The Centers for Medicare and Medicaid Services (CMS) recently issued Survey and Certification Letter 17-44, clarifying what it means for a facility to be “primarily engaged” in inpatient care for purposes of meeting the definition of a hospital and qualifying for reimbursement as a hospital under Medicare and Medicaid. A facility is primarily engaged in providing inpatient services when it directly provides such services to inpatients (i.e. a patient admitted as an inpatient with an expectation that he or she will require hospital care that is expected to span at least two midnights). CMS does not require a facility to have a specific inpatient to outpatient ratio to meet the definition of primarily engaged. Instead, CMS considers the following factors:

  • 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,
  • volume of outpatient surgical procedures compared to inpatient surgical procedures,
  • staffing patterns, and
  • patterns of ADC by the day of the week.

In order for surveyors to determine whether a facility is primarily engaged in inpatient care, a facility must have at least two inpatients at the time of survey. If a facility does not have two inpatients at the time of survey, surveyors will conduct an initial review of the facility’s admission data and will attempt a second survey for facilities with a minimum ADC of two and a minimum ALOS of two midnights over the past 12 months. If the facility does not have the minimum ADC and ALOS, the CMS Regional Office will consider the factors listed above to determine whether a second survey will be performed or recommend denial of an initial application or termination of a current provider agreement. On Wednesday, U.S. Republican Senators introduced ACA repeal legislation. Senators Lindsey Graham (R-SC), Bill Cassidy (R-LA), Dean Heller (R-NV), and Ron Johnson (R-WI) proposed new legislation to repeal and replace the Affordable Care Act (ACA). The Graham-Cassidy legislation would repeal the ACA’s individual and employer mandates and medical device tax and replace the ACA with annual block grants to the states. Republicans have until September 30th to pass a health care bill with a simple majority of 51 votes. The Congressional Budget Office (CBO) has not yet scored the proposed legislation, and Senate Republican leadership has requested the CBO to expedite its scoring of the bill.

In addition to being primarily engaged in inpatient care, a facility must meet and continue to meet the statutory definition of a hospital as codified in section 1861(e) of the Social Security Act and meet all Condition of Participation requirements. CMS stressed that having a state license to operate as a hospital does not automatically qualify a facility as a hospital for Medicare and Medicaid reimbursement and that hospital status can only be conveyed and approved by the CMS Regional Office after a survey has been conducted. Facilities seeking to enroll in Medicare as a hospital or currently enrolled as a hospital in the Medicare program should confirm that they are in full compliance with CMS’ newly issued guidance, which is effective immediately, in order to avoid termination of an existing provider agreement or being denied enrollment as a hospital in the Medicare or Medicaid programs.

On Wednesday, Democrats in the Senate promoted their own health care legislation. Senator Bernie Sanders (I-VT) with the support of 16 Democratic Senators proposed the Medicare for All Act of 2017, which would result in a single payer health system and expand Medicare coverage benefits to include dental care, vision services, and comprehensive reproductive, maternity, and new born care. The proposed legislation would also eliminate deductibles and lower other out-of-pocket expenses for health care benefits. While Sanders released a list of potential financial options for Medicare for all, the proposed legislation does not include financing details.