Critical Access Hospital Regulatory Update Current Developments

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

Overview of Topics n n Review Status of CAH Program 2010 Final Rule (IPPS) n n n n 2 n 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

Status of CAH Program n n n There 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 - $1 million/CAH About 850 are Necessary Provider CAHs n n n 3 453 have “health clinics” (CMS’s term? ) 81 have psych units 20 have rehab units

CAH Program US CAHs 4

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Current Status of CAH Eligibility Requirements n CAHs must be >35 miles from a hospital unless: n n n States CANNOT issue new NP designations after 12/31/2005 n n 7 Located in mountainous areas or have only secondary roads (15 miles) OR Received state designation as a "necessary provider" 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!

Current Status of CAH Eligibility Requirements n n 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 10/1/2004 CAHs may also have distinct part units: n n n Excluded units do NOT count toward n n 8 Psych unit of up to 10 beds Rehab unit of up to 10 beds 25 bed limit ALOS calculation

Cost Reimbursement for Lab n Payment for clinical diagnostic laboratory tests: n n OLD rule n n 9 Cost only for CAH patients Beneficiaries not liable for any costsharing or co-payment Non-patients (reference) paid on fee schedule 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

Cost Reimbursement for Lab n MIPPA 2008 – effective 7/1/09 n n 10 n 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 !!!!

Cost Reimbursement for Lab n 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: n n n 11 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

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

Cost Reimbursement for Lab n Collected by a CAH employee? n W-2 employee of CAH n n n Contracted lab staff ? n n 13 Including employees of CAH PB'd dept's But not employees of PB'd entity (RHC) (huh? ) 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

Cost Reimbursement for Lab n Specimen collected by employee n n n Example: CAH employee goes to SNF to do blood draw on part B resident, also picks up urine sample from SNF staff n n n 14 CAH employee (as defined) must physically perform the specimen collection Not enough to pick up the specimen 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?

Method II Election n “All Inclusive” Election n Annual election by cost report year n n 15 facility payment will be reasonable costs plus 115% of the Medicare fee schedule for professional services (billed to FI on UB) 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

Method II Election n “All Inclusive” Election (cont’d) n n 16 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. )

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

CAHs in Counties Changed to Urban n Must be rural to be a CAH Rural vs Urban defined by Census Bureau 2008 – CB changed 3 counties to urban n n 18 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

CAH Provider Based Clarifications – Final Rule n CMS amended regulation to expressly state that CAH labs must meet the PB'd requirements n n Ambulance n n n 19 Technical interpretation of prior regulation excluded labs from PB'd rule 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

Proposed Physician Supervision n CY 2010 HOPPS Proposed Rule would amend regs to clarify requirements for Medicare payment of o/p therapeutic & diagnostic services n n 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 n n n Assumption – Not Really n 20 Who can supervise Where do they have to be n 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"

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

Proposed Physician Supervision n Where must supervising professionals be? n n 22 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 ….

Proposed Physician Supervision n Immediately available means…. n n n 23 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

Proposed Physician Supervision n Diagnostic CAH o/p services – PHYSICIANS ONLY – NOT PAs, etc n n n 24 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 therapeutic "incident to" standard Reminder: for all services at an off-campus PB'd department – appropriate supervising professional must be at that site

Proposed Physician Supervision n Challenges for CAHs n n n If using this rule then no Medicare coverage for: n n n 25 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 therapeutic services when professional is off site? diagnostic services unless physician (NOT PA or NP etc) is in the house? Comments due by August 31 st

Provider Based Limit n Final 2008 HOPPS rule – 11/27/07: n n 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 n 26 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 n Converting to free-standing should be sufficient Not closing site

CAH Provider Based Limit n Sites operated and qualified as provider based before 1/1/08 are grandfathered n n Relocation of pre-1/1/08 PB’d site loses grandfather status - it is site specific!!! n n May be outside CAH's control - lease termination Changes at grandfathered site: n n n 27 “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 Addition of footprint or services Construction of new building to replace old Should be able to keep status – but confirm with regional office

CAH Provider Based Limit n After 12/31/2007 - CAH corporation is NOT prohibited from: n Operating free standing sites, just PB’d. So lose option to get: n n n Opening Hospital Based - Rural Health Clinics n n 28 Exempt because not part of hospital provider Have separate provider number Sites under development before 1/1/08 n n Cost on hospital o/p facility services 15% bonus for Method II professional billing 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!!!

CAH Provider Based Limit n CMS Guidance 12/21/08 and 6/12/09 n n 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…. n 29 n PB'd site may meet tests even though campus does not And, remember 15 mile rule

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

Definition of Campus n So What is "On Campus" ? ? n n "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: n n 31 Ability to open new PB'd services given 12/31/07 restrictions Relocation test

Definition of Campus n On Campus Case Study n n Hospital out of state – but in Region 5 Key to lines n n n n 32 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?

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Definition of Campus n Take aways n n 34 "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

Excluded Units n n n CAHs can have up to 10 bed psych &/or rehab Paid under psych or rehab PPS – NOT cost Process for exclusion n n 35 Can only be excluded on 1 st 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

CAH: Relocations n At the new location a non-NP CAH must meet all of the CAH Conditions of Participation, including the location requirement n n 36 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

NP CAH Relocation n n CMS Position not CAH friendly If relocating NP CAH does not satisfy original NP criteria AND 75% tests then - deemed a closed business n n n 37 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!

NP CAH: Relocations n 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: n n Despite CMS commentary in final rule: n n n 38 Serve 75% of the same service area Provide 75% of the same services Staffed by 75% of the same staff “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

NP CAH Relocation n CMS takes the position that IN ADDITION to 75% tests NP CAH must: n n CMS bases position on final rule commentary: n n 39 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 “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)

So What is a Relocation? n Final Rule Commentary (8/12/05) n n 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 n n 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 n 40 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

NP CAH: Relocation n Relocating NP CAH must work with CMS RO and state rural health agency n Letter of assurance re NP criteria n n n Pre-relocation attestation letter and Postrelocation process n n 41 Same 2 or 5 of 10 ? ? Or maybe not? 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

"Landlocked" NP Options n n n Relocate and go back to PPS Payment (NOT) Work to meet NP criteria (difficult, at best) Work w/ CMS to obtain approval for: n n n 42 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….

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