Notice2022-02739
Medicare Program; Announcement of Request for an Exception to the Prohibition on Expansion of Facility Capacity Under the Hospital Ownership and Rural Provider Exceptions to the Physician Self-Referral Prohibition
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Published
February 9, 2022
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
The Social Security Act prohibits a physician-owned hospital from expanding its facility capacity unless the Secretary of the Department of Health and Human Services grants the hospital's request for an exception to that prohibition after considering input on the request from individuals and entities in the community where the hospital is located. The Centers for Medicare & Medicaid Services has received a request from a physician-owned hospital for an exception to the prohibition on expansion of facility capacity. This notice solicits comments on the request from individuals and entities in the community in which the hospital is located. Community input may inform our determination regarding whether the requesting hospital qualifies for an exception to the prohibition on expansion of facility capacity.
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<title>Federal Register, Volume 87 Issue 27 (Wednesday, February 9, 2022)</title>
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[Federal Register Volume 87, Number 27 (Wednesday, February 9, 2022)]
[Notices]
[Pages 7471-7473]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-02739]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1774-PN]
Medicare Program; Announcement of Request for an Exception to the
Prohibition on Expansion of Facility Capacity Under the Hospital
Ownership and Rural Provider Exceptions to the Physician Self-Referral
Prohibition
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Notice with request for comment.
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SUMMARY: The Social Security Act prohibits a physician-owned hospital
from expanding its facility capacity unless the Secretary of the
Department of Health and Human Services grants the hospital's request
for an exception to that prohibition after considering input on the
request from individuals and entities in the community where the
hospital is located. The Centers for Medicare & Medicaid Services has
received a request from a physician-owned hospital for an exception to
the prohibition on expansion of facility capacity. This notice solicits
comments on the request from individuals and entities in the community
in which the hospital is located. Community input may inform our
determination regarding whether the requesting hospital qualifies for
an exception to the prohibition on expansion of facility capacity.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, by March 11, 2022.
ADDRESSES: In commenting, refer to file code CMS-1774-PN.
Comments, including mass comment submissions, must be submitted in
one of the following three ways (please choose only one of the ways
listed):
1. Electronically. You may submit electronic comments on this
regulation to <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-1774-PN, P.O. Box 8010,
Baltimore, MD 21244-1850.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-1774-PN, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: <a href="/cdn-cgi/l/email-protection#30607f781d754853554044595f5e625541455543444370535d431e5858431e575f46"><span class="__cf_email__" data-cfemail="9acad5d2b7dfe2f9ffeaeef3f5f4c8ffebefffe9eee9daf9f7e9b4f2f2e9b4fdf5ec">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments
received before the close of the comment period are available for
viewing by the public, including any personally identifiable or
confidential business information that is included in a comment. We
post all comments received before the close of the comment period on
the following website as soon as possible after they have been
received: <a href="http://www.regulations.gov">http://www.regulations.gov</a>. Follow the search instructions on
that website to view public comments. CMS will not post on
<a href="http://Regulations.gov">Regulations.gov</a> public comments that make threats to individuals or
institutions or suggest that the individual will take actions to harm
the individual. CMS continues to encourage individuals not to submit
duplicative comments. We will post acceptable comments from multiple
unique
[[Page 7472]]
commenters even if the content is identical or nearly identical to
other comments.
I. Background
Section 1877 of the Social Security Act (the Act), also known as
the physician self-referral law: (1) Prohibits a physician from making
referrals for certain designated health services payable by Medicare to
an entity with which he or she (or an immediate family member) has a
financial relationship unless the requirements of an applicable
exception are satisfied; and (2) prohibits the entity from filing
claims with Medicare (or billing another individual, entity, or third
party payer) for any improperly referred designated health services. A
financial relationship may be an ownership or investment interest in
the entity or a compensation arrangement with the entity. The statute
establishes a number of specific exceptions and grants the Secretary of
the Department of Health and Human Services (the Secretary) the
authority to create regulatory exceptions for financial relationships
that do not pose a risk of program or patient abuse.
Section 1877(d) of the Act sets forth exceptions related to
ownership or investment interests held by a physician (or an immediate
family member of a physician) in an entity that furnishes designated
health services. Section 1877(d)(2) of the Act provides an exception
for ownership or investment interests in rural providers (the ``rural
provider exception''). In order to qualify for the rural provider
exception, the designated health services must be furnished in a rural
area (as defined in section 1886(d)(2) of the Act) and substantially
all the designated health services furnished by the entity must be
furnished to individuals residing in a rural area, and, in the case
where the entity is a hospital, the hospital must meet the requirements
of section 1877(i)(1) of the Act no later than September 23, 2011.
Section 1877(d)(3) of the Act provides an exception for ownership or
investment interests in a hospital located outside of Puerto Rico (the
``whole hospital exception''). In order to qualify for the whole
hospital exception, the referring physician must be authorized to
perform services at the hospital, the ownership or investment interest
must be in the hospital itself (and not merely in a subdivision of the
hospital), and the hospital must meet the requirements of section
1877(i)(1) of the Act no later than September 23, 2011.
II. Prohibition on Facility Expansion
Section 6001(a)(3) of the Patient Protection and Affordable Care
Act (Affordable Care Act) (Pub. L. 111-148) amended the rural provider
and whole hospital exceptions to provide that a hospital may not
increase the number of operating rooms, procedure rooms, and beds
beyond that for which the hospital was licensed on March 23, 2010 (or,
in the case of a hospital that did not have a provider agreement in
effect as of this date, but did have a provider agreement in effect on
December 31, 2010, the effective date of such provider agreement) (the
hospital's ``baseline number of operating rooms, procedure rooms, and
beds''). Thus, since March 23, 2010, a physician-owned hospital that
seeks to avail itself of either exception is prohibited from expanding
the number of operating rooms, procedure rooms, and beds (``facility
capacity'') unless it qualifies as an ``applicable hospital'' or ``high
Medicaid facility'' (as defined in sections 1877(i)(3)(E), (F) of the
Act and 42 CFR 411.362(c)(2), (3) of our regulations) and has been
granted an exception to the prohibition by the Secretary.
Section 6001(a)(3) of the Affordable Care Act added new section
1877(i)(3)(A)(i) of the Act, which required the Secretary to establish
and implement an exception process to the prohibition on expansion of
facility capacity for hospitals that qualify as an ``applicable
hospital.'' Section 1106 of the Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111-152) amended section
1877(i)(3)(A)(i) of the Act to require the Secretary to establish and
implement an exception process to the prohibition on expansion of
facility capacity for hospitals that qualify as either an ``applicable
hospital'' or a ``high Medicaid facility.'' These terms are defined at
sections 1877(i)(3)(E) and 1877(i)(3)(F) of the Act. The process for
requesting an exception to the prohibition on expansion of facility
capacity is discussed in section III of this notice.
The requirements for qualifying as an applicable hospital are set
forth at Sec. 411.362(c)(2), and the requirements for qualifying as a
high Medicaid facility are set forth at Sec. 411.362(c)(3). An
applicable hospital means a hospital: (1) That is located in a county
in which the percentage increase in the population during the most
recent 5-year period (as of the date that the hospital submits its
request for an exception to the prohibition on expansion of facility
capacity) is at least 150 percent of the percentage increase in the
population growth of the State in which the hospital is located during
that period, as estimated by the Bureau of the Census; (2) whose annual
percent of total inpatient admissions under Medicaid is equal to or
greater than the average percent with respect to such admissions for
all hospitals in the county in which the hospital is located during the
most recent 12-month period for which data are available (as of the
date that the hospital submits its request for an exception to the
prohibition on expansion of facility capacity); (3) that does not
discriminate against beneficiaries of Federal health care programs and
does not permit physicians practicing at the hospital to discriminate
against such beneficiaries; (4) that is located in a State in which the
average bed capacity in the State is less than the national average bed
capacity; and (5) that has an average bed occupancy rate that is
greater than the average bed occupancy rate in the State in which the
hospital is located. The regulations at Sec. 411.362(c)(2)(ii), (iv),
and (v) specify acceptable data sources for determining whether a
hospital qualifies as an applicable hospital. A ``high Medicaid
facility'' means a hospital that: (1) Is not the sole hospital in a
county; (2) with respect to each of the three most recent 12-month
periods for which data are available, has an annual percent of total
inpatient admissions under Medicaid that is estimated to be greater
than such percent with respect to such admissions for any other
hospital located in the county in which the hospital is located; and
(3) does not discriminate against beneficiaries of Federal health care
programs and does not permit physicians practicing at the hospital to
discriminate against such beneficiaries. The regulation at Sec.
411.362(c)(3)(ii) specifies the acceptable data sources for determining
whether a hospital qualifies as a high Medicaid facility.
III. Exception Request Process
In the Calendar Year (CY) 2012 Outpatient Prospective Payment
System/Ambulatory Surgical Centers (OPPS/ASC) final rule (76 FR 74121),
we published regulations establishing the process for a hospital to
request an exception from the prohibition on facility expansion (the
``exception process'') at Sec. 411.362(c)(4), community input related
to a hospital's request at Sec. 411.362(c)(5), and related definitions
at Sec. 411.362(a). In the CY 2021 OPPS/ASC final rule (85 FR 85866),
we revised the regulations that set forth the exception process with
respect to high Medicaid facilities to remove certain regulatory
restrictions that are not included in the Act. As of January 1,
[[Page 7473]]
2021, a high Medicaid facility may request an exception to the
prohibition on expansion of facility capacity more frequently than once
every 2 years; may request to expand its facility capacity beyond 200
percent of the hospital's baseline number of operating rooms, procedure
rooms, and beds; and is not restricted to locating approved expansion
capacity on the hospital's main campus.
Section 1877(i)(3)(A)(ii) of the Act and our regulations at Sec.
411.362(c)(5) provide that individuals and entities in the community in
which the provider requesting the exception is located must have an
opportunity to provide input with respect to the provider's application
for the exception. For further information, we refer readers to the CMS
website at: <a href="http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html">http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html</a>. As stated in our
regulations, we will solicit community input on the request for an
exception by publishing a notice of the request in the Federal
Register. Individuals and entities in the hospital's community will
have 30 days to submit comments on the request. Community input must
take the form of written comments and may include documentation
demonstrating that the physician-owned hospital requesting the
exception does or does not qualify as an ``applicable hospital'' or
``high Medicaid facility,'' as such terms are defined in Sec.
411.362(c)(2) and (3). In the CY 2012 OPPS/ASC final rule, we gave
examples of community input, such as documentation demonstrating that
the hospital does not satisfy one or more of the data criteria or that
the hospital discriminates against beneficiaries of Federal health
programs; however, we noted that these were examples only and that we
will not restrict the type of community input that may be submitted (76
FR 74522). If we receive timely comments from the community, we will
notify the hospital, and the hospital will have 30 days after such
notice to submit a rebuttal statement (Sec. 411.362(c)(5)).
A request for an exception to the facility expansion prohibition is
considered complete as follows:
<bullet> If the request, any written comments, and any rebuttal
statement include only filed Medicare hospital cost report data
(Healthcare Cost Report Information System (``HCRIS'') data): (1) The
end of the 30-day comment period if CMS receives no written comments
from the community; or (2) the end of the 30-day rebuttal period if CMS
receives written comments from the community, regardless of whether the
hospital submitting the request submits a rebuttal statement (Sec.
411.362(c)(5)(i)).
<bullet> If the request, any written comments, or any rebuttal
statement include data from an external data source, no later than: (1)
180 days after the end of the 30-day comment period if CMS receives no
written comments from the community; and (2) 180 days after the end of
the 30-day rebuttal period if CMS receives written comments from the
community, regardless of whether the hospital submitting the request
submits a rebuttal statement (Sec. 411.362(c)(5)(ii)).
The CMS decision to grant or deny a hospital's request for an
exception to the prohibition on expansion of facility capacity must be
published in the Federal Register in accordance with our regulations at
Sec. 411.362(c)(7).
IV. Hospital Exception Request
As permitted by section 1877(i)(3) of the Act and our regulations
at Sec. 411.362(c), the following physician-owned hospital has
requested an exception to the prohibition on expansion of facility
capacity:
Name of Facility: Doctors Hospital at Renaissance, Ltd.
Location: 5501 South McColl Road, Edinburg, Texas 78539
Basis for this Exception Request: High Medicaid Facility
We seek comments on this request from individuals and entities in
the community in which the hospital is located. We encourage interested
parties to review the hospital's request, which is posted on the CMS
website at: <a href="http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html">http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html</a>. We especially
welcome comments regarding whether the hospital qualifies as a high
Medicaid facility.
Individuals and entities wishing to submit comments on the
hospital's request should state whether or not they are in the
community in which the hospital is located. We suggest that parties
review the DATES and ADDRESSES sections above to ensure timely
submission of their comments.
V. Collection of Information Requirements
This document does not impose information collection requirements,
that is, reporting, recordkeeping or third-party disclosure
requirements. Consequently, there is no need for review by the Office
of Management and Budget under the authority of the Paperwork Reduction
Act of 1995 (44 U.S.C. 3501 et seq.).
VI. Response to Comments
We will consider all comments we receive by the date and time
specified in the DATES section of this preamble.
The Administrator of the Centers for Medicare & Medicaid Services
(CMS), Chiquita Brooks-LaSure, having reviewed and approved this
document, authorizes Lynette Wilson, who is the Federal Register
Liaison, to electronically sign this document for purposes of
publication in the Federal Register.
Dated: February 4, 2022.
Lynette Wilson,
Federal Register Liaison, Centers for Medicare & Medicaid Services.
[FR Doc. 2022-02739 Filed 2-8-22; 8:45 am]
BILLING CODE 4120-01-P
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