On September 6, 2017, CMS’s Center for Clinical Standards and Quality/Survey & Certification Group announced revisions to Appendix A of the State Operations Manual (SOM), which governs hospital surveys. The revisions are aimed at clarifying the requirements for meeting the statutory definition of a hospital—i.e., that a hospital be “primarily engaged” in furnishing care to inpatients—and comes approximately a year after CMS revoked Ozarks Community Hospital’s Medicare provider agreement because the facility failed to meet the federal statutory definition of a hospital.
Pursuant to Section 1861(e) of the Social Security Act, to qualify as a hospital, an institution must be “primarily engaged in providing, by or under the supervision of physicians, to inpatients (A) diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons.” CMS’s revised guidance provides additional information regarding how CMS surveyors are to evaluate whether a facility is “primarily engaged” in providing inpatient services to in inpatients.
CMS’s new guidance states that, in making a determination of whether a facility is “primarily engaged” in providing inpatient services and care to inpatients, CMS will consider multiple factors and will make a final determination based on an evaluation of the facility in totality. Such factors include, but are not limited to:
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Average daily census (ADC);
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Average length of state (ALOS);
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The number of off-campus outpatient location;
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The number of provider-based emergency departments;
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The number of inpatient beds related to the size of the facility and scope of services offered;
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Volume of outpatient surgical procedures compared to inpatient surgical procedures,
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Staffing patterns; and
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Patterns of ADC by day of the week.
Hospitals are not required to have a specific inpatient to outpatient ratio to meet the definition of “primarily engaged.” CMS’s revised guidance also states that a hospital must have inpatients at the time of the survey for the surveyors to directly observe the actual provision of care and services to patients and the effects of that care. If a hospital does not have at least two inpatients at the time of a survey, CMS instructs that a survey should not be conducted at that time, and an initial review of the facility’s admission data should be performed by surveyors 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 past 12 months.
The release of this guidance appears to be in response to concerns regarding CMS’s decision to terminate Ozark Community Hospital’s Medicare provider agreement last year due to its failure to meet the statutory definition of a hospital. CMS’s action drew significant attention, including from Missouri Senator Claire McCaskill. Ozarks Community Hospital Chief Executive Officer Paul Taylor praised CMS’s September 6, 2017 guidance stating: “The guidance in the amended Manual which tells surveyors how to audit hospital operations is exactly what we were asking CMS to do. Give us a rule and we will satisfy it. Before this change, it was like being ticketed for speeding even though there was no established speed limit.”
To view CMS’s September 6, 2017 memo, click here. To view Ozarks Community Hospital’s statement on the CMS guidance, click here.
