CMS Loosens Restrictions on Co-Located Healthcare Providers; Enforcement Interpretation Still to Be Determined

On November 12, 2021, the Facilities for Medicare and Medicaid Companies (“CMS”) revised and finalized draft steering first issued on Could 3, 2019, for co-location of hospitals with different hospitals or healthcare suppliers[1] (the “Finalized Guidance”). The Finalized Steering is meant to information CMS Surveyors in analysis of such hospitals’ compliance with Medicare Situations of Participation associated to shared area, companies, and workers.


The Finalized Steering revises necessities for sharing area by loosening prior restrictions. The draft steering required a co-located hospital to have “defined and distinct” areas of operation over which the hospital maintained “control at all times,” with no overlap in “clinical spaces.” Nonetheless, the Finalized Steering removes the “defined and distinct” requirement, as an alternative requiring solely that the hospital “consider whether the hospital’s spaces that are used by another co-located provider risk their compliance with these requirements.” CMS advises that areas of such consideration might relate to “patient rights, infection prevention and control, governing body, and/or physical environment.”

When assessing compliance of a co-located hospital’s area, the Finalized Steering makes clear that Surveyors are “not expected to be evaluating spaces for co-location”; Surveyors are to decide if the hospital being surveyed is in compliance with the Situations of Participation, unbiased of the co-located supplier. As such, the Finalized Steering reduces the breadth of such surveys, together with eliminating the necessities for Surveyors to undertake in depth ground plan evaluations.


The Finalized Steering confirms that contracted companies are acceptable for co-located services in quite a few situations. The Finalized Steering states that such companies are offered below the oversight of the hospital’s governing physique, and “would be treated as any other service provided directly by the hospital.”

This simplification extends to the survey steering, offering that, “The procedures for surveying contracted services would be the same for co-located hospitals as it would be for surveying any other hospital that has contracted services.” The Finalized Steering removes from the draft steering the in depth necessities and pointers for surveying contracted companies of a co-located hospital, together with (however not restricted to) the assessment of documentation of how the contracted companies are included into the hospital’s High quality Assurance and Efficiency Enchancment program.


The Finalized Steering additionally makes vital modifications to the rules for staffing. The draft steering required any workers obtained “under arrangement” from one other entity to “be assigned to work solely for one hospital during a specific shift,” disallowing such workers to “‘float’ between the two hospitals during the same shift, work at one hospital while concurrently being ‘on call’ at another,” or offering companies concurrently. The Finalized Steering loosens these restrictions as nicely, requiring solely that “there be evidence that the hospital’s staff are meeting the needs of patients for whom they are providing care,” in addition to “statutory and regulatory requirements for the activity.”


The Finalized Steering removes the prohibition on hospitals with out emergency departments arranging to have a co-located hospital reply to its emergencies “in order to appraise the patient and provide initial emergency treatment.”

For surveys, the Finalized Steering streamlines necessities, delineating between co-located hospitals which have emergency departments or maintain themselves out as offering emergency companies 24/7 and those who don’t. For those who do, Surveyors will defer to emergency companies and EMTALA necessities.  For those who don’t, Surveyors merely have to guarantee that the co-located hospital’s medical workers has written insurance policies and procedures for appraisal of emergencies, preliminary remedy, and referral when acceptable.


Lastly, the Finalized Steering additionally simplifies the rules for any deficiencies, requiring Surveyors to cite recognized deficiencies “in the same manner as in other hospital surveys.” If the deficiency extends to the co-located supplier, then the surveyor ought to decide if the cited deficiency warrants a criticism investigation of the co-located supplier (if doable, whereas nonetheless on-site). These two separate surveys would end in two separate survey studies.


Largely, the Finalized Steering has been lauded by business stakeholders. As detailed above, the revisions present considerably better flexibility than the draft steering that preceded it. Nonetheless, some apprehension has been expressed, together with concern over whether or not the Finalized Steering supplies adequate readability in how Surveyors will interpret and apply these pointers and the way these revisions will interaction with present statutory and regulatory necessities, in addition to state guidelines. Contemplating these considerations and the numerous modifications to co-location necessities initiated by the Finalized Steering, co-located hospitals ought to proactively study these relationships and their compliance with all relevant necessities.


[1] The Steering clarifies that the time period “healthcare providers” doesn’t embrace crucial entry hospitals, as such hospitals have particular distance and placement necessities, nor to non-public doctor workplaces, together with these which may be collaborating in a timesharing or lease association.

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