(b) Use of criteria. In assessing the need for and appropriateness of an inpatient health care facility stay, a QIO must apply criteria to determine—

1. (1) The necessity for facility admission and continued stay (in cases of day outliers in hospitals under prospective payment);
2. (2) The necessity for surgery and other invasive diagnostic and therapeutic procedures; or
3. (3) The appropriateness of providing services at a particular health care facility or at a particular level of care. The QIO must determine whether the beneficiary requires the level of care received or whether a lower and less costly level of care would be equally effective.

(c) Establishment of criteria and standards. For the conduct of review a QIO must—

1. (1) Establish written criteria based upon typical patterns of practice in the QIO area, or use national criteria where appropriate; and
2. (2) Establish written criteria and standards to be used in conducting quality review studies.

(d) Variant criteria and standards. A QIO may establish specific criteria and standards to be applied to certain locations and facilities in the QIO area if the QIO determines that—

1. (1) The patterns of practice in those locations and facilities are substantially different from patterns in the remainder of the QIO area; and
2. (2) There is a reasonable basis for the difference which makes the variation appropriate.