Critical Access Hospital Regulatory Update & Current Developments

1. Critical Access Hospital Regulatory Update & Current Developments Wisconsin Office of Rural Health Workshop By: David H. Snow Hall, Render, Killian, Heath & Lyman, PC August 19, 2009

2. Overview of Topics • Review Status of CAH Program • 2010 Final Rule (IPPS) • Cost reimbursement for lab • Method II (Death Sentence?) • CAHs in counties redesignated urban • CAH provider based updates • Proposed Physician Supervision • Review 12/31/07 Provider Based Limitations • Definition of Campus • CAH Excluded Units • Review Relocation Developments 2

3. Status of CAH Program • There are approximately 1,300 CAHs in the US, per CMS • >50% of US rural community hospital • About 22% of all US hospitals • Paid $1.3 billion > PPS - $1million/CAH • About 850 are Necessary Provider CAHs • 453 have “health clinics” (CMS’s term?) • 81 have psych units • 20 have rehab units 3

4. CAH Program US CAHs 4

6. 6

7. Current Status of CAH Eligibility Requirements • CAHs must be >35 miles from a hospital unless: • Located in mountainous areas or have only secondary roads (15 miles) OR • Received state designation as a "necessary provider" • States CANNOT issue new NP designations after 12/31/2005 • Had to have NP designation, AND • Be certified as a CAH by January 1, 2006 • to be grandfathered from 35 mile rule • Proposal circulating to reinstate NP authority! 7

8. Current Status of CAH Eligibility Requirements • Effective 1/1/2004 CAHs may operate up to 25 inpatient beds in any combination of acute care and swing beds • Effective for cost reporting periods beginning after 10/1/2004CAHs may also have distinct part units: • Psych unit of up to 10 beds • Rehab unit of up to 10 beds • Excluded units do NOT count toward • 25 bed limit • ALOS calculation 8

9. Cost Reimbursement for Lab • Payment for clinical diagnostic laboratory tests: • Cost only for CAH patients • Beneficiaries not liable for any cost-sharing or co-payment • Non-patients (reference) paid on fee schedule • OLD rule • Patient must be physically present in the hospital when the draw is done • Draw by hospital personnel elsewhere – such as nursing home is not sufficient 9

10. Cost Reimbursement for Lab • MIPPA 2008 – effective 7/1/09 • CAH lab services "shall be treated as being furnished as part of outpatient critical access services without regard to whether the individual with respect to whom such services are furnished is physically present in the CAH, or in a SNF or a clinic (including a RHC) that is operated by the a CAH, at the time the specimen is collected." • Could be read to mean all reference work paid at cost……. • But not by CMS !!!! 10

11. Cost Reimbursement for Lab • Effective 7/1/09: Cost payment if patient is physically present in the CAH (including PB'd dept's, but not entities) when the specimen is collected, OR at least 1 of following: • Individual receives o/p services in CAH on the same day the specimen is collected • Specimen is collected by CAH "employee" • Other bundling rules trump cost payment – SNF consolidated billing 11

12. Cost Reimbursement for Lab • Individual receives o/p services in the CAH on the same day the specimen is collected, but it is not collected in the CAH: • Doesn't matter where specimen is collected • Home, Dr's office, back at SNF… • Or, who collects it • Patient, SNF staff, Dr. office staff… 12

13. Cost Reimbursement for Lab • Collected by a CAH employee? • W-2 employee of CAH • Including employees of CAH PB'd dept's • But not employees of PB'd entity (RHC) (huh?) • Contracted lab staff ? • As long as not employed by an entity at site where specimen is collected (SNF employee contracted to CAH) can be considered employee for these purposes • No info on how this coordinates with CAH COP that lab services be provided directly 13

14. Cost Reimbursement for Lab • Specimen collected by employee • CAH employee (as defined) must physically perform the specimen collection • Not enough to pick up the specimen • Example: CAH employee goes to SNF to do blood draw on part B resident, also picks up urine sample from SNF staff • Blood draw – cost reimbursed (851 bill type) • Urine sample – fee schedule (141 bill type) (unless patient also received CAH o/p services that day!) • See the cost reimbursement opportunity? 14

15. Method II Election • “All Inclusive” Election • facility payment will be reasonable costs • plus 115% of the Medicare fee schedule for professional services (billed to FI on UB) • Annual election by cost report year • in writing • at least 30 days before beginning of cost report year • applies to all physician services to outpatients for entire year for which physician reassigns billing rights to CAH • Need not be all physicians 15

16. Method II Election • “All Inclusive” Election (cont’d) • Outpatient Services only • Must be in hospital (provider based) space • PC billed by CAH - CAH pays physician • Physicians do not need to be employees (but will need a written contract - Stark, etc.) 16

17. Method II's Effective Death Sentence • 2010 Final Rule States that CAHs electing Method II will be paid 100% of costs instead of 101% • CMS believes this is correct statutory interpretation • Effective for cost reporting periods beg'g on or after 10/1/09 • Usually 1% on cost is more than 15% extra on physician fee schedule • Per CMS CAHs "may change election" • Annual election required so NOT filing should stop it • But, consider affirmatively notifying FI 17

18. CAHs in Counties Changed to Urban • Must be rural to be a CAH • Rural vs Urban defined by Census Bureau • 2008 – CB changed 3 counties to urban • None in Wisconsin • Same thing happened in 2004 – including Wisconsin • CAHs had to apply for redesignation to rural to keep CAH • CMS amended regs to allow redesignation again – but did not make permanent • Will happen again following 2010 census 18

19. CAH Provider Based Clarifications – Final Rule • CMS amended regulation to expressly state that CAH labs must meet the PB'd requirements • Technical interpretation of prior regulation excluded labs from PB'd rule • Ambulance • CAH operated ambulance providers, when there is no other ambulance w/i 35 miles, are paid at cost • In May CMS requested commentary on whether such CAH ambulance services should be required to meet the PB'd rules like other CAH departments and provider based entities (like RHCs) • CMS Decided NOT to apply PB'd rules in this case 19

20. Proposed Physician Supervision • CY 2010 HOPPS Proposed Rule would amend regs to clarify requirements for Medicare payment of o/p therapeutic & diagnostic services • Applies to CAHs and PPS hospitals • Addresses physician "in the house" assumption that has been built into o/p coverage rules for a long time • Who can supervise • Where do they have to be • Assumption – Not Really • Prior guidance stating we assume the supervision requirement will be met in the hospital did not mean a free pass • Must actually be "in the house" 20

21. Proposed Physician Supervision • Therapeutic Services: Who must be in the house? • CMS proposes to expand from physicians to also include: • PAs, NPs, Clinical Nurse Specialists & certified nurse-midwives • Clinical psychologists already have supervision authority • Can supervise all procedures they could do themselves w/i scope of state law, scope of practice, and hospital granted privileges • Carve outs for cardiac & pulmonary rehab 21

22. Proposed Physician Supervision • Where must supervising professionals be? • Must be present on the same campus, in the hospital, or the on-campus PB'd department of the hospital • Hospital = main buildings under control of & operated by hospital, and from which services are billed under hospital provider # • NOT in any other entity, even if co-located on campus: SNF, IDTF, MOB, ESRD, HHA… • AND, immediately available …. 22

23. Proposed Physician Supervision • Immediately available means…. • Available to furnish assistance and direction throughout the performance of the procedure • To step in and perform anytime, not just in emergency • Not available if performing another procedure that could not be interrupted • Do not need to be in same room/area • But…not so far away, even though in the hospital, that could not intervene right away 23

24. Proposed Physician Supervision • Diagnostic CAH o/p services – PHYSICIANS ONLY – NOT PAs, etc • CMS proposes to clarify that hospital/CAH must meet same level of supervision as applies under physician fee schedule – • General, direct, or personal • Services provided directly or under arrangement • Direct is the same standard as the therapeutic "incident to" standard • Reminder: for all services at an off-campus PB'd department – appropriate supervising professional must be at that site 24

25. Proposed Physician Supervision • Challenges for CAHs • Do not have to have a physician in the house for COPs/License • ER requirement is Physician, PA, or NP available on site w/i 30 minutes • If using this rule then no Medicare coverage for: • therapeutic services when professional is off site? • diagnostic services unless physician (NOT PA or NP etc) is in the house? • Comments due by August 31st 25

26. Provider Based Limit • Final 2008 HOPPS rule – 11/27/07: • Any off campus location opened or acquired after 1/1/08 that meets provider based requirements must be >35(15 in M/SR areas) mile drive from any other hospital or CAH • Applies to excluded psych and rehab units also • Essentially includes all PB’d sites in determining whether 35/15 mile/NP Location Rules Met • Failure to comply: CAH status subject to termination unless the CAH terminates the off campus arrangement • Converting to free-standing should be sufficient • Not closing site 26

27. CAH Provider Based Limit • Sites operated and qualified as provider based before 1/1/08 are grandfathered • “created or acquired after 1/1/08” • Converting free standing pre 1/1/08 site to PB’d after 1/1/08 is not grandfathered • CMS approval/attestation not required • Relocation of pre-1/1/08 PB’d site loses grandfather status - it is site specific!!! • May be outside CAH's control - lease termination • Changes at grandfathered site: • Addition of footprint or services • Construction of new building to replace old • Should be able to keep status – but confirm with regional office 27

28. CAH Provider Based Limit • After 12/31/2007 - CAH corporation is NOT prohibited from: • Operating free standing sites, just PB’d. So lose option to get: • Cost on hospital o/p facility services • 15% bonus for Method II professional billing • Opening Hospital Based - Rural Health Clinics • Exempt because not part of hospital provider • Have separate provider number • Sites under development before 1/1/08 • Need CMS approval of prior plans/commitments • Were not required to file before 1/1/08 • Law does NOT limit PPS hospitals from opening PB’d sites within 35 miles of a CAH!!! 28

29. CAH Provider Based Limit • CMS Guidance 12/21/08 and 6/12/09 • CAHs seeking a PB'd determination for newly created or acquired off campus sites MUST submit an attestation to Regional Office to determine location requirements • Regulation 413.65 says PB'd Attestations Optional • Follow Guidance ! • Few places left in Wisconsin that can meet location tests, but…. • PB'd site may meet tests even though campus does not • And, remember 15 mile rule 29

30. Off Campus Clinic Location Example 34 (CAH-NP) (PBC) 16 13 23 = Primary Roads = Secondary Roads 30

31. Definition of Campus • So What is "On Campus" ???? • "Campus means the physical area immediately adjacent to the provider's main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider's campus" • Affects: • Ability to open new PB'd services given 12/31/07 restrictions • Relocation test 31

32. Definition of Campus • On Campus Case Study • Hospital out of state – but in Region 5 • Key to lines • Blue = Owned land + 250 yards • Red = hospital building + 250 yards • Orange = hospital operated ambulance + 250 yards • Green = expansion parcel for new building to house PT/OT, various o/p ancillary & hospital admin/support, & physician offices • Portion of new building would be within Red & Orange 250 yard rules • Is the building on campus? • If yes, does it expand 250 yard footprint? 32

34. Definition of Campus • Take aways • "Main buildings" not defined – Region 5 interprets as primarily I/P care. • Only main buildings enlarge footprint via 250 yard rule • Region 5 rarely has approved discretionary expansion • Maybe if nothing but open space between main buildings and new structure 34

35. Excluded Units • CAHs can have up to 10 bed psych &/or rehab • Paid under psych or rehab PPS – NOT cost • Process for exclusion • Can only be excluded on 1st day of cost reporting period • Surveys cannot be retroactive to before date of survey • Catch 22 - cannot get survey until operational • Need to use some of 25 beds for "unit" pre-exclusion to trigger survey • Need lots of advance planning/notice to DHFS and CMS 35

36. CAH: Relocations • At the new location a non-NP CAH must meet all of the CAH Conditions of Participation, including the location requirement • More than 35 miles from any hospital/CAH • Or, more than 15 miles of mountainous terrain or secondary roads between it & any other hospital or CAH • Primary roads = Federal highways & state highways with 2 or more lanes in each direction • Wisconsin did not originally use 15 mile rule – a few spots can meet it. CMS has approved a NP switching to 15 mile status to allow a move 36

37. NP CAH Relocation • CMS Position not CAH friendly • If relocating NP CAH does not satisfy original NP criteria AND 75% tests then - deemed a closed business • CAH provider agreement is terminated • Would need to recertify as a PPS hospital • CMS position that it can reassess NP and 75% up to 1 year AFTER move – Blind Leap Effect! 37

38. NP CAH: Relocations • 42 CFR 485.610(d) (added 8/12/05) If a <1/1/06 NP CAH relocates >1/1/06 it can continue to meet location requirement based on NP ONLY IF: • Serve 75% of the same service area • Provide 75% of the same services • Staffed by 75% of the same staff • Despite CMS commentary in final rule: • “a NP CAH can relocate… provided it is essentially the same facility in its new location. To help ensure that the facility is the same we will require the relocated NP CAH to [meet the 75% tests]” • And other similar comments focusing on 75% tests • No other requirement in Regulation, BUT 38

39. NP CAH Relocation • CMS takes the position that IN ADDITION to 75% tests NP CAH must: • Satisfy the exact same N.P. criteria the CAH originally met • Not any of state’s NP criteria, but the same one(s) the CAH was originally approved under • Must be re-verified by state agency • CMS bases position on final rule commentary: • “The state agencies and Regional Offices will closely monitor each NP CAH that relocates to ensure that it will continue to provide services based on the criteria that qualified the CAH to be designated as a NP” • No legal challenges yet – unlikely due to amount at stake (new hospital construction) 39

40. So What is a Relocation? • Final Rule Commentary (8/12/05) • All new necessary provider CAH facilities that will be constructed after Jan. 1, 2006 will be considered relocated facilities • CMS issued interpretive guidance on the NP CAH relocation rule 11/14/05, 9/7/07, 1/18/08 and 6/12/09 • All discuss CMS position that a CAH with a grandfathered NP status must also meet the same criteria it originally met for NP CAH designation • Renovations or expansion of a CAH’s existing building or addition of buildings on the existing main campus of the CAH is not considered a relocation • As long as some portion of current building is kept and used for hospital purposes (allowable space), patient care or admin/support CAH can add anything, including all new beds footprint, within 250 yards 40

41. NP CAH: Relocation • Relocating NP CAH must work with CMS RO and state rural health agency • Letter of assurance re NP criteria • Same 2 or 5 of 10 ???? • Or maybe not? • Pre-relocation attestation letter and Post-relocation process • NP verification • Document the three 75% tests • Get full survey & approval of all CAH COPs • Can take up to 1 year after move to obtain final CAH continuation approval 41

42. "Landlocked" NP Options • Relocate and go back to PPS Payment (NOT) • Work to meet NP criteria (difficult, at best) • Work w/ CMS to obtain approval for: • As much renovation & reconfiguration as possible • w/o crossing relocation line • CMS will review plans and provide informal guidance that plans are not a relocation • Stay “as is” • Change the law…. 42

43. Critical Access Hospital Regulatory Update & Current DevelopmentsThank you! By: David H. Snow Hall, Render, Killian, Heath & Lyman, PC August 19, 2009