On November 12, 2021, the Centers for Medicare & Medicaid Services (“CMS”) issued its final guidance for hospitals to clarify how CMS and state agency surveyors will evaluate space-sharing or contracted staff and service arrangements with other hospitals or healthcare providers for compliance with the Medicare Conditions of Participation (“CoPs”).

According to CMS, “[c]o-location occurs when two Medicare certified hospitals or a Medicare certified hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services.” CMS provides the following examples of co-location in its guidance:

  • One hospital entirely located on another hospital’s campus or in the same building as another hospital
  • Part of one hospital’s inpatient services (e.g., at a remote location or satellite) is in another hospital’s building or on another hospital’s campus
  • Outpatient department of one hospital is located on the same campus of or in the same building as another hospital or a separately Medicare-certified provider/supplier such as an ambulatory surgical center (ASC), rural health clinic (RHC), federally-qualified healthcare center (FQHC), an imaging center, etc.

CMS further specifies that any co-located entities that are in the same location as another hospital or healthcare entity must each independently satisfy compliance with the Medicare and Medicaid program requirements applicable to that provider.

Notable revisions from CMS’s draft guidance issued in May 2019 include removal of explicit instructions that staff provided under arrangements must be assigned to only one hospital during a specific shift.  Also removed from the draft guidance is an explicit prohibition on travel through clinical spaces of shared hospitals.

Hospitals are responsible for ensuring that shared spaces are in compliance with both section 1861(e) of the Social Security Act and 42 CFR Part 482. CMS also explains that hospitals may contract for certain services, such as laboratory, pharmacy, maintenance, security, dietary, and housekeeping services, among others, with the co-located facility, but the hospital is ultimately responsible for compliance with the CoPs and the services will be treated as if provided by the hospital directly. In terms of staffing, the hospital needs to meet the CoPs’ staffing requirements and the hospital should maintain “evidence that the hospital’s staff [when staff are under an arrangement with another entity] are meeting the needs of patients for whom they are providing care.”

Surveyors will be responsible for surveying both the hospital’s space and any shared spaces with the co-located facility. CMS explains that any deficiency found in the shared space would be cited for the hospital being surveyed and may trigger a complaint of the co-located facility based on the regulatory requirements applicable to that provider. Surveyors will be surveying the hospital being surveyed for compliance with the CoPs and not to evaluate the space for co-location.

Special thanks to Lauryn Robinson, Law Clerk (Austin) and Stephanie Metherall, Law Clerk (Washington, DC) for their assistance with this post.