Getting to a Safe Space in Healthcare

Provider-based facilities may share space with a freestanding entity.

Any provider that has an arrangement under which there is a freestanding clinic in a building that also contains provider-based or hospital space needs to understand both the relevant Centers for Medicare & Medicaid Services (CMS) policy and the law related to sharing of space.

A pair of high-profile actions by CMS make it clear that the agency believes that it is improver for a provider-based facility to share space with a freestanding clinic. For example, the Denver regional office of CMS sent a letter to St. Peter’s Community Hospital in Montana indicating that “sharing of space and time” is inconsistent with the provider-based rules. That letter, written Sept. 29, 2015, will not win any writing awards. It is both unclear and inaccurate.

Here is an actual excerpt from the letter: 

“The provider-based requirements and obligations are also not met to the extent that the freestanding services are not integrated with the hospital. Examples include: …

The freestanding office space and or time are not owned and operated as part of the main provider.”

With the possible exception of Dr. Who, to the best of my knowledge is a fictional character, no one owns or operates time. The balance of the letter is not much better. Most importantly, it does not accurately describe the law. The letter asserts that it’s impermissible for provider-based facilities to share space with a freestanding entity. In fact, the provider-based regulations include no such limitation. 

CMS knows how to ban sharing of space. The Independent Diagnostic Testing Facility (IDTF) regulations do precisely that at 42 CFR 410.33(g)(15). The provider base rules contain no similar language. The letter to St. Peter’s Community Hospital tries to invent a ban by imposing a very creative interpretation of the fact that the provider-based rules require “public awareness” of the facility’s hospital-based status. The letter posits that when space is shared, patients don’t know if they are in a hospital or a freestanding space. That is, of course, utter nonsense. People are able to read signs. If patients are able to differentiate between two buildings across the street from one another, they are able to discern the difference between two rooms in the same building.

But there appears to be good news coming down the pike. Last week the American Health Lawyers Association held a webinar that included a discussion with David Wright, the director of the Quality, Safety, and Oversight Group in the Center for Clinical Standards and Quality at CMS. Mr. Wright sounded incredibly reasonable and explained that CMS recognizes that some of its enforcement positions may be unfair, and that some have a particularly negative impact on rural areas. He also said something that most people would consider obvious, but which is significant coming from CMS, in light of the St. Peter’s Community letter: patients are capable of reading a sign and knowing where they are.

Mr. Wright indicated that new guidance has been written, is in the final stages of approval, and will hopefully be released early next year. Of course, since the review process is still underway, there is a possibility that timeframe could change, or the revisions could even be cancelled.

In the meantime, if you receive something from CMS claiming that you made an overpayment because you’ve shared space in a provider-based setting, fight it tooth and nail. I look forward to seeing the new guidance from CMS.

Space sharing is one of the topics we will discuss on a Dec. 18 webcast on how to avoid legal pitfalls. Sign up for the webinar here.

Program Note:
Listen to David Glaser every Monday on Monitor Mondays, 10-10:30 a.m. EST.

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David M. Glaser, Esq.

David M. Glaser is a shareholder in Fredrikson & Byron's Health Law Group. David assists clinics, hospitals, and other health care entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David's goal is to explain the government's enforcement position, and to analyze whether this position is supported by the law or represents government overreaching. David is a member of the RACmonitor editorial board and is a popular guest on Monitor Mondays.

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