Notice2022-27566
Medicare Program; Approval 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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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 20, 2022
Issuing agencies
Health and Human Services DepartmentCenters for Medicare & Medicaid Services
Abstract
This notice announces our decision to approve the request from Doctors Hospital at Renaissance, Ltd.'s for an exception to the prohibition on expansion of facility capacity.
Full Text
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<title>Federal Register, Volume 87 Issue 243 (Tuesday, December 20, 2022)</title>
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[Federal Register Volume 87, Number 243 (Tuesday, December 20, 2022)]
[Notices]
[Pages 77844-77847]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27566]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1774-FN]
Medicare Program; Approval 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.
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SUMMARY: This notice announces our decision to approve the request from
Doctors Hospital at Renaissance, Ltd.'s for an exception to the
prohibition on expansion of facility capacity.
DATES: The decision announced in this notice is applicable on December
16, 2022.
ADDRESSES: <a href="/cdn-cgi/l/email-protection#09594641244c716a6c797d6066675b6c787c6c7a7d7a496a647a2761617a276e667f"><span class="__cf_email__" data-cfemail="7626393e5b330e151306021f1918241307031305020536151b05581e1e0558111900">[email protected]</span></a>.
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. In addition, 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 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 a process for granting exceptions 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 a process for granting exceptions to the prohibition on
expansion of facility capacity for hospitals that qualify as either an
``applicable hospital'' or a ``high
[[Page 77845]]
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. 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)(2)(ii) specifies the
acceptable data sources for determining whether a hospital qualifies as
an applicable hospital, and 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 Approval 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), the process for
obtaining 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 2015 OPPS/ASC final rule (79 FR 66770), we expanded the
permissible data sources on which a hospital may rely to show that it
is qualified to request an exception to the prohibition on expansion of
facility capacity (that is, that the hospital qualifies as either an
applicable hospital or a high Medicaid facility). We also amended the
exception process established in the CY 2012 OPPS/ASC final rule to
increase the period of time after which an exception request will be
deemed complete when an external data source is used by a requesting
hospital or in the public comments to determine whether a hospital
qualifies as either an applicable hospital or high Medicaid facility.
In the CY 2015 OPPS/ASC final rule, we stated that it is possible (if
not likely) that, when reviewing an expansion exception request, the
Centers for Medicare & Medicaid Services (CMS) would need to verify the
data (and other information, if any) provided by the requesting
hospital and any commenters, as well as consider the data in light of
the information otherwise available to CMS (79 FR 66995).
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, 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, if
its request is granted, is not restricted to locating approved
expansion capacity on the hospital's main campus. An applicable
hospital remains subject to the statutory limitation on the frequency
of requests for an exception to the prohibition on expansion of
facility capacity (no more than once every 2 years); may not request to
expand its facility capacity beyond 200 percent of the hospital's
baseline number of operating rooms, procedure rooms, and beds; and, if
its request is granted, is restricted to locating approved expansion
capacity on the hospital's main campus.
Our regulations at Sec. 411.362(c)(5) require us to 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 hospital requesting the
exception does or does not qualify as an applicable hospital or high
Medicaid facility as defined at Sec. 411.362(c)(2) and (3),
respectively. In the November 30, 2011 final rule (76 FR 74522), 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
do not restrict the type of community input that may be submitted. If
we receive timely comments from the community, we notify the requesting
hospital, and the hospital has 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 Healthcare Provider Cost Reporting Information
System (HCRIS) data, the request is considered complete as of: (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, the request is
considered complete no later than: (1) 180 days after the end of the
30-day comment period if CMS receives no written comments from the
community; or (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
[[Page 77846]]
submitting the request submits a rebuttal statement (Sec.
411.362(c)(5)(ii)).
If we grant the request for an exception to the prohibition on
expansion of facility capacity for a hospital that qualifies as an
applicable hospital, the expansion may occur only in facilities on the
hospital's main campus and may not result in the number of operating
rooms, procedure rooms, and beds for which the hospital is licensed
exceeding 200 percent of the hospital's baseline number of operating
rooms, procedure rooms, and beds (Sec. 411.362(c)(6)). If we grant the
request for an exception to the prohibition on expansion of facility
capacity for a hospital that qualifies as a high Medicaid facility,
these limitations do not apply. 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. Public Response to Notice With Comment Period
On February 9, 2022, we published a notice in the Federal Register
entitled ``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''
(87 FR 7471). In the February 9, 2022 notice, we stated that, as
permitted by section 1877(i)(3) of the Act and our regulations at Sec.
411.362(c), the following physician-owned hospital 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 Exception Request: High Medicaid Facility.
The request that is the subject of this notice is the second
request for an exception to the prohibition against expansion of
facility capacity that Doctors Hospital at Renaissance, Ltd. (DHR) has
submitted to CMS. In the September 17, 2015 Federal Register notice (80
FR 55851), we published our decision granting DHR's request to add a
total of 551 operating rooms, procedure rooms, and beds for which it is
licensed, permitting an increase in DHR's facility capacity to 200
percent of its baseline number of operating rooms, procedure rooms, and
beds (the 2014 Request). DHR qualified as an applicable hospital at the
time it submitted its 2014 Request, which occurred prior to the
regulatory revisions that became effective on January 1, 2021. As
stated above, the January 1, 2021 regulatory revisions permit a
hospital that qualifies as a high Medicaid facility to: (1) request an
exception to the prohibition on expansion of facility capacity more
frequently than once every 2 years; and (2) request to expand its
facility capacity beyond 200 percent of the hospital's baseline number
of operating rooms, procedure rooms, and beds. From September 11, 2015
(the effective date of our decision to grant the 2014 Request) until
January 1, 2021, DHR was prohibited from submitting a second request
for an exception to the prohibition against expansion of facility
capacity under section 1877(i)(3)(B) of the Act and Sec. 411.362(c)(1)
(as then in effect). DHR submitted the request that is the subject of
this notice (the 2021 Request) on July 21, 2021.
During the 30-day public comment period, we received 14 public
comments through <a href="http://www.regulations.gov">www.regulations.gov</a>. Twelve comments supported CMS
approving DHR's 2021 Request for an exception to the prohibition
against expansion of facility capacity; two comments opposed CMS
approving the request. The comments in opposition to CMS approving the
2021 Request did not challenge DHR's qualification as a high Medicaid
facility in Hidalgo County, Texas. Rather, the commenters asserted
that, even if DHR qualifies as a high Medicaid facility, CMS has
authority to deny the request and, to be consistent with the statutory
purpose of allowing limited expansion of grandfathered physician-owned
hospitals, which focuses on the need for additional facility capacity
and beneficiary interests in the community in which the requesting
hospital is located, CMS should deny the request. One of these
commenters asserted that, given DHR's publicly-stated plans to expand
outside Hidalgo County, Texas, granting the 2021 Request would result
in the establishment of a new physician-owned hospital in contravention
of section 1877(i) of the Act.
On April 22, 2022, DHR filed a rebuttal statement in response to
the comments that opposed CMS granting its 2021 Request for an
exception to the prohibition against expansion of facility capacity.
Among other things, DHR asserted that, because it qualifies as a high
Medicaid facility, CMS must grant its 2021 Request for an exception to
the prohibition against expansion of facility capacity.
V. Decision
DHR submitted the information, data, and certifications specified
at Sec. 411.362(c)(4). This notice announces our decision with respect
to DHR's 2021 Request for an exception to the prohibition against
expansion of facility capacity.
A. Qualification as a High Medicaid Facility
In order to make a request with respect to which CMS may issue a
decision, a hospital must qualify as an applicable hospital or a high
Medicaid facility. As of the date of its 2021 Request, DHR was located
in Hidalgo County, Texas. We determined that, on the date the 2021
Request was submitted, DHR qualified as a high Medicaid facility in
Hidalgo County, Texas, for the following reasons:
<bullet> DHR is not the sole hospital in Hidalgo County, Texas;
<bullet> With respect to each of the three most recent 12-month
periods for which data were available as of the date the hospital
submitted its 2021 Request, DHR had an annual percent of total
inpatient admissions under Medicaid that was estimated to be greater
than such percent with respect to such admissions for any other
hospital located in Hidalgo County, Texas; and
<bullet> DHR certified that it does not discriminate against
beneficiaries of Federal health care programs and does not permit
physicians practicing at the hospital to discriminate against such
beneficiaries.
B. Decision Regarding the 2021 Request for an Exception to the
Prohibition on Facility Expansion
After reviewing DHR's 2021 Request, the public comments, and DHR's
rebuttal statement, we are granting DHR's 2021 Request for an exception
to the prohibition against expansion of facility capacity. Our decision
grants DHR's 2021 Request to add a total of 551 operating rooms,
procedure rooms, and beds. Under the regulations in effect as of the
date that the 2021 Request was submitted, the location of the expansion
is not limited to facilities on the hospital's main campus, and may
result in the number of operating rooms, procedure rooms, and beds for
which DHR is licensed exceeding 200 percent of its baseline number of
operating rooms, procedure rooms, and beds.
CMS makes no determination as to whether, following expansion, any
financial relationships between DHR and its physician owners would
satisfy any other requirement of the whole hospital or rural hospital
exceptions.
[[Page 77847]]
VI. 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.).
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: December 15, 2022.
Lynette Wilson,
Federal Register Liaison, Center for Medicare & Medicaid Services.
[FR Doc. 2022-27566 Filed 12-16-22; 4:15 pm]
BILLING CODE 4120-01-P
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