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4. Proposed Sec. 3.108--Correction of Deficiencies, Revocation and Voluntary Relinquishment
Proposed Sec. 3.108 describes the process by which PSOs will be given an opportunity to correct deficiencies, the process for revocation of acceptance of the certification submitted by an entity for cause and its removal from the list of PSOs, and specifies the circumstances under which an entity will be considered to have voluntarily relinquished its status as a PSO.
This section would establish procedural opportunities for a PSO to respond during the process that might lead to revocation. When the Secretary identifies a possible deficiency, the PSO would be given an opportunity to correct the record if it can demonstrate that the information regarding a deficiency is erroneous, and if the existence of a deficiency is uncontested, an opportunity to correct it. The PSO is encouraged to alert the Department if it faces unanticipated challenges in correcting the deficiency; we propose that the Secretary will consider such information in determining whether the PSO has acted in good faith, whether the deadline for corrective action should be extended, or whether the required corrective action should be modified. If the Secretary determines that the PSO has not timely corrected the deficiency and issues a notice of proposed revocation and delisting, the PSO will be given an automatic right of appeal to present its case in writing.
If the Secretary makes a decision to revoke acceptance of the entity's certification and remove it from the list of PSOs, this proposed section specifies the required actions that the Secretary and the entity must take following such a decision. The proposed rule implements the statutory requirements for the establishment of a limited period during which providers can continue to report information to the former PSO and receive patient safety work product protections for these data, and establishes a framework for appropriate disposition of patient safety work product or data held by the former PSO. See section 924(e)-(g) of the Public Health Service Act, 42 U.S.C. 299b-24(e)-(g).
This section also describes two circumstances under which an entity will be considered to have voluntarily relinquished its status as a PSO: (1) Notification of the Secretary in writing by the PSO of its intent to relinquish its status voluntarily; and (2) if a PSO lets its period of listing expire without submission of a certification for continued listing that the Secretary has accepted. In both circumstances, we propose that such a PSO consult with the source of the patient safety work product in its possession to provide notice of its intention to cease operations and provide for appropriate disposition of such patient safety work product. When the Secretary removes a PSO from listing as a result of revocation for cause or voluntarily relinquishment, the Secretary is required to provide public notice of the action.
We note that section 921 of the Public Health Service Act, 42 U.S.C. 299b-21, and, therefore, the proposed rule, defines a PSO as an entity that is listed by the Secretary pursuant to the requirements of the statute that are incorporated into this proposed rule. This means that an entity remains a PSO for its three-year period of listing unless the Secretary removes the entity from the list of PSOs because he revokes acceptance of its certification and listing for cause or because the entity voluntarily relinquishes its status as described below. Accordingly, even when a deficiency is identified publicly or the proposed requirements of this section have been initiated, we stress that an entity remains a PSO until the date and time at which the Secretary's removal of the entity from listing is effective. Until then, data that is reported to a listed entity by providers shall be considered patient safety work product and the protections accorded patient safety work product continue to apply following the delisting of the PSO.
(A) Proposed Sec. 3.108(a)--Process for Correction of a Deficiency and Revocation
Proposed Sec. 3.108(a) describes the process by which the Secretary would provide an opportunity for a PSO to correct identified deficiencies and, if not timely corrected or if the deficiencies cannot be "cured," the process that can lead to a determination by the Secretary to revoke acceptance of a PSO's certification. This section proposes a two-stage process. The first stage would provide an opportunity to correct a deficiency. Under the proposal, when the Secretary identifies a deficiency, the Secretary would send the PSO a notice of preliminary determination of a deficiency. The PSO would then have an opportunity to demonstrate that the information on which the notice was based is incorrect. The notice would include a timetable for correction of the deficiency and may specify the specific corrective action and the documentation that the Secretary would need to determine if the deficiency has been corrected. The PSO would be encouraged to provide information for the administrative record on unexpected challenges in correcting the deficiency, since the Secretary has great flexibility to work with a PSO to facilitate correction of deficiencies. We anticipate that most PSO deficiencies would be resolved at this stage.
Under the proposal, the second stage would occur when the Secretary would conclude that a PSO has not timely corrected a deficiency or has a pattern of non-compliance and issues the PSO a notice of proposed revocation and delisting. Rather than requiring a PSO to seek an opportunity to appeal, the proposed rule would provide an automatic period of 30 days for a PSO to be heard in writing by submitting a rebuttal to the findings in the Secretary's notice of revocation and delisting. The Secretary may then affirm, modify, or reverse the notice of revocation and delisting.
In light of the procedures in the proposed rule to ensure due process, we have not proposed to incorporate any further internal administrative appeal process beyond the Secretary's determination regarding a notice of proposed revocation and delisting pursuant to proposed Sec. 3.108(a)(5). We invite comments on our proposed approach.
(1) Proposed Sec. 3.108(a)(1)--Circumstances Leading to Revocation
Proposed Sec. 3.108(a)(1) lists four circumstances, each of which is statutorily based, that may lead the Secretary to revoke acceptance of a PSO's certification and delist the entity: the PSO is not meeting the obligations to which it certified its compliance as required by proposed Sec. 3.102; the PSO has not certified to the Secretary that it has entered the required minimum of two contracts within the applicable 24-month period pursuant to proposed Sec. 3.102(d)(1); the Secretary, after reviewing a PSO's disclosure statement submitted pursuant to proposed Sec. 3.102(d)(2), determines that the PSO cannot fairly and accurately perform its duties pursuant to proposed Sec. 3.104(c); or the PSO is not in compliance with any other provision of the Patient Safety Act or this proposed part. (See section 924(c) and (e) of the Public Health Service Act, 42 U.S.C. 299b-24(c) and (e).)
(2) Proposed Sec. 3.108(a)(2)--Notice of Preliminary Finding of Deficiency and Establishment of an Opportunity for Correction of a Deficiency
Under proposed Sec. 3.108(a)(2), when the Secretary has reason to believe that a PSO is not in compliance with the requirements of the statute and the final rule, the Secretary would send a written notice of a preliminary finding of deficiency to the PSO (see section 924(c) and (e) of the Public Health Service Act, 42 U.S.C. 299b-24(c) and (e)). The notice would specifically state the actions or inactions that describe the deficiency, outline the evidence that a deficiency exists, specify the possible and/or required corrective action(s) that must be taken, establish an opportunity for correction and a date by which the corrective action(s) must be completed, and, in certain circumstances, specify the documentation that the PSO would be required to submit to demonstrate that the deficiency has been corrected.
We propose that, absent other evidence of actual receipt, we would assume that the notice of a preliminary finding of deficiency has been received 5 calendar days after it was sent. Under the proposal, if a PSO submits evidence to the Secretary that demonstrates to the Secretary that the preliminary finding is factually incorrect within 14 calendar days following receipt of this notice, the preliminary finding of deficiency would be withdrawn; otherwise, it would be the basis for a finding of deficiency. We stress that this would not be an opportunity to file an appeal regarding the proposed corrective actions, the period allotted for correcting the deficiency, or the time to provide explanations regarding why a deficiency exists. This 14-day period would only ensure that the PSO has an opportunity, if the information on which the notice is based is not accurate, to correct the record immediately. For example, a notice of a preliminary finding of deficiency may be based on the fact that the Secretary has no record that the PSO has entered the required two contracts. In this case, if a PSO can attest that it submitted the certification as required or can attest that it has entered the required two contracts consistent with the requirements of proposed Sec. 3.102(d)(1), the Secretary would then withdraw the notice. If a notice of deficiency is based on the failure of the PSO to submit a required disclosure statement within 45 days, the PSO might submit evidence that the required statement had been sent as required. If the evidence is convincing, the Secretary would withdraw the notice of preliminary finding of deficiency. If the Secretary does not consider the evidence convincing, the Secretary would so notify the PSO and the notice would remain in effect. The PSO would then need to demonstrate that it has met the requirements of the notice regarding correction of the deficiency.
We anticipate that in the vast majority of circumstances in which the Secretary believes there is a deficiency, the deficiency can and will be corrected by the PSO. In those cases, as discussed above, the PSO will be given an opportunity to take the appropriate action to correct the deficiency, and avoid revocation and delisting. However, we can anticipate situations in which a PSO's conduct is so egregious that the Secretary's acceptance of the PSO's certification should be revoked without the opportunity to cure because there is no meaningful cure. An example would be where a PSO has a policy and practice of knowingly and inappropriately selling patient safety work product or where the PSO is repeatedly deficient and this conduct continues despite previous opportunities to cure. We are considering adding a provision whereby an opportunity to "cure" would not be available in this type of situation. Providing the PSO with an opportunity for correction, as provided in the Patient Safety Act, would entail providing an opportunity to correct the preliminary factual findings of the Department. Thus, the PSO would have the chance to demonstrate that we have the facts wrong or there are relevant facts we are overlooking. We invite comments regarding this approach and how best to characterize the situations in which the opportunity to "cure" (e.g., to change policies, practices or procedures, sanction employees, send out correction notices) would not be sufficient, meaningful, or appropriate.
(3) Proposed Sec. 3.108(a)(3)--Determination of Correction of a Deficiency
Proposed section Sec. 3.108(a)(3) addresses the determination of whether a deficiency has been corrected, including the time frame for submission of the required documentation that the deficiency has been corrected, and the actions the Secretary may take after review of the documentation and any site visit(s) the Secretary deems necessary or appropriate (see sections 924(c) and (e) of the Public Health Service Act, 42 U.S.C. 299b-24(c) and (e)).
Under the proposal, during the period of correction, we would encourage the PSO to keep the Department apprised in writing of its progress, especially with respect to any challenges it faces in implementing the required corrective actions. Such communications would become part of the administrative record. Until there is additional experience with the operational challenges that PSOs face in implementing specific types of corrective actions, such information, if submitted, would be especially helpful for ensuring that the time frames and the corrective actions specified by the Secretary are reasonable and appropriate. As noted below, such information would be considered by the Secretary in making a determination regarding a PSO's compliance with the correction of a deficiency. Unless the Secretary specifies a different submission date, or approves such a request from the PSO, we propose that documentation submitted by the PSO to demonstrate correction of the deficiency must be received by the Secretary no later than 5 calendar days after the final day of the correction period.
Under the proposed rule, in making a determination, the Secretary would consider the documentation and other information submitted by the PSO, the findings of any site visit that might have been conducted, recommendations of program staff, and any other information available regarding the PSO that the Secretary deems appropriate. After completing his review, the Secretary may make one of the following determinations: (1) The action(s) taken by the PSO have corrected any deficiency, in which case the Secretary will withdraw the notice of deficiency and so notify the PSO; (2) the PSO has acted in good faith to correct the deficiency but an additional period of time is necessary to achieve full compliance and/or the required corrective action specified in the notice of a preliminary finding of deficiency needs to be modified in light of the actions undertaken by the PSO so far, in which case the Secretary will extend the period for correction and/or modify the specific corrective action required; or (3) the PSO has not completed the corrective action because it has not acted with reasonable diligence or timeliness to ensure that the corrective action was completed within the allotted time, in which case the Secretary will issue to the PSO a notice of proposed revocation and delisting.
When the Secretary issues a notice of proposed revocation and delisting, this notice would include those deficiencies that have not been timely corrected. The notice would be accompanied by information concerning the manner in which the PSO may exercise its opportunity to be heard in writing to respond to the deficiency findings described in the notice.
(4) Proposed Sec. 3.108(a)(4)--Opportunity to be Heard in Writing Following a Notice of Proposed Revocation and Delisting
Proposed Sec. 3.108(a)(4) sets forth our approach to meeting the statutory requirement established in section 924(e) of the Public Health Service Act, 42 U.S.C. 299b-24(e), for a PSO to have an opportunity to dispute the findings of deficiency in a notice of proposed revocation and delisting.
Absent other evidence of actual receipt, we would assume that the notice of proposed revocation and delisting has been received by a PSO five calendar days after it was sent. Under the proposed rule, unless a PSO chooses to waive its right to contest a notice of proposed revocation and delisting and so notifies the Secretary, a PSO would not need to request an opportunity to appeal a notice of proposed revocation and delisting. A PSO would automatically have 30 calendar days, beginning the day the notice is deemed to be received, to exercise its opportunity to be heard in writing. The Secretary would consider, and include in the administrative record, any written information submitted by the PSO within this 30-day period that responds to the deficiency findings in the notice of proposed revocation and delisting. If a PSO does not take advantage of the opportunity to submit a substantive response in writing within 30 calendar days of receipt of the notice of proposed revocation and delisting, the notice would become final as a matter of law at midnight of the date specified by the Secretary in the notice. The Secretary would provide the PSO with policies and rules of procedures that govern the form or transmission of the written response to the notice of proposed revocation and delisting.
We are considering incorporating in the final rule an exception to our proposed policy of automatically providing a PSO with a 30-day period in which to submit a written response to a notice of proposed revocation and delisting. The one exception we are considering relates to failure to meet the requirement for a minimum of two contracts. The statutory requirement is unambiguous that this requirement must be met within every 24-month period after the initial date of listing of the PSO. We propose elsewhere that a PSO submit its notification 45 calendar days early so that a period for correction can be established that concludes at midnight of the last day of the applicable 24-month period established by the statute for compliance. The Secretary would then need to receive notification from a PSO that this requirement has been met no later than midnight of that last day (see proposed Sec. 3.102(d)(1) and proposed Sec. 3.104(b)). Other than verifying that the PSO has not entered into and reported the required two bona fide contracts by midnight on the last day of the applicable 24-month period, we see no basis for a written rebuttal of such a deficiency determination. The language we are considering, therefore, would authorize the Secretary, when the basis for a notice of proposed revocation and delisting is the failure of a PSO to meet this very specific requirement, to proceed to revocation and delisting five calendar days after the notice of proposed revocation and delisting would be deemed to have been received.
(5) Proposed Sec. 3.108(a)(5)--The Secretary's Decision Regarding Revocation
If a written response to the deficiency findings of a notice of proposed revocation and delisting is submitted by a PSO, proposed Sec. 3.108(a)(5) provides that the Secretary will review the entire administrative record pertaining to the notice of proposed revocation and delisting and any written materials submitted by the PSO under proposed Sec. 3.108(a)(4). The Secretary may affirm, reverse, or modify the notice of proposed revocation and delisting. The Secretary will notify the PSO in writing of his decision with respect to any revocation of the acceptance of its certification and its continued listing as a PSO. (See section 924(e) of the Public Health Service Act, 42 U.S.C. 299b-24(e).)
(B) Proposed Sec. 3.108(b)--Revocation of the Secretary's Acceptance of a PSO's Certification
When the Secretary makes a determination to remove the listing of a PSO for cause pursuant to proposed Sec. 3.108(a), proposed Sec. 3.108(b) specifies the actions that the Secretary and the entity must take, and implements the protections that the statute affords to data submitted to such an entity.
(1) Proposed Sec. 3.108(b)(1)--Establishing Revocation for Cause
Under our proposal, after following the requirements of proposed Sec. 3.108(a), if the Secretary determines pursuant to paragraph (a)(5) of this section that revocation of the acceptance of a PSO's certification is warranted for failure to comply with the requirements of the Patient Safety Act, or the regulations implementing the Patient Safety Act, the Secretary would establish, and notify the PSO of, the date and time at which the Secretary will revoke the acceptance of its certification and remove the entity from the list of PSOs. The Secretary may include information in the notice on the statutory requirements, incorporated in proposed Sec. 3.108(b)(2) and Sec. 3.108 (b)(4) and discussed below, that apply to the entity following the Secretary's actions, and the Secretary would provide public notice as required by proposed Sec. 3.108(d).
(2) Proposed Sec. 3.108(b)(2)--Required Notification of Providers and Status of Data
Proposed Sec. 3.108(b)(2) incorporates in the proposed rule the statutory requirements that are intended to ensure that providers receive a reasonable amount of notice that the PSO with which they are working is being removed from the list of PSOs (section 924(e)(2) of the Public Health Service Act, 42 U.S.C. 299b-24(e)(2)) and to clarify the status of data submitted by providers to a PSO whose listing has been revoked (section 924(f) of the Public Health Service Act, 42 U.S.C. 299b-24(f)).
As required by the statute, within 15 calendar days of the date established in the Secretary's notification of action under paragraph (b)(1) of this section, the entity subject to proposed Sec. 3.108(b)(1) shall confirm to the Secretary that it has taken all reasonable actions to notify each provider whose patient safety work product has been collected or analyzed by the PSO that the entity has been removed from the list of PSOs. We would recommend, but do not propose to require, that PSOs make a priority of notifying providers who report most frequently to the PSO, especially providers with contracts with the PSO. These providers would need to close out any current contract they have with the PSO, determine if they wish to enter a contract with another PSO, and if so, they would need time to identify another PSO and then negotiate another contract.
We also recognize that, even when this statutory notification requirement is met, the notification period is short. While we do not have the authority to require a PSO to undertake notification of providers more quickly than the statute specifies, we invite comment on whether there are any other steps the Secretary should take to ensure that affected providers receive timely notice. We are considering requiring notice by electronic or priority mail if no notice has been given at the end of seven days.
Confidentiality and privilege protections that applied to patient safety work product while the former PSO was listed continue to apply after the entity is removed from listing. Furthermore, section 924(f)(1) of the Public Health Service Act, 42 U.S.C. 299b-24(f)(1) provides that data submitted to an entity within 30 calendar days of the date on which acceptance of its certification is revoked and it is removed from the list of PSOs, shall have the same status as data submitted while the entity was still listed. Thus, data that would otherwise be patient safety work product had it been submitted while the PSO was listed, will be protected as patient safety work product if submitted during this 30-day period after delisting.
We stress that the statutory language in section 924(f)(1) of the Public Health Service Act, 42 U.S.C. 299b-24(f)(1), pertains only to data submitted to such an entity within 30 calendar days after such revocation and removal. This provision does not enable an entity that has been removed from listing to generate patient safety work product on its own pursuant to section 921(7)(A)(i)(II) of the Public Health Service Act, 42 U.S.C. 299b-21(7)(A)(i)(II); the entity loses that authority on the effective date and time of the Secretary's action to remove it from listing.
(3) Proposed Sec. 3.108(b)(3)--Disposition of Patient Safety Work Product and Data
Proposed Sec. 3.108(e) incorporates in the proposed rule statutory requirements regarding the disposition of patient safety work product or data following revocation and delisting of a PSO (section 924(g) of the Public Health Service Act, 42 U.S.C. 299b-24(g)). This proposed subsection would require that the former PSO provide for the disposition of patient safety work product or data in its possession in accordance with one or more of three alternatives described in section 924(g) of the Public Health Service Act, 42 U.S.C. 299b-24(g). The three alternatives include: transfer of the patient safety work product with the approval of the source from which it was received to a PSO which has agreed to accept it; return of the patient safety work product or data to the source from which it was received; or, if return is not practicable, destroy such work product or data.
The text of the proposed rule refers to the "source" of the patient safety work product or data that is held by the former PSO, which is a broader formulation than the statutory phrase "received from another entity." While the statutory requirement encompasses PSOs as well as institutional providers, we tentatively conclude that the underlying intent of this statutory provision is to require the appropriate disposition of patient safety work product from all sources, not merely institutional sources. We note that the statute, and therefore the proposed rule, permits individual providers to report data to PSOs and individual providers are able to enter the same type of ongoing arrangements, or contractual arrangements, as institutional providers. Moreover, proposed Sec. 3.108(b)(2) would require PSOs to notify all providers (individual as well as institutional providers) from whom they receive data about the Secretary's revocation and delisting decision. We preliminarily conclude, therefore, that it is consistent with the statute that a former PSO consult with all sources (individuals as well as entities) regarding the appropriate disposition of the patient safety work product or data that they supplied. Moreover, it is a good business practice. If workforce members of a former PSO retain possession of any patient safety work product, they would incur obligations and potential liability if it is impermissibly disclosed. We welcome comments on our interpretation.
The statutory provision indicates that these requirements apply to both patient safety work product or 'data' described in 924(f)(1) of the Public Health Service Act, 42 U.S.C. 299b-24(f)(1). Subsection (f)(1), entitled 'new data' and incorporated in proposed Sec. 3.108(b)(2), describes data submitted to an entity within 30 calendar days after the entity is removed from listing as a PSO and provides that this data "shall have the same status as data submitted while the entity was still listed." The proposed regulation mirrors this formulation.
While the statute and this proposed rule would permit destruction of patient safety work product, we would encourage entities that have their listing as a PSO revoked to work with providers to ensure that patient safety work product remains available for aggregation and further analysis whenever possible, either by returning it to the provider or, with concurrence of the provider, transferring it to a PSO willing to accept it.
The statute does not establish a time frame for a PSO subject to revocation and delisting to complete the disposition of the patient safety work product or data in its possession. We invite comment on whether we should include a date by which this requirement must be completed (for example, a specific number of months after the date of revocation and delisting).
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