CMS Issues Proposed Rule to Reform "Unnecessary, Obsolete, or Excessively Burdensome" Medicare Participation Standards

by Bradley Arant Boult Cummings LLP

On February 4, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to reform Medicare regulations that CMS views as unnecessary, obsolete, and/or excessively burdensome on hospitals and health care providers. CMS estimates that changes to conditions of participation (CoPs) for hospitals, long-term care facilities, transplant centers, rural health clinics, and federally qualified health centers, as well as the conditions of coverage (CfCs) of ambulatory surgical centers (ASC) will save $676 million annually and $3.4 billion over five years. This proposed rule is CMS’ second effort to reduce burdensome regulations, the first being significant changes to providers’ CoPs in Final Rules at 77 FR 29061 and 77 FR 29033, each published on May 16, 2012.


Governing Body

Current Rule: In “Reform of Hospital and Critical Access Hospital Conditions of Participation” (77 FR 29034), published May 16, 2012, CMS finalized changes to the requirements of the Governing Body CoP, § 482.12, and adopted a policy to allow one governing body to oversee multiple hospitals in a multi-hospital system. Additionally, this revised rule requires that a medical staff member from at least one hospital in the system be included on the governing body.

Proposed Rule: Hospitals’ governing bodies would no longer be required to include a member of the medical staff. Instead, governing bodies would be required to consult with medical staff on an ongoing basis. This is designed to alleviate problematic issues hospitals experience in appointing staff members to governing bodies, especially those located where state law requires members of a public hospital’s governing body to either be publicly elected or appointed by the state’s governor or by some other state or local official.

Physician Orders, Supervision, and Swing-Bed Surveys

Current Rule: Changes have also been proposed to current sections §482.28, requiring a therapeutic diet to be prescribed only by the practitioner responsible for the patient; §482.53(b)(1), requiring the in-house preparation of radiopharmaceuticals to be performed by or under the direct supervision of a pharmacist or doctor of medicine or osteopathy; §482.54, on who may order hospital rehabilitation and respiratory care services; and §482.66 requiring hospitals to undergo a separate survey by a State Survey Agency (SA) to determine compliance with swing-bed requirements in addition to the Accredited Organization (AO) survey for the other CoPs.

Proposed Rule: Additionally, the proposed rule would allow outpatient services to be ordered by any practitioner who is (1) responsible for the care of patients, (2) licensed in the state where care is provided, (3) acting within the scope of practice under state law, and (4) authorized in accordance with the policies of the medical staff to order outpatient services. This would facilitate the ordering of rehabilitation and respiratory services by all practitioners. The preparation of radiopharmaceuticals would no longer be under the direct supervision of a registered pharmacist, or doctor of medicine or osteopathy. This was a burdensome requirement during off-hours when only minimal use of radiopharmaceuticals occurred. Dieticians would no longer be required to be supervised by physicians when ordering diets for patients. Finally, swing-bed services would be an optional service provided by hospitals. Under this change, hospitals that provide swing-bed service would have to be surveyed only once, rather than twice.

Long-Term Care Facilities

Current Rule: In 73 FR 47075, published August 13, 2008, CMS required all buildings containing long-term care facilities to have automatic sprinkler systems installed throughout the building. The deadline for meeting this requirement is August 13, 2013. The final rule was based on a CMS analysis of fire safety in nursing homes. Based on recent public comments, however, CMS believes some facilities will not be able to meet the deadline due to the magnitude of the enterprise they are undertaking (such as large scale construction of a replacement facility) combined with recent financial and construction constraints.

Proposed Rule: CMS would allow long-term care facilities that (1) are in the process of replacing the current system, (2) have made financial commitments to completing the renovations, (3) have submitted construction plans to state and local authorities, and (4) agree to interim steps to improve fire safety, to apply for a two-year extension to the August 13, 2013 deadline.

Organ Transplant Centers

Current Rule: In “Hospital Conditions of Participation: Requirements for Approval and Re-Approval of Transplant Centers to Perform Transplants Final Rule” (72 FR 15198), published May 30, 2007, CMS required that transplant centers undergo an automatic onsite review of all CoPs under a three-year re-approval cycle. As well, centers, among other things, must report to CMS any significant changes related to the center’s transplant program or changes that could affect a center’s compliance with the CoPs. For example, whenever there is a decrease in the center’s number of transplants or survival rates that could result in the center being out of compliance with the clinical experience (number of required transplants) or outcome (survival) requirements, CMS requires a three-year average of ten transplants per year.

Proposed Rule: Organ transplant centers would no longer have to be resurveyed every three years. CMS believes that it obtains enough information regarding the services provided at the facilities from other reporting mechanisms. If the information in those mechanisms indicates that a survey is necessary, CMS would conduct a survey of the facility. Also, for the same reasons, transplant facilities would no longer have to report to CMS when they are out of compliance with the three-year average of ten transplants per year.

Rural Health Care Providers

Current Rule: CMS identified several priority areas in the CoPs for critical access hospitals (CAHs) (42 CFR part 485), the CfCs for both rural health clinics (RHCs) and federally qualified health care centers (FQHCs) (42 CFR part 491), and payment provisions for RHCs (42 CFR part 405) for updates and revisions. These regulations currently require a physician to be present for sufficient periods of time, at least once in every two-week period, except in extraordinary circumstances. Some providers in extremely remote areas or areas with geographic barriers have difficulty complying with the precise biweekly schedule requirement.

Proposed Rule: CMS is proposing to remove the requirement that a physician be present at least once every two weeks at CAHs, RHCs, or FQHCs. There are substantial barriers to very remote facilities meeting this requirement. In addition, advances in telemedicine technologies have allowed physicians to still provide these services without having to be physically present. Secondly, CMS is proposing that CAHs would no longer be required to have a non-CAH staff member advise them on the development of patient care and procedures.

Clinical Laboratories

Current Rule: As set out in the Clinical Laboratory Improvement Amendments of 1988 (CLIA), laboratories are checked by conducting tests on samples sent to them. This proficiency testing (PT) is to be conducted without referring the sample to another laboratory for additional testing. Some labs, however, in the normal course of business, will send samples to other labs to confirm results or to retest if their test reveals an abnormality or result outside a specific range. If a PT sample is referred to another laboratory for this testing, the penalties are severe. A laboratory’s certificate may be suspended and the owner prohibited from owning another laboratory for two years.

Proposed Rule: Proposed changes would prevent confusion on the part of laboratories, reduce the risk of noncompliance, and establish policies under which certain PT referrals by laboratories would not generally be subject to revocation of a CLIA certificate, or a two-year probation on laboratory ownership or operation. CMS proposes to add a clarifying statement explicitly noting that the requirement to treat PT samples in the same manner as patient specimens does not mean that it is acceptable to refer PT samples to another laboratory for testing, even if that is the protocol for patient specimens. PT samples must never be sent to another laboratory under any circumstances. However, CMS also proposes to carve out a narrow exception to what constitutes an “internal” referral, and to provide for a less severe penalty for a single instance of PT referral.

CMS believes these regulatory modifications will streamline Medicare participation standards, and by eliminating outdated or overly burdensome requirements, providers can focus on treating patients—all while saving a large sum of money.

Comments on CMS’ proposed rule to reform Medicare regulations, published in the Federal Registrar on February 7, 2012, must be received by CMS no later than 5 P.M. on April 8, 2012, and may be submitted either electronically, by regular mail, by express of overnight mail, or by hand or courier.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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