Medicare Program; Criteria and Standards for Evaluating Intermediary and Carrier Performance: Millennium Compliance

I. Background

Section 1816 of the Social Security Act (the Act) authorizes us to enter into agreements with fiscal intermediaries to determine whether medical services are covered under Medicare and determine correct payment amounts. The intermediaries then make payments to the health care providers on behalf of the beneficiaries. Section 1816(f) of the Act requires us to develop criteria, standards, and procedures to evaluate an intermediary's performance of its functions under its agreement. Section 1842 of the Act authorizes us to enter into contracts with carriers for the payment of Part B claims for Medicare-covered services. Under

section 1842(b)(2) of the Act, we are required to develop criteria, standards, and procedures to evaluate a carrier's performance of its functions under its contract. We refer to these fiscal intermediaries and carriers as Medicare ``contractors''. On September 7, 1994, we published in the Federal Register (59 FR 46258) the criteria and standards to be used to evaluate the performance of our contractors under their agreements or contracts with us. The criteria and standards we published help us determine if a contractor's performance measures up to the expectations that we have for the activities being evaluated to ensure that our beneficiaries and providers are being properly served. We announced that we would use the results of the performance evaluations in our contract management activities, which might result in the initiation of administrative actions. These actions could include entering into, renewing/extending, or terminating contracts or contract amendments with our contractors. We also announced that we would consider revising the criteria and standards if changes were required as a result of administrative mandate or congressional action. If changes are necessary, we are required to issue a Federal Register notice before implementing a change.

II. Provisions of This Notice

With the approach of the year 2000, we have been focusing on our readiness to move into the next century and taking all appropriate steps to ensure that Medicare claims are processed without interruption. Millennium compliance of all claims processing and related systems is our highest priority. We believe it is appropriate to add a requirement to our contracts and agreements with our Medicare contractors to ensure that all Medicare contractors are making the commitment and taking necessary action to meet our requirements in that regard. In addition, we are requiring each contractor to certify, under the normal penalties that apply to false certifications, that it has made all necessary systems changes and has tested its systems in accordance with the guidelines we have established. The normal penalties for false certification include criminal and/or civil prosecution as well as appropriate administrative action, not limited to suspension of the contractor from the Medicare program, as well as the termination or nonrenewal of a contract or agreement. Listed below are the revisions to the ``Administrative Activities'' criterion and section VII. ``Action Based on Performance Evaluations'' to incorporate the addition of the certification requirements for the contractors' systems changes. Under the ``Administrative Activities'' criterion in sections IV and V for fiscal intermediaries and carriers, respectively, the following introductory paragraph is added: ``A contractor must efficiently and effectively manage its operations to ensure constant improvement in the way it does business. Proper systems security, ADP maintenance, and disaster recovery plans must be in place. It must also ensure that all necessary actions and system changes have been made and tested so that it is meeting established milestones along the critical path of HCFA's requirements for millennium compliance.'' Year 2000 compliant means information technology that accurately processes date and time data (including, but not limited to, calculating, comparing, and sequencing) from, into, and between the nineteenth, twentieth, and twenty-first centuries, and the years 1999 and 2000 and leap year calculations. Furthermore, Year 2000 compliant information technology, when used in combination with other information technology, must accurately process date and time data if the other information technology properly exchanges date and time data with it. [adapted from: FAR 39.002 Definitions] The remaining section of the criterion is unchanged, except for the reference to implementation reviews of ``Task management plans''. This reference should be to implementation reviews of ``Change management plans'' to conform with our recent implementation of the ``Change management system'' for issuing instructions to our contractors. We are also adding the following requirement to section VII. ``Action Based on Performance Evaluations'' after the existing requirements: ``A contractor must certify that it has made all necessary systems changes and has tested its systems in accordance with the guidelines HCFA has established.''

Authority: Section 1816(f) and 1842(b)(2) of the Social Security Act (42 U.S.C. 1395h and 1395u).

(Catalog of Federal Domestic Assistance Program No. 93.773 Medicare--Hospital Insurance Program; and No. 93.774, Medicare-- Supplementary Medical Insurance Program)

Dated: August 24, 1998. Nancy-Ann Min DeParle, Administrator, Health Care Financing Administration. [FR Doc. 98-32977 Filed 12-10-98; 8:45 am] BILLING CODE 4120-01-P