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CMS Issues DRAFT Guidance for Hospital Co-Location Initiatives; Industry is Invited to Submit Comments

Posted: 05/14/2019
Industries: Health Care

As the health care delivery system continues to evolve, on May 3, 2019, the Centers for Medicare & Medicaid Services (“CMS”) issued a draft guidance document to state survey agency directors entitled, “Guidance for Hospital Co-location with Other Hospitals or Healthcare Facilities” (the “Draft Guidance”). The Draft Guidance, according to CMS, is intended to provide clarity regarding a hospital’s “space sharing or contracted staff arrangements with another hospital or health care entity” when evaluated by CMS and a state agency surveyor for the hospital’s compliance with Medicare Conditions of Participation (“CoP”).  Comments on the Draft Guidance are due to CMS by July 2, 2019.

CMS recognizes that hospitals co-locate (i.e., share space on the same campus or in the same building and share space, staff or services) with one another and other health care entities for efficiency purposes or to develop specific care delivery systems.  CMS states in the Draft Guidance that under prior subregulatory guidance, co-location of hospitals with other health care entities was prohibited.  The Draft Guidance discusses how co-location may be appropriate but emphasizes that all co-located hospitals “must demonstrate separate and independent compliance with the hospital CoPs.”

The Draft Guidance focuses on three issues related to hospital co-location: (i) distinct space and shared space; (ii) contracted services; and (iii) emergency services.

With respect to distinct space and shared space, the Draft Guidance notes, “It is expected that the hospital have defined and distinct spaces of operation for which it maintains control at all times.” Distinct spaces are necessary for maintaining patient privacy and ensuring confidentiality of patient medical records.  There may be shared spaces (i.e., public spaces and public paths of travel utilized by both entities), although both entities would be individually responsible for compliance with the CoPs in those shared spaces.

For contracted services, the Draft Guidance focused upon staffing contracts and clinical services contracts.  For staffing contracts, the Draft Guidance states that staff must work exclusively for one hospital during any given shift and not “float” between two hospitals during the same shift.  With respect to clinical services contracts, the Draft Guidance suggests that a hospital is not necessarily required to notify patients of all services that are provided under an arrangement since they are provided under the oversight of the hospital’s governing body.  

With respect to emergency services, the Draft Guidance notes that hospitals without emergency departments must have policies and procedures in place for addressing emergency care needs 24/7.  A hospital may contract with another hospital or entity for emergency services if the contracted staff do not work simultaneously at another hospital or health care setting.  It may be appropriate for one hospital to transfer a patient to another co-located facility where the hospital cannot provide the care required by the patient’s condition.
The Draft Guidance also provides state surveyors with the protocols they should follow to ensure a hospital’s co-location compliance with each of distinct space and shared space; contracted services; and emergency services.

Hospitals and all interested parties have until July 2nd to provide comments with respect to the Draft Guidance to CMS.  Consolidation and the need for efficiencies continues to drive change in the health care delivery system.  As hospitals evolve to ensure they can continue to provide high quality, timely and affordable care, the Draft Guidance offers CMS’ perspectives on compliant co-location relationships.  To the extent the Draft Guidance should be modified, hospitals should take the time to provide comments to ensure their own innovative models of care will not raise the ire of CMS and or its state surveyors.

Saul Ewing Arnstein & Lehr’s health law practitioners regularly assist hospitals and other health care providers in evaluating and creating compliant arrangements.  For more information, contact the authors of this Alert.