[Author: Michael LaBattaglia]
On November 2, 2017, CMS hosted a Medicare Learning Network (MLN) call to provide guidance regarding the statutory requirement that a hospital must be “primarily engaged” in providing care to inpatients to qualify for participation in the Medicare Program. To determine whether a hospital is “primarily engaged,” CMS explained that its surveyors are to use a totality of the circumstances approach that focuses on numerous factors related to inpatient care. This guidance comes on the heels of the September 6, 2017 memorandum outlining revisions to Appendix A of the State Operations Manual, which governs hospital surveys, as previously discussed here. Specialty hospitals, micro-hospitals, ambulatory surgery centers, off-campus emergency departments and other low-inpatient volume facilities are among the types of entities that must be mindful of CMS’s new standard.
Section 1861(e) of the Social Security Act sets forth the definitional requirements of what it means to be a “hospital” under the Medicare and Medicaid programs. Among other requirements, a hospital must be “primarily engaged” in providing care to inpatients. CMS requires that a hospital must meet, both at the time of its initial certification and throughout its participation in the Medicare program, all statutory provisions of §1861(e) of the Act to qualify for and maintain a provider agreement. CMS uses surveyors, either state agencies or accrediting organizations, to determine whether a facility meets these requirements. Surveyors observe the provision of care during unannounced on-site visits and report their findings and recommendations to CMS Regional Offices.
Under the revised guidance, CMS instructs surveyors to proceed with a survey only if the facility has at least two inpatients at the time of the site visit. Surveyors will then “consider multiple factors” in determining whether or not a facility is “primarily engaged” in providing inpatient care. Such factors include, but are not limited to, average daily census (ADC), average length of stay (ALOS), the number of off-campus outpatient locations, the number of provider based emergency departments, the number of inpatient beds related to the size of the facility and scope of services offered, the volume of outpatient surgical procedures compared to inpatient surgical procedures, and staffing patterns that indicate full-time inpatient care. On the MLN call, CMS stressed that its focus is on the “actual” provision of care to inpatients, rather than the potential or capacity to provide care to inpatients. In other words, capacity to delivery inpatient care alone is insufficient to demonstrate that a facility is “primarily engaged.”
If a facility does not have at least two inpatients at the time of the site visit, surveyors will perform an initial review of the facility’s admission data while onsite to determine if the hospital has had an ADC of at least two and an ALOS of at least two midnights over the last 12 months. If a facility satisfies these data benchmarks, surveyors will return for a second survey attempt at a later date. If a facility does not satisfy the requisite ADC and ALOS benchmarks, then the facility is presumed to not be “primarily engaged” in inpatient care. The CMS Regional Office will consider similar factors to those listed above to determine if a second survey is appropriate. If not, a denial or termination of the facility’s provider agreement is the likely outcome.
CMS’s policy is particularly relevant for providers such as specialty hospitals, remote emergency department hospitals, and other smaller hospitals that generally do not have high inpatient volume. Additionally, hospitals focused on expanding their off-campus outpatient offerings are particularly affected by any shifts in the landscape of what it means to be “primarily engaged” in inpatient care. However, so-called “micro hospitals” that operate a minimal number of inpatient beds while establishing a large network of provider-based EDs are likely CMS’s main target.
A full-scale acute-care hospital that establishes an off-campus ED likely need not worry about running afoul of these new guidelines. Additionally, remote-location hospitals are unlikely to be affected by the revised guidance because the “primarily engaged” requirement applies to the entire hospital facility – both the main hospital campus and any remote location(s). That is, a hospital’s remote location(s) would have to expand its outpatient offerings to such a large degree that the entire hospital entity’s inpatient volume was dwarfed by its new outpatient volume.
As surveyors prepare to sharpen their focus on whether hospitals are “primarily engaged” in inpatient care, so too should hospitals that are potentially vulnerable under the new policy. At minimum, that means keeping good records of admissions data, staffing schedules, and other factors that will demonstrate actual inpatient care. Facilities should also keep in mind that the other requirements of §1861(e) (e.g., a hospital must maintain clinical records on all patients, a hospital must have medical staff bylaws) are independent of a “primarily engaged” analysis. Just because the “primarily engaged” requirement is satisfied, that does not automatically mean that the facility meets the definition of a hospital. Finally, accreditation, state licenses, and similar designations that recognize the facility as a hospital are not material to whether a hospital is “primarily engaged” in inpatient care, according to CMS.
