers or suppliers.

CJR-X reconciliation report means the report prepared after each reconciliation that CMS provides to each CJR-X participant notifying the CJR-X participant of the outcome of the reconciliation.

Clinician engagement list means the list of eligible clinicians or MIPS eligible clinicians that participate in CJR-X activities and have a contractual relationship with the CJR-X participant, and who are not listed on the financial arrangements list, as described in § 512.615(c).

CMS Electronic Health Record (EHR) Certification ID means the identification number that represents the combination of Certified Health Information Technology that is owned and used by providers and hospitals to provide care to their patients and is generated by the Certified Health Information Technology Product List.

Collaboration agent means an individual or entity that is not a CJR-X collaborator and that is either of the following:

(1) A member of a PGP, NPPGP, or TGP that has entered into a distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a CJR-X collaborator.

(2) An ACO participant or ACO provider/supplier that has entered into a distribution arrangement with the same ACO in which it is participating, and where the ACO is a CJR-X collaborator.

Composite quality score (CQS) means a score computed for each CJR-X participant to summarize the CJR-X participant's level of quality performance on specified quality measures as described in § 512.635.

CORF stands for comprehensive outpatient rehabilitation facility.

Critical access hospital (CAH) means a hospital designated under subpart F of part 485 of this chapter.

Discount factor means a set percentage included in the preliminary target price and adjusted for quality at reconciliation as described at § 512.645(g).

Distribution arrangement means a financial arrangement between a CJR-X collaborator that is an ACO, PGP, NPPGP, or TGP and a collaboration agent for the sole purpose of distributing some or all of a gainsharing payment received by the ACO, PGP, NPPGP, or TGP.

Distribution payment means a payment from a CJR-X collaborator that is an ACO, PGP, NPPGP, or TGP to a collaboration agent, under a distribution arrangement, composed only of gainsharing payments.

DME stands for durable medical equipment.

Downstream collaboration agent means an individual who is not a CJR-X collaborator or a collaboration agent and who is a member of a PGP, NPPGP, or TGP that has entered into a downstream distribution arrangement with the same PGP, NPPGP, or TGP in which he or she is an owner or employee, and where the PGP, NPPGP, or TGP is a collaboration agent.

Downstream distribution arrangement means a financial arrangement between a collaboration agent that is both a PGP, NPPGP, or TGP and an ACO participant and a downstream collaboration agent for the sole purpose of sharing a distribution payment received by the PGP, NPPGP, or TGP.

Downstream participant means an individual or entity that has entered into a written arrangement with a CJR-X participant, CJR-X collaborator, collaboration agent, or downstream collaboration agent under which the downstream participant engages in one or more CJR-X activities.

Dually eligible beneficiary means a beneficiary enrolled in both Medicare and full Medicaid benefits.

EHR stands for electronic health record.

Eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Episode means all Medicare Part A and B items and services described in § 512.625(b) (and excluding the items and services described in § 512.625(c)) that are furnished to a CJR-X beneficiary during the time period that begins on the date of the beneficiary's admission to an anchor hospitalization or the date of the anchor procedure, as described at § 512.630(c), and ends on the 90th day following the date of discharge from the anchor hospitalization or anchor procedure, as described at § 512.630(d).

Episode type means the subset of episodes that are associated with a given MS-DRG/HCPCS, as set forth at § 512.640(a)(1).

Final normalization factor means the mathematical mean of the benchmark price for each MS-DRG/HCPCS episode type and region divided by the mean of the risk-adjusted benchmark price for the same MS-DRG/HCPCS episode type and region.

Financial arrangements list means the list of eligible clinicians or MIPS eligible clinicians that have a financial arrangement with the CJR-X participant, CJR-X collaborator, collaboration agent, and downstream collaboration agent, as described in § 512.615(b).

Gainsharing payment means a payment from a CJR-X participant to a CJR-X collaborator, under a sharing arrangement, composed of only reconciliation payments, internal cost savings, or both.

HCPCS stands for Healthcare Common Procedure Coding System and means the system used to bill for items and services.

HHA means a Medicare-enrolled home health agency.

High-cost outlier cap means the CMS-applied episode spending cap at the 99th percentile of regional spending for a given MS DRG/HCPCS episode type, region, and baseline year.

Hospital means a hospital as defined in section 1886(d)(1)(B) of the Act.

Hospital discharge planning means the standards set forth in § 482.43 of this chapter.

ICD-CM stands for International Classification of Diseases, Clinical Modification.

Inpatient measure composite quality score means the sum of inpatient quality measure point values capped at 20 points.

Internal cost savings means the measurable, actual, and verifiable cost savings realized by the CJR-X participant resulting from care redesign undertaken by the CJR-X participant in connection with providing items and services to CJR-X beneficiaries within an episode. Internal cost savings does not include savings realized by any individual or entity that is not the CJR-X participant.

IPF stands for inpatient psychiatric facility.

IPPS stands for Inpatient Prospective Payment System, and means the payment system for subsection (d) hospitals as defined in section 1886(d)(1)(B) of the Act.

IRF stands for inpatient rehabilitation facility.

LIS stands for Medicare Part D Low-Income Subsidy.

Lower-extremity joint replacement (LEJR) means any hip, knee, or ankle replacement that is paid under MS-DRG 469, 470, 521, or 522 through the IPPS or HCPCS code 27447 or 27130 through the OPPS.

Low-volume hospital means a hospital identified by CMS as having fewer than 31 LEJR episodes during the applicable baseline period.

LTCH stands for long-term care hospital as defined in section 1861(ccc) of the Act.

Medicare severity diagnosis-related group (MS-DRG) means, for the purposes of this model, the classification of inpatient hospital discharges updated in accordance with § 412.10 of this chapter.

Medicare-dependent, small rural hospital (MDH) means a specific type of hospital that meets the classification criteria specified under § 412.108 of this chapter.

Member of the NPPGP or NPPGP member means a nonphysician practitioner or therapist who is an owner or employee of an NPPGP and who has reassigned to the NPPGP his or her right to receive Medicare payment.

Member of the PGP or PGP member means a physician, nonphysician practitioner, or therapist who is an owner or employee of the PGP and who has reassigned to the PGP his or her right to receive Medicare payment.

Member of the TGP or TGP member means a therapist who is an owner or employee of a TGP and who has reassigned to the TGP his or her right to receive Medicare payment.

MIPS stands for Merit-based Incentive Payment System

MIPS eligible clinician means a clinician as defined in § 414.1305 of this chapter.

Model start date means the start of the Phase II model test on January 1, 2028.

Non-AAPM option means the CJR-X participant's choice to not attest to the use of CEHRT as described in § 512.615.

Nonphysician practitioner means one of the following:

(1) A physician assistant who satisfies the qualifications set forth at § 410.74(a)(2)(i) and (ii) of this chapter.

(2) A nurse practitioner who satisfies the qualifications set forth at § 410.75(b) of this chapter.

(3) A clinical nurse specialist who satisfies the qualifications set forth at § 410.76(b) of this chapter.

(4) A certified registered nurse anesthetist (as defined at § 410.69(b)).

(5) A clinical social worker (as defined at § 410.73(a)).

(6) A registered dietician or nutrition professional (as defined at § 410.134).

NPI stands for National Provider Identifier.

NPPGP stands for non-physician provider group practice and means an entity that is enrolled in Medicare as a group practice, includes at least one owner or employee who is a nonphysician practitioner, does not include a physician owner or employee, and has a valid and active TIN.

Net payment reconciliation amount (NPRA) means the dollar amount calculated in accordance with § 512.650(c).

OIG stands for the Department of Health and Human Services' Office of Inspector General.

OP means an outpatient procedure for which the institutional claim is billed by the hospital through the OPPS.

OPPS stands for the Outpatient Prospective Payment System.

Outpatient composite quality score means the sum of outpatient quality measure points values, capped at 20 points.

Overall composite quality score means the sum of the weighted average of the inpatient measure composite quality score and the outpatient measure composite quality score, capped at 20 points.

PAC stands for post-acute care.

PAC provider is a home health agency (HHA), skilled nursing facility (SNF), inpatient rehabilitation facility (IRF), or long-term care hospital (LTCH), as defined in section 1899B(a)(2) of the Act.

Performance year (PY) means a 12-month period beginning on January 1 and ending on December 31 to align with the calendar year.

Performance year spending means the sum of standardized Medicare claims payments during a performance year for the items and services that are included in the episode in accordance with § 512.625(b), excluding the items and services described in § 512.625(c).

PGP stands for physician group practice.

Physician has the meaning set forth in section 1861(r) of the Act.

Preliminary target price means the CMS-set financial amount provided to the CJR-X participant prior to the start of the performance year, that is subject to adjustment at reconciliation, as set forth at § 512.640.

Prospective normalization factor means the multiplier used by CMS in the preliminary target price calculation to ensure that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, calculated as set forth in § 512.640(b)(6).

Prospective trend factor means the multiplier used by CMS in the preliminary target price calculation to estimate changes in spending patterns between the baseline period and the performance year, calculated as set forth in § 512.640(b)(7).

Provider of outpatient therapy services means an entity that is enrolled in Medicare as a provider of therapy services and furnishes one or more of the following:

(1) Outpatient physical therapy services as defined in § 410.60 of this chapter.

(2) Outpatient occupational therapy services as defined in § 410.59 of this chapter.

(3) Outpatient speech-language pathology services as defined in § 410.62 of this chapter.

Reconciliation payment amount means the amount that CMS may pay to a CJR-X participant after reconciliation as determined in accordance with § 512.650(g).

Reconciliation target price means the target price applied to an episode at reconciliation, as determined in accordance with § 512.645.

Region means one of the nine U.S. census divisions, as defined by the U.S. Census Bureau, with the U.S. territories included in Census Division 9.

Reorganization event means a merger, consolidation, spin-off or other restructuring that results in a new hospital entity under a given CCN.

Repayment amount means the amount that the CJR-X participant may owe to Medicare after reconciliation as determined in accordance with § 512.650(g).

Retrospective trend factor means the multiplier CMS uses in its reconciliation target price calculation to estimate realized changes in spending patterns during the performance year, calculated as set forth in § 512.645(f).

Rural hospital means an IPPS hospital that meets one of the following criteria:

(1) Is located in a rural area as defined under § 412.64 of this chapter.

(2) Is located in a rural census tract defined under § 412.103(a)(1) of this chapter.

Safety net hospital means a hospital in the top 25th percentile in their region for percentage of Medicare LEJR episodes provided to dually eligible beneficiaries during the applicable baseline period.

Sharing arrangement means a financial arrangement between a CJR-X participant and a CJR-X collaborator for the sole purpose of making gainsharing payments or alignment payments under CJR-X.

SNF stands for skilled nursing facility as defined in section 1819(a) of the Act.

Sole community hospital (SCH) means a hospital that meets the classification criteria specified in § 412.92 of this chapter.

Swing-bed hospital means a hospital that meets the definition specified in § 413.114 of this chapter.

TAA stands for total ankle arthroplasty.

TGP or therapy group practice means an entity that is enrolled in Medicare as a therapy group in private practice, includes at least one owner or employee who is a therapist in private practice, does not include an owner or employee who is a physician or nonphysician practitioner, and has a valid and active TIN.

THA means total hip arthroplasty.

Therapist means one of the following individuals as defined at § 484.4 of this chapter:

(1) Physical therapist.

(2) Occupational therapist.

(3) Speech-language pathologist.

Therapist in private practice means a therapist that—

(1) Complies with the special provisions for physical therapists in private practice in § 410.60(c) of this chapter;

(2) Complies with the special provisions for occupational therapists in private practice in § 410.59(c) of this chapter; or

(3) Complies with the special provisions for speech-language pathologists in private practice in § 410.62(c) of this chapter.

TIN stands for taxpayer identification number.

TKA stands for total knee arthroplasty.

§ 512.610 Mandatory participation.

(a) General

(1) CJR-X participants, as defined in § 512.605, must participate in CJR-X, except as specified in paragraph (b) of this section.

(2) CJR-X participants will remain CJR-X participants, unless they no longer meet the definition of CJR-X participant, CMS terminates CJR-X, or the CJR-X participant receives notice of termination from CJR-X in accordance with § 512.610(c).

(b) Exclusions. CMS excludes from CJR-X hospitals that meet any of the following criteria:

(1) Is a TEAM participant as defined at § 512.505.

(2) Is located in the State of Maryland.

(c) CJR-X participant termination from CJR-X.

(1) CMS may in its sole discretion terminate a CJR-X participant's participation in the model immediately or upon advance notice if CMS determines:

(i) One or more grounds for remedial action described in § 512.160(a) have occurred with respect to the CJR-X participant; or

(ii) The CJR-X participant's continued participation would be inconsistent with the purposes of CJR-X, the requirements of this part, or applicable law.

(2) If a CJR-X participant receives a notification from CMS of termination from CJR-X and wishes to dispute the termination, it must provide a written notice to CMS requesting review of the termination within 10 calendar days of the notice.

(i) CMS has 30 days to respond to the CJR-X participant's request for review.

(ii) If the CJR-X participant fails to provide timely notification to CMS, the termination is deemed final.

(3) Where a participant is terminated from the CJR-X Model, the participant hospital will remain liable for all negative NPRA generated from episodes of care that ended prior to termination.

§ 512.615 CJR-X APM options.

(a) APM options. A CJR-X participant may choose either of the following options based on their CEHRT use:

(1) AAPM option. A CJR-X participant selects the AAPM option by attesting in a form and manner and by a date specified by CMS to their use of CEHRT, as defined in § 414.1305 of this chapter, on an annual basis prior to the start of each performance year. In addition to submitting an annual CEHRT attestation, the CJR-X participant must:

(i) Provide their CMS electronic health record certification ID in a form and manner and by a date specified by CMS on annual basis prior to the end of each performance year; and

(ii) Retain documentation of their attestation to CEHRT use and provide access to the documentation in accordance with § 512.135.

(2) Non-AAPM option. CMS assigns the CJR-X participant to the non-AAPM option if the CJR-X participant does not satisfy the requirements set forth in § 512.615(a)(1).

(b) Financial arrangements list. A CJR-X participant with CJR-X collaborators, collaboration agents, or downstream collaboration agents during a performance year must submit to CMS a financial arrangements list in a form and manner and by a date specified by CMS on a quarterly basis for each performance year. The financial arrangements list must include the following:

(1) CJR-X collaborators. For each physician, nonphysician practitioner, or therapist who is a CJR-X collaborator during the applicable performance year:

(i) The name, TIN, and NPI of the CJR-X collaborator.

(ii) The start date and, if applicable, end date of the sharing arrangement between the CJR-X participant and the CJR-X collaborator.

(2) Collaboration agents. For each physician, nonphysician practitioner, or therapist who is a collaboration agent during the applicable performance year:

(i) The name, TIN, and NPI of the collaboration agent and the name and TIN of the CJR-X collaborator with which the collaboration agent has entered into a distribution arrangement.

(ii) The start date and, if applicable, end date of the distribution arrangement between the CJR-X collaborator and the collaboration agent.

(3) Downstream collaboration agents. For each physician, nonphysician practitioner, or therapist who is a downstream collaboration agent during the applicable performance year:

(i) The name, TIN, and NPI of the downstream collaboration agent and the name and TIN of the collaboration agent with which the downstream collaboration agent has entered into a downstream distribution arrangement.

(ii) The start date and, if applicable, end date of the downstream distribution arrangement between the collaboration agent and the downstream collaboration agent.

(c) Clinician engagement list. A CJR-X participant must submit to CMS a clinician engagement list in a form and manner and by a date specified by CMS on a quarterly basis during each performance year. The clinician engagement list must include the following:

(1) For each physician, nonphysician practitioner, or therapist who is not on a CJR-X participant's financial arrangements list during the performance year but who does have a contractual relationship with the CJR-X participant and participates in CJR-X activities during the applicable performance year:

(i) The name, TIN, and NPI of the physician, nonphysician practitioner, or therapist.

(ii) The start date and, if applicable, the end date of the contractual relationship between the physician, nonphysician practitioner, or therapist and the CJR-X participant.

(2) [Reserved]

(d) Attestation to no individuals. A CJR-X participant with no individuals that meet the criteria specified in paragraphs (b)(1) through (3) of this section for the financial arrangements list or paragraph (c) of this section for the clinician engagement list must attest in a form and manner and by a date specified by CMS that there are no financial arrangements or clinician engagements to report.

(e) Documentation requirements. A CJR-X participant that submits a financial arrangements list specified in paragraph (b) of this section or a clinician engagement list specified in paragraph (c) of this section must retain and provide access to the documentation in accordance with § 512.135.

§ 512.620 Beneficiary inclusion criteria.

(a) An individual is a CJR-X beneficiary if, based on a 180-day lookback period that ends on the day prior to an anchor procedure or anchor hospitalization, the individual—

(1) Is enrolled in Medicare Parts A and B;

(2) Has Medicare as their primary payer;

(3) Is not eligible for Medicare on the basis of having end stage renal disease, as described at § 406.13 of this chapter;

(4) Is not enrolled in any managed care plan (for example, Medicare Advantage, health care prepayment plans, or cost-based health maintenance organizations);

(5) Is not covered under a United Mine Workers of America health care plan; and

(6) Is in an episode.

(b) The episode is canceled in accordance with § 512.630(e) if at any time during the episode a beneficiary no longer meets all of the criteria in paragraph (a) of this section.

§ 512.622 Beneficiary notifications.

(a) CJR-X participant beneficiary notification—(1) Notification to beneficiaries. Each CJR-X participant must provide written notification to each CJR-X beneficiary of his or her inclusion in the CJR-X Model.

(2) Timing of notification. Prior to discharge from either the anchor hospitalization or the anchor procedure, as applicable, the CJR-X participant must provide the CJR-X beneficiary with a beneficiary notification as described in paragraph (a)(4) of this section.

(3) List of CJR-X beneficiaries who have received a notification. The CJR-X participant must be able to generate a list of all CJR-X beneficiaries who have received such notification, including the date on which the notification was provided to the CJR-X beneficiary, and provide such list to CMS or its designee upon request.

(4) Content of notification. The beneficiary notification must contain all of the following:

(i) A detailed explanation of CJR-X and how it might be expected to affect the CJR-X beneficiary's care.

(ii) That the CJR-X beneficiary retains freedom of choice to choose providers, suppliers, and services.

(iii) Explanation of how the CJR-X beneficiary can access care records and claims data through an available patient portal, if applicable, and how to share access to Blue Button® electronic health information with caregivers.

(iv) Explanation of the type of beneficiary-identifiable claims data the CJR-X participant may receive.

(v) A statement that all existing Medicare beneficiary protections continue to be available to the CJR-X beneficiary. These include the ability to report concerns of substandard care to Quality Improvement Organizations or the 1-800-MEDICARE helpline.

(vi) A list of the CJR-X collaborators with which the CJR-X participant has a sharing arrangement. This requirement may be fulfilled by the CJR-X participant including in the detailed notification a publicly available web address where the CJR-X beneficiary may access the list.

(b) CJR-X collaborator notice. The CJR-X participant must require every CJR-X collaborator that furnishes an item or service to a CJR-X beneficiary during an episode to provide written notice, to be developed by CMS, to the CJR-X beneficiary that describes general information on the quality and payment incentives under CJR-X, and the existence of the CJR-X collaborator's sharing arrangement.

(1) The notice must be provided no later than the time at which the CJR-X beneficiary first receives an item or service from the CJR-X collaborator during an episode. In circumstances where, due to the CJR-X beneficiary's condition, it is not feasible to provide notification at such time, the notification must be provided to the CJR-X beneficiary or his or her representative as soon as is reasonably practicable.

(2) The CJR-X collaborator must provide to CMS upon request, a list of all CJR-X beneficiaries who received such a notice, including the date on which the notice was provided to the CJR-X beneficiary.

(c) Discharge planning notice. The CJR-X participant must provide the CJR-X beneficiary with a written notice of any potential financial liability associated with non-covered items and services recommended or presented as an option as part of discharge planning, no later than the time that the CJR-X beneficiary discusses a particular post-acute care option or at the time the CJR-X beneficiary is discharged from an anchor procedure or anchor hospitalization, whichever occurs earlier.

(1) If the CJR-X participant knows or should have known that the CJR-X beneficiary is considering or has decided to receive a non-covered post-acute care service or other non-covered associated item or service, the CJR-X participant must notify the CJR-X beneficiary in writing that the item or service would not be covered by Medicare.

(2) If the CJR-X participant is discharging a CJR-X beneficiary to a SNF after an inpatient hospital stay, and the CJR-X beneficiary is being transferred to or is considering a SNF that would not qualify under the SNF 3-day waiver in § 512.695(b), the CJR-X participant must notify the CJR-X beneficiary in accordance with paragraph (b)(1) of this section that the CJR-X beneficiary will be responsible for payment for the items and services furnished by the SNF during that stay, except those items and services that would be covered by Medicare Part B during a non-covered inpatient SNF stay.

(d) Access to records and retention. The CJR-X participant must provide access to the list and notice described in paragraphs (a), (b), and (c), of this section to CMS, or its designees, in accordance with § 512.135.

§ 512.625 Scope of episode.

(a) Lower extremity joint replacement (LEJR) procedures. The MS-DRGs and HCPCS codes included in episodes are as follows:

(1) IPPS discharge under MS-DRG 469, 470, 521, or 522.

(2) OPPS claim for HCPCS codes 27130 or 27447.

(b) Included services. All Medicare Part A and B items and services are included in the episode, except as specified in paragraph (c) of this section. These items and services include, but are not limited to, the following:

(1) Physicians' services.

(2) Inpatient hospital services (including hospital readmissions).

(3) IPF services.

(4) LTCH services.

(5) IRF services.

(6) SNF services.

(7) HHA services.

(8) Hospital outpatient services.

(9) Outpatient therapy services.

(10) Clinical laboratory services.

(11) DME.

(12) Part B drugs and biologic, except for those excluded under paragraph (c) of this section.

(13) Hospice services.

(14) Part B professional claims dated in the 3 days prior to an anchor hospitalization if a claim for the surgical procedure for the same episode type is not detected as part of the hospitalization because the procedure was performed by the CJR-X participant on an outpatient basis, but the patient was subsequently admitted as an inpatient.

(c) Excluded services. The following items, services, and payments are excluded from the episode:

(1) Select items and services considered unrelated to the anchor hospitalization or the anchor procedure for episodes in the baseline period and performance year, including, but not limited to, the following:

(i) Inpatient hospital admissions for MS-DRGs that group to the following categories of diagnoses:

(A) Oncology.

(B) Trauma unrelated to the CJR-X episode.

(C) Organ transplant.

(D) Ventricular shunt.

(ii) Inpatient hospital admissions that fall into the following Major Diagnostic Categories (MDCs):

(A) MDC 02 (Diseases and Disorders of the Eye).

(B) MDC 14 (Pregnancy, Childbirth, and Puerperium).

(C) MDC 15 (Newborns).

(D) MDC 25 (Human Immunodeficiency Virus).

(2) New technology add-on payments, as defined in part 412, subpart F of this chapter for episodes in the baseline period and performance year.

(3) Transitional pass-through payments for medical devices as defined in § 419.66 of this chapter for episodes initiated in the baseline period and performance year.

(4) Hemophilia clotting factors provided in accordance with § 412.115 of this chapter for episodes in the baseline period and performance year.

(5) Part B payments for low-volume drugs, high-cost drugs and biologics, and blood clotting factors for hemophilia for episodes in the baseline period and performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biologic HCPCS codes that are billed in fewer than 31 episodes in total across all episodes in CJR-X during the baseline period;

(ii) Drug/biologic HCPCS codes that are billed in at least 31 episodes in the baseline period and have a mean allowed cost of greater than $25,000 per episode in the baseline period; and

(iii) HCPCS codes corresponding to clotting factors for hemophilia patients, identified in the quarterly average sales price file for certain Medicare Part B drugs and biologics as HCPCS codes with clotting factor equal to 1, HCPCS codes for new hemophilia clotting factors not included in the baseline period, and other HCPCS codes identified as hemophilia.

(6) Part B payments for low-volume drugs, high-cost drugs and biologics, and blood clotting factors for hemophilia for episodes initiated in the performance year, billed on outpatient, carrier, and DME claims, defined as—

(i) Drug/biologic HCPCS codes that were not captured in the baseline period and appear in 10 or fewer episodes in the relevant performance year;

(ii) Drug/biologic HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the relevant performance year, and have a mean cost of greater than $25,000 per episode in the relevant performance year; and

(iii) Drug/biologic HCPCS codes that were not included in the baseline period, appear in more than 10 episodes in the relevant performance year, have a mean cost of $25,000 or less per episode in the relevant performance year, and correspond to a drug/biologic that appears in the baseline period but was assigned a new HCPCS code between the baseline period and the relevant performance year.

(iv) HCPCS codes for new hemophilia clotting factors not included in the baseline period.

(d) CJR-X exclusions list. The list of excluded MS-DRGs, MDCs, and HCPCS codes is posted on the CMS website.

(e) Updating the CJR-X exclusions list. The list of excluded services is updated through rulemaking to reflect any of the following:

(1) Changes to the MS-DRGs under the IPPS.

(2) Coding changes.

(3) Other issues brought to CMS' attention.

§ 512.630 Determination of the episode.

(a) Timing of episodes. Episodes initiated on or after January 1, 2028.

(b) Episode attribution. All items and services included in the episode are attributed to the CJR-X participant at which the anchor hospitalization or anchor procedure, as applicable, occurs.

(c) Episode initiation. An episode is initiated by—

(1) A beneficiary's admission to a CJR-X participant for an anchor hospitalization that is paid under a MS-DRG specified in § 512.625(a); or

(2) A beneficiary's receipt of an anchor procedure billed under a HCPCS code specified in § 512.625(a). If an anchor hospitalization is initiated on the same day as or within 3 days of an outpatient procedure for the same episode type at the same CJR-X participant, the episode start date will be that of the outpatient procedure rather than the admission date, and an anchor procedure will not be initiated.

(d) Episode conclusion. (1) An episode ends on the 90th day following the date of the anchor procedure or the date of discharge from the anchor hospitalization, as applicable, with the date of the anchor procedure or the date of discharge from the anchor hospitalization being counted as the first day in the 90-day post-discharge period.

(2) [Reserved]

(e) Cancellation of an episode. The episode is canceled and is not included in the reconciliation calculation as specified in § 512.650 if any of the following occur:

(1) The beneficiary ceases to meet any criterion listed in § 512.620.

(2) The beneficiary dies at any point during the episode.

(3) The episode qualifies for cancellation due to extreme and uncontrollable circumstances. An extreme and uncontrollable circumstance occurs if both of the following criteria are met:

(i) The CJR-X participant has a CCN primary address that—

(A) Is located in an emergency area, as those terms are defined in section 1135(g) of the Act, for which the Secretary has issued a waiver under section 1135; and

(B) Is located in a county, parish, or tribal government designated in a major disaster declaration under the Stafford Act.

(ii) The date of admission to the anchor hospitalization or the date of the anchor procedure is during an emergency period (as defined in section 1135(g) of the Act) or in the 30 days before the date that the emergency period (as defined in section 1135(g) of the Act) begins.

(4) The beneficiary is in a TEAM episode and receives a LEJR procedure at a CJR-X participant during the 30-day post-discharge period after a TEAM anchor hospitalization or TEAM anchor procedure.

§ 512.635 Quality measures, composite quality score, and display of quality measures.

(a) Quality measures. CMS calculates the quality measures used to evaluate the CJR-X participant's performance using Medicare claims data or patient-reported outcomes data reported under existing CMS quality reporting programs, including but not limited to the Hospital Inpatient Quality Reporting Program and the Hospital Outpatient Quality Reporting Program. The following quality measures are used for public reporting and for determining the CJR-X participant's CQS as described in paragraph (b) of this section:

(1) For all inpatient episodes: Hospital-level Risk-Standardized Complication Rate following elective primary Total Hip Arthroplasty and/or Total Knee Arthroplasty (CMIT ID #350).

(2) For all outpatient episodes: Hospital Visits within 7 days of Hospital Outpatient Department Surgery (CMIT ID #344, OP-36).

(3) For all inpatient episodes: Hospital Consumer Assessment of Healthcare Providers and Systems Survey (HCAHPS) (CMIT ID #338).

(4) For all outpatient episodes: Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Survey (OAS CAHPS) (CMIT #162, OP-46).

(5) For all inpatient episodes: Hospital-Level Total Hip and/or Total Knee Arthroplasty Patient-Reported Outcome-Based Performance Measure (PRO-PM) (CMIT ID #1618).

(b) Calculation of the composite quality score (CQS). CMS calculates an overall composite quality score during reconciliation, capped at 20 points, for each CJR-X participant for the relevant performance year. The overall composite quality score equals the sum of the inpatient measure composite quality score, as described in paragraph (b)(1) of this section, and the outpatient measure composite quality score, as described in paragraph (b)(2) of this section.

(1) CMS calculates the inpatient measure composite quality score by summing the CJR-X participant's quality performance points for all of the following:

(i) The measure identified in paragraph (a)(1) of this section. This measure is weighted at 50 percent of the inpatient composite quality score.

(ii) The measure identified in paragraph (a)(3) of this section. This measure is weighted at 40 percent of the inpatient composite quality score.

(iii) The measure identified in paragraph (a)(5) of this section. This measure is weighted at 10 percent of the inpatient composite quality score.

(2) CMS calculates the outpatient measure composite quality score by summing the CJR-X participant's quality performance points for all of the following:

(i) The measure identified in paragraphs (a)(2) of this section. This measure is weighted at 50 percent of the outpatient composite quality score.

(ii) The measure identified in paragraphs (a)(4) of this section. This measure is weighted at 40 percent of the outpatient composite quality score.

(iii) The measure identified in paragraph (a)(5) of this section. This measure is weighted at 10 percent of the inpatient composite quality score.

(c) Quality performance points. CMS calculates quality performance points for each quality measure based on the CJR-X participant's performance relative to the distribution of performance of all hospitals that are eligible for payment under IPPS and meet the minimum patient case or survey count for that measure.

(1) For the measures described in paragraphs (a)(1) and (a)(2) of this section, CMS assigns the CJR-X participant measure value to a performance percentile and then quality performance points are assigned based on the following performance percentile scale:

(i) 10.00 for ≥90th.

(ii) 9.25 for ≥80th and <90th.

(iii) 8.50 for ≥70th and <80th.

(iv) 7.75 for ≥60th and <70th.

(v) 7.00 for ≥50th and <60th.

(vi) 6.25 for ≥40th and <50th.

(vii) 5.50 for ≥30th and <40th.

(viii) 0.00 for <30th.

(2) For the measure described in paragraphs (a)(3) and (a)(4) of this section, CMS assigns the CJR-X participant measure value to a performance percentile and then quality performance points are assigned based on the following performance percentile scale:

(i) 8.00 for ≥90th.

(ii) 7.40 for ≥80th and <90th.

(iii) 6.80 for ≥70th and <80th.

(iv) 6.20 for ≥60th and <70th.

(v) 5.60 for ≥50th and <60th.

(vi) 5.00 for ≥40th and <50th.

(vii) 5.40 for ≥30th and <40th.

(viii) 0.00 for <30th.

(3) For the measure described in paragraph (a)(5) of this section, CMS assigns the CJR-X participant's measure value to a performance percentile and then CMS assigns quality performance points based on the following performance percentile scale:

(i) 2.00 for ≥90th.

(ii) 1.85 for ≥80th and <90th.

(iii) 1.70 for ≥70th and <80th.

(iv) 1.55 for ≥60th and <70th.

(v) 1.40 for ≥50th and <60th.

(vi) 1.25 for ≥40th and <50th.

(vii) 1.10 for ≥30th and <40th.

(viii) 0.00 for <30th.

(d) Exception for hospitals without a measure value.

(1) If the CJR-X participant is without a measure value that would allow CMS to assign quality performance points for that quality measure, CMS assigns the 50th percentile quality performance points to the CJR-X participant for the individual measure.

(2) A CJR-X participant will not have a measure value for—

(i) The measure described in paragraph (a)(1) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(ii) The measure described in paragraph (a)(2) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(iii) The measure described in paragraph (a)(3) of this section, if the CJR-X participant does not meet the minimum 100 completed surveys.

(iv) The measure described in paragraph (a)(4) of this section, if the CJR-X participant does not meet the minimum 100 completed surveys.

(v) The measure described in paragraph (a)(5) of this section, if the CJR-X participant does not meet the minimum 25 patient case count.

(e) Display of quality measures.

(1) CMS displays quality measure results on the publicly available CMS website that is specific to CJR-X, in a form and manner consistent with other publicly reported measures.

(2) CMS shares quality measures with the CJR-X participant prior to display on the CMS website. Quality measure performance in performance year 1 will be reported in Calendar Year 2029. Subsequent years will be reported in the year following the performance period.

§ 512.640 Determination of preliminary target prices.

(a) Preliminary target price application. CMS establishes preliminary target prices for CJR-X participants for each performance year of the model as follows:

(1) MS-DRG/HCPCS episode type. CMS uses the MS-DRGs and, as applicable, HCPCS codes specified in § 512.625(d) when calculating the preliminary target prices for each MS-DRG/HCPCS episode type.

(i) CMS determines a separate preliminary target price for each of the MS-DRGs specified in § 512.625(a)(1).

(ii) Preliminary target prices for MS-DRG 470 include HCPCS 27130 and 27447.

(2) Applicable time period for preliminary target prices. CMS calculates preliminary target prices for each MS-DRG/HCPCS episode type and region for each performance year and applies the preliminary target price to each episode based on the episode's date of discharge from the anchor hospitalization or the episode's date of the anchor procedure, as applicable.

(3) Episodes that begin in one performance year and end in the subsequent performance year. CMS applies the preliminary target price to the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure, as applicable, and reconciles the episode based on the date of discharge from the anchor hospitalization or the date of the anchor procedure.

(4) Exception for low-volume hospitals. CJR-X participants with fewer than 31 episodes in the applicable baseline period do not receive preliminary target prices for the upcoming performance year and are not eligible for reconciliation for that performance year.

(b) Preliminary target price calculation.

(1) CMS calculates preliminary target prices based on average baseline episode spending for the region where the CJR-X participant is located. The region CMS uses for calculating the preliminary target price corresponds to the U.S. Census Division associated with the primary address of the CCN of the CJR-X participant, and CMS bases the regional episode spending amount on all hospitals within the region, except for those excluded from CJR-X as specified in § 512.610(b).

(2) CMS uses the following baseline periods to determine baseline episode spending:

(i) Performance Year 1: Episodes with anchor hospitalization start dates or anchor procedure dates beginning on or after January 1, 2024 and anchor hospitalization discharge dates or anchor procedure dates between January 1, 2024 and December 31, 2026.

(ii) Performance Year 2 and future performance years: CMS uses the same cadence described in paragraph (i) of this section to roll the baseline period forward a year to construct the baseline period.

(3) CMS calculates the benchmark price as the weighted average of baseline episode spending, applying the following weights:

(i) Baseline episode spending from baseline year 1 is weighted at 17 percent.

(ii) Baseline episode spending from baseline year 2 is weighted at 33 percent.

(iii) Baseline episode spending from baseline year 3 is weighted at 50 percent.

(4) Exception for high episode spending. CMS applies a high-cost outlier cap to baseline episode spending at the 99th percentile of regional spending for each of the MS-DRG/HCPCS episode types specified in § 512.640(a)(1) for each baseline year individually.

(5) Exclusion of incentive programs and add-on payments under existing Medicare payment systems. CMS excludes certain Medicare incentive programs and add-on payments from baseline episode spending by using, with certain modifications, the CMS Price (Payment) Standardization Detailed Methodology.

(6) Prospective normalization factor. Based on the episodes in the baseline period, CMS calculates a prospective normalization factor, at the MS-DRG/HCPCS region level, so that the average of the total risk-adjusted benchmark price does not exceed the average of the total non-risk adjusted benchmark price, by—

(i) Applying risk adjustment multipliers, as specified in § 512.645(a)(1) through (3), to baseline period episodes to calculate the estimated risk-adjusted target price for all performance year episodes; and

(ii) Dividing the mean of the benchmark price for each episode across all hospitals and regions by the mean of the estimated risk-adjusted benchmark price calculated in § 512.640(b)(6)(i) for the same episode types across all hospitals and regions.

(7) Prospective trend factor. CMS determines the prospective trend factor for each MS-DRG/HCPCS episode type and region as the average (arithmetic mean) of the multiplier, as calculated in paragraph (7)(i) of this section, for that MS-DRG/HCPCS episode type and region and the national average for that MS-DRG/HCPCS episode type.

(i) CMS calculates a multiplier for each MS-DRG/HCPCS episode type and region and applies that multiplier to the most recent calendar year of the applicable baseline period. CMS calculates the multiplier using linear regression on the logarithmically transformed average regional spending for each MS-DRG/HCPCS episode type in the baseline years at both the regional and national level.

(ii) CMS exponentiates the coefficient from the linear regression (as described in paragraph (7)(i) of this section) to calculate the estimated annual change (where an exponentiated coefficient of 1 signifies no change) in average regional spending for each MS-DRG/HCPCS episode type from year to year.

(8) Discount factor. CMS applies a discount factor of 2 percent to the CJR-X participant's preliminary target price.

(9) Notification of preliminary target prices. CMS provides written notice, in a form and manner specified by CMS, to the CJR-X participant of its preliminary target prices for each MS-DRG/HCPCS episode type for each region prior to the start of the performance year in which the preliminary target prices apply.

§ 512.645 Determination of reconciliation target prices.

(a) Risk adjustment factors. CMS risk adjusts the preliminary target prices calculated in accordance with § 512.640 at the beneficiary level using the following: a CJR-X Hierarchical Condition Category (HCC) count risk adjustment factor, an age bracket risk adjustment factor, a beneficiary economic risk adjustment factor, and the additional factors specified in paragraph (a)(6) of this section, and at the hospital level using a hospital bed size risk adjustment factor and a safety net hospital risk adjustment factor.

(1) The CJR-X HCC count risk adjustment factor uses five variables, representing beneficiaries with zero, one, two, three, or four or more CMS-HCC conditions based on a 180-day lookback period that begins 181 days prior to the anchor hospitalization or anchor procedure and ends on the day prior to the anchor hospitalization or anchor procedure.

(2) The age bracket risk adjustment factor uses four variables, representing beneficiaries in the following age groups as of the first day of the episode:

(i) Less than 65 years.

(ii) 65 to less than 75 years.

(iii) 75 years to less than 85 years.

(iv) 85 years or more.

(3) The beneficiary economic risk adjustment factor uses two variables, representing beneficiaries that, as of the first day of the episode:

(i) Meet one or more of the following economic measures:

(A) National CDI above the 80th percentile.

(B) Eligibility for the low-income subsidy.

(C) Eligibility for full Medicaid benefits.

(ii) Do not meet any of the three economic measures in paragraph (a)(3)(i) of this section.