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U.S. Code as of:
01/19/04
Section 1320c-3. Functions of peer review organizations
(a) Review of professional activities; determination of payment;
determination of review authority; consultation with professional
health care practitioners; standards of health care; other duties
Any utilization and quality control peer review organization
entering into a contract with the Secretary under this part must
perform the following functions:
(1) The organization shall review some or all of the
professional activities in the area, subject to the terms of the
contract and subject to the requirements of subsection (d) of
this section, of physicians and other health care practitioners
and institutional and noninstitutional providers of health care
services in the provision of health care services and items for
which payment may be made (in whole or in part) under subchapter
XVIII of this chapter (including where payment is made for such
services to eligible organizations pursuant to contracts under
section 1395mm of this title, to Medicare Advantage organizations
pursuant to contracts under part C,)1(! and to prescription drug
sponsors pursuant to contracts under part D )1(! ) for the
purpose of determining whether -
(A) such services and items are or were reasonable and
medically necessary and whether such services and items are not
allowable under subsection (a)(1) or (a)(9) of section 1395y of
this title;
(B) the quality of such services meets professionally
recognized standards of health care; and
(C) in case such services and items are proposed to be
provided in a hospital or other health care facility on an
inpatient basis, such services and items could, consistent with
the provision of appropriate medical care, be effectively
provided more economically on an outpatient basis or in an
inpatient health care facility of a different type.
If the organization performs such reviews with respect to a type
of health care practitioner other than medical doctors, the
organization shall establish procedures for the involvement of
health care practitioners of that type in such reviews.
(2) The organization shall determine, on the basis of the
review carried out under subparagraphs (A), (B), and (C) of
paragraph (1), whether payment shall be made for services under
subchapter XVIII of this chapter. Such determination shall
constitute the conclusive determination on those issues for
purposes of payment under subchapter XVIII of this chapter,
except that payment may be made if -
(A) such payment is allowed by reason of section 1395pp of
this title;
(B) in the case of inpatient hospital services or extended
care services, the peer review organization determines that
additional time is required in order to arrange for
postdischarge care, but payment may be continued under this
subparagraph for not more than two days, but only in the case
where the provider of such services did not know and could not
reasonably have been expected to know (as determined under
section 1395pp of this title) that payment would not otherwise
be made for such services under subchapter XVIII of this
chapter prior to notification by the organization under
paragraph (3);
(C) such determination is changed as the result of any
hearing or review of the determination under section 1320c-4 of
this title; or
(D) such payment is authorized under section 1395x(v)(1)(G)
of this title.
The organization shall identify cases for which payment should
not be made by reason of paragraph (1)(B) only through the use of
criteria developed pursuant to guidelines established by the
Secretary.
(3)(A) Subject to subparagraphs (B) and (D), whenever the
organization makes a determination that any health care services
or items furnished or to be furnished to a patient by any
practitioner or provider are disapproved, the organization shall
promptly notify such patient and the agency or organization
responsible for the payment of claims under subchapter XVIII of
this chapter of such determination.
(B) The notification under subparagraph (A) with respect to
services or items disapproved by reason of subparagraph (A) or
(C) of paragraph (1) shall not occur until 20 days after the date
that the organization has -
(i) made a preliminary notification to such practitioner or
provider of such proposed determination, and
(ii) provided such practitioner or provider an opportunity
for discussion and review of the proposed determination.
(C) The discussion and review conducted under subparagraph
(B)(ii) shall not affect the rights of a practitioner or provider
to a formal reconsideration of a determination under this part
(as provided under section 1320c-4 of this title).
(D) The notification under subparagraph (A) with respect to
services or items disapproved by reason of paragraph (1)(B) shall
not occur until after -
(i) the organization has notified the practitioner or
provider involved of the determination and of the
practitioner's or provider's right to a formal reconsideration
of the determination under section 1320c-4 of this title, and
(ii) if the provider or practitioner requests such a
reconsideration, the organization has made such a
reconsideration.
If a provider or practitioner is provided a reconsideration, such
reconsideration shall be in lieu of any subsequent
reconsideration to which the provider or practitioner may be
otherwise entitled under section 1320c-4 of this title, but shall
not affect the right of a beneficiary from seeking
reconsideration under such section of the organization's
determination (after any reconsideration requested by the
provider or physician under clause (ii)).
(E)(i) In the case of services and items provided by a
physician that were disapproved by reason of paragraph (1)(B),
the notice to the patient shall state the following: "In the
judgment of the peer review organization, the medical care
received was not acceptable under the medicare program. The
reasons for the denial have been discussed with your physician."
(ii) In the case of services or items provided by an entity or
practitioner other than a physician, the Secretary may substitute
the entity or practitioner which provided the services or items
for the term "physician" in the notice described in clause (i).
(4)(A) The organization shall, after consultation with the
Secretary, determine the types and kinds of cases (whether by
type of health care or diagnosis involved, or whether in terms of
other relevant criteria relating to the provision of health care
services) with respect to which such organization will, in order
to most effectively carry out the purposes of this part, exercise
review authority under the contract. The organization shall
notify the Secretary periodically with respect to such
determinations. Each peer review organization shall provide that
a reasonable proportion of its activities are involved with
reviewing, under paragraph (1)(B), the quality of services and
that a reasonable allocation of such activities is made among the
different cases and settings (including post-acute-care settings,
ambulatory settings, and health maintenance organizations). In
establishing such allocation, the organization shall consider (i)
whether there is reason to believe that there is a particular
need for reviews of particular cases or settings because of
previous problems regarding quality of care, (ii) the cost of
such reviews and the likely yield of such reviews in terms of
number and seriousness of quality of care problems likely to be
discovered as a result of such reviews, and (iii) the
availability and adequacy of alternative quality review and
assurance mechanisms.
(B) The contract of each organization shall provide for the
review of services (including both inpatient and outpatient
services) provided by eligible organizations pursuant to a
risk-sharing contract under section 1395mm of this title (or that
is subject to review under section 1395ss(t)(3) of this title)
for the purpose of determining whether the quality of such
services meets professionally recognized standards of health
care, including whether appropriate health care services have not
been provided or have been provided in inappropriate settings and
whether individuals enrolled with an eligible organization have
adequate access to health care services provided by or through
such organization (as determined, in part, by a survey of
individuals enrolled with the organization who have not yet used
the organization to receive such services). The contract of each
organization shall also provide that with respect to health care
provided by a health maintenance organization or competitive
medical plan under section 1395mm of this title, the organization
shall maintain a beneficiary outreach program designed to apprise
individuals receiving care under such section of the role of the
peer review system, of the rights of the individual under such
system, and of the method and purposes for contacting the
organization. The previous two sentences shall not apply with
respect to a contract year if another entity has been awarded a
contract under subparagraph (C). Under the contract the level of
effort expended by the organization on reviews under this
subparagraph shall be equivalent, on a per enrollee basis, to the
level of effort expended by the organization on utilization and
quality reviews performed with respect to individuals not
enrolled with an eligible organization.
(C) The Secretary may provide, by contract under competitive
procurement procedures on a State-by-State basis in up to 25
States, for the review described in subparagraph (B) by an
appropriate entity (which may be a peer review organization
described in that subparagraph). In selecting among States in
which to conduct such competitive procurement procedures, the
Secretary may not select States which, as a group, have more than
50 percent of the total number of individuals enrolled with
eligible organizations under section 1395mm of this title. Under
a contract with an entity under this subparagraph -
(i) the entity must be, or must meet all the requirements
under section 1320c-1 of this title to be, a utilization and
quality control peer review organization (other than the
ability to perform review functions under this section that are
not described in subparagraph (B)),
(ii) the contract must meet the requirement of section
1320c-2(b)(3) of this title, and
(iii) the level of effort expended under the contract shall
be, to the extent practicable, not less than the level of
effort that would otherwise be required under the third
sentence of subparagraph (B) if this subparagraph did not
apply.
(5) The organization shall consult with nurses and other
professional health care practitioners (other than physicians
described in section 1395x(r)(1) of this title) and with
representatives of institutional and noninstitutional providers
of health care services, with respect to the organization's
responsibility for the review under paragraph (1) of the
professional activities of such practitioners and providers.
(6)(A) The organization shall, consistent with the provisions
of its contract under this part, apply professionally developed
norms of care, diagnosis, and treatment based upon typical
patterns of practice within the geographic area served by the
organization as principal points of evaluation and review, taking
into consideration national norms where appropriate. Such norms
with respect to treatment for particular illnesses or health
conditions shall include -
(i) the types and extent of the health care services which,
taking into account differing, but acceptable, modes of
treatment and methods of organizing and delivering care, are
considered within the range of appropriate diagnosis and
treatment of such illness or health condition, consistent with
professionally recognized and accepted patterns of care; and
(ii) the type of health care facility which is considered,
consistent with such standards, to be the type in which health
care services which are medically appropriate for such illness
or condition can most economically be provided.
As a component of the norms described in clause (i) or (ii), the
organization shall take into account the special problems
associated with delivering care in remote rural areas, the
availability of service alternatives to inpatient
hospitalization, and other appropriate factors (such as the
distance from a patient's residence to the site of care, family
support, availability of proximate alternative sites of care, and
the patient's ability to carry out necessary or prescribed
self-care regimens) that could adversely affect the safety or
effectiveness of treatment provided on an outpatient basis.
(B) The organization shall -
(i) offer to provide, several times each year, for a
physician representing the organization to meet (at a hospital
or at a regional meeting) with medical and administrative staff
of each hospital (the services of which are reviewed by the
organization) respecting the organization's review of the
hospital's services for which payment may be made under
subchapter XVIII of this chapter, and
(ii) publish (not less often than annually) and distribute to
providers and practitioners whose services are subject to
review a report that describes the organization's findings with
respect to the types of cases in which the organization has
frequently determined that (I) inappropriate or unnecessary
care has been provided, (II) services were rendered in an
inappropriate setting, or (III) services did not meet
professionally recognized standards of health care.
(7) The organization, to the extent necessary and appropriate
to the performance of the contract, shall -
(A)(i) make arrangements to utilize the services of persons
who are practitioners of, or specialists in, the various areas
of medicine (including dentistry, optometry, and podiatry), or
other types of health care, which persons shall, to the maximum
extent practicable, be individuals engaged in the practice of
their profession within the area served by such organization;
and
(ii) in the case of psychiatric and physical rehabilitation
services, make arrangements to ensure that (to the extent
possible) initial review of such services be made by a
physician who is trained in psychiatry or physical
rehabilitation (as appropriate).)2(!
(B) undertake such professional inquiries either before or
after, or both before and after, the provision of services with
respect to which such organization has a responsibility for
review which in the judgment of such organization will
facilitate its activities;
(C) examine the pertinent records of any practitioner or
provider of health care services providing services with
respect to which such organization has a responsibility for
review under paragraph (1); and
(D) inspect the facilities in which care is rendered or
services are provided (which are located in such area) of any
practitioner or provider of health care services providing
services with respect to which such organization has a
responsibility for review under paragraph (1).
(8) The organization shall perform such duties and functions
and assume such responsibilities and comply with such other
requirements as may be required by this part or under regulations
of the Secretary promulgated to carry out the provisions of this
part or as may be required to carry out section 1395y(a)(15) of
this title.
(9)(A) The organization shall collect such information relevant
to its functions, and keep and maintain such records, in such
form as the Secretary may require to carry out the purposes of
this part, and shall permit access to and use of any such
information and records as the Secretary may require for such
purposes, subject to the provisions of section 1320c-9 of this
title.
(B) If the organization finds, after reasonable notice to and
opportunity for discussion with the physician or practitioner
concerned, that the physician or practitioner has furnished
services in violation of section 1320c-5(a) of this title and the
organization determines that the physician or practitioner should
enter into a corrective action plan under section 1320c-5(b)(1)
of this title, the organization shall notify the State board or
boards responsible for the licensing or disciplining of the
physician or practitioner of its finding and of any action taken
as a result of the finding.
(10) The organization shall coordinate activities, including
information exchanges, which are consistent with economical and
efficient operation of programs among appropriate public and
private agencies or organizations including -
(A) agencies under contract pursuant to sections 1395h and
1395u of this title;
(B) other peer review organizations having contracts under
this part; and
(C) other public or private review organizations as may be
appropriate.
(11) The organization shall make available its facilities and
resources for contracting with private and public entities paying
for health care in its area for review, as feasible and
appropriate, of services reimbursed by such entities.
(12) Repealed. Pub. L. 103-432, title I, Sec. 156(a)(2)(A)(i),
Oct. 31, 1994, 108 Stat. 4440.
(13) Notwithstanding paragraph (4), the organization shall
perform the review described in paragraph (1) with respect to
early readmission cases to determine if the previous inpatient
hospital services and the post-hospital services met
professionally recognized standards of health care. Such reviews
may be performed on a sample basis if the organization and the
Secretary determine it to be appropriate. In this paragraph, an
"early readmission case" is a case in which an individual, after
discharge from a hospital, is readmitted to a hospital less than
31 days after the date of the most recent previous discharge.
(14) The organization shall conduct an appropriate review of
all written complaints about the quality of services (for which
payment may otherwise be made under subchapter XVIII of this
chapter) not meeting professionally recognized standards of
health care, if the complaint is filed with the organization by
an individual entitled to benefits for such services under such
subchapter (or a person acting on the individual's behalf). The
organization shall inform the individual (or representative) of
the organization's final disposition of the complaint. Before the
organization concludes that the quality of services does not meet
professionally recognized standards of health care, the
organization must provide the practitioner or person concerned
with reasonable notice and opportunity for discussion.
(15) During each year of the contract entered into under
section 1320c-2(b) of this title, the organization shall perform
significant on-site review activities, including on-site review
in at least 20 percent of the rural hospitals in the
organization's area.
(16) The organization shall provide for a review and report to
the Secretary when requested by the Secretary under section
1395dd(d)(3) of this title. The organization shall provide
reasonable notice of the review to the physician and hospital
involved. Within the time period permitted by the Secretary, the
organization shall provide a reasonable opportunity for
discussion with the physician and hospital involved, and an
opportunity for the physician and hospital to submit additional
information, before issuing its report to the Secretary under
such section.
(17) The organization shall execute its responsibilities under
subparagraphs (A) and (B) of paragraph (1) by offering to
providers, practitioners, Medicare Advantage organizations
offering Medicare Advantage plans under part C,)3(! and
prescription drug sponsors offering prescription drug plans under
part D )3(! quality improvement assistance pertaining to
prescription drug therapy. For purposes of this part and
subchapter XVIII of this chapter, the functions described in this
paragraph shall be treated as a review function.
(b) Review by physicians; physician's family defined
(1) No physician shall be permitted to review -
(A) health care services provided to a patient if he was
directly responsible for providing such services; or
(B) health care services provided in or by an institution,
organization, or agency, if he or any member of his family has,
directly or indirectly, a significant financial interest in such
institution, organization, or agency.
(2) For purposes of this subsection, a physician's family
includes only his spouse (other than a spouse who is legally
separated from him under a decree of divorce or separate
maintenance), children (including legally adopted children),
grandchildren, parents, and grandparents.
(c) Utilization of services of physicians to make final
determinations of denial decisions with respect to professional
conduct of other physicians
No utilization and quality control peer review organization shall
utilize the services of any individual who is not a duly licensed
doctor of medicine, osteopathy, dentistry, optometry, or podiatry
to make final determinations of denial decisions in accordance with
its duties and functions under this part with respect to the
professional conduct of any other duly licensed doctor of medicine,
osteopathy, dentistry, optometry, or podiatry, or any act performed
by any duly licensed doctor of medicine, osteopathy, dentistry,
optometry, or podiatry in the exercise of his profession.
(d) Review of ambulatory surgical procedures
Each contract under this part shall require that the utilization
and quality control peer review organization's review
responsibility pursuant to subsection (a)(1) of this section will
include review of all ambulatory surgical procedures specified
pursuant to section 1395l(i)(1)(A) of this title which are
performed in the area, or, at the discretion of the Secretary a
sample of such procedures.
(e) Review of hospital denial notices
(1) If -
(A) a hospital has determined that a patient no longer requires
inpatient hospital care, and
(B) the attending physician has agreed with the hospital's
determination,
the hospital may provide the patient (or the patient's
representative) with a notice (meeting conditions prescribed by the
Secretary under section 1395pp of this title) of the determination.
(2) to (4) Repealed. Pub. L. 106-554, Sec. 1(a)(6) [title V, Sec.
521(c)], Dec. 21, 2000, 114 Stat. 2763, 2763A-543.
(f) Identification of methods for identifying cases of substandard
care
The Secretary, in consultation with appropriate experts, shall
identify methods that would be available to assist peer review
organizations (under subsection (a)(4) of this section) in
identifying those cases which are more likely than others to be
associated with a quality of services which does not meet
professionally recognized standards of health care.
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