Under an agreement between the Secretary, CMS and each State, a State agency (usually a component of the State Health Department) surveys and recommends to the Secretary whether or not providers and suppliers are eligible to participate in the Medicare program. The State agency’s principal activities in this area are:

1. 1. 

   Identifying an institution or facility that might qualify as a provider or supplier for title XVIII and XIX programs, using guidelines provided by the Secretary;

2. 2. 

   Inspecting and certifying (recommending) to the Secretary whether or not the provider or supplier qualifies as a participating provider or supplier;

3. 3. 

   Giving consultation to providers and suppliers to help them sustain their compliance with quality standards to participate in the program;

4. 4. 

   For title XIX purposes, determining whether or not an institution can be paid for treating Medicaid beneficiaries.

For certification purposes, a State agency must establish and maintain methods and criteria for identifying situations in which a question of fraud in obtaining certification may exist. Any such situations are reported to the CMS Bureau of Quality Control RO having responsibility for investigating Medicare fraud in the area in which the offending facility is located.

State agencies designated to carry out Health Insurance program functions may engage in, and cooperate with, a variety of planning and coordination efforts which have goals similar to those of the Health Insurance Program. These activities include health facility planning, providing for the treatment of mental and chronic diseases, and providing for sufficient community facilities for patient care at appropriate levels of intensity. The Health Insurance Program encourages this coordination and reimburses the State agencies for a fair share of the costs attributable to these activities.

To insure that Medicare beneficiaries receive quality care through sound utilization of institutional facilities and professional services, a utilization review plan based on statutory requirements was included as a condition of participation for hospitals and SNF’s. To assure providers are complying with the requirements of utilization review, State agencies periodically review each provider’s mechanism. However, where a PSRO is operating, the conditions of participation do not require utilization review.

The Part A intermediary also becomes concerned with such utilization review factors as the proper length of stay and the necessity of the services performed in individual cases. State agencies and intermediaries are encouraged to exchange their findings in utilization review so that they can complement each other’s efforts.