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Congress Extends Moratorium on Enforcement of Supervision Requirements for CAHs

on Monday, 12 January 2015 in Health Law Alert: Erin E. Busch, Editor

On December 4, 2014, President Barack Obama signed into law (Pub. L. 113-198) which continued a de facto moratorium on enforcement of physician supervision requirements for critical access and small rural hospitals. Specifically, the law requires the Secretary of the Department of Health and Human Services to continue to instruct Medicare contractors to not enforce requirements for the direct physician supervision of certain outpatient therapeutic services such as chemotherapy.

Section 1861(s)(2)(B) of the Social Security Act (the Act) permits Medicare suppliers to receive payment for services provided “incident to physicians” services provided to outpatients. CMS further requires that these “incident to” outpatient therapeutic services be performed under one of three levels of supervision–classified from least to most intensive–as general, direct, or personal supervision. CMS generally requires outpatient therapeutic services, (discussed in the Medicare Benefit Policy Manual, Chapter 6), to be provided under “direct supervision,” meaning that a physician or non-physician practitioner must be “immediately available” to furnish assistance and direction throughout the performance of the procedure.

Larger hospitals and medical centers are currently required to meet this requirement. However, imposing it on critical access and small rural hospitals created a significant burden because few have physicians readily available onsite during all times that outpatient therapeutic services are provided. To address the serious concern about this disproportionate impact, in November 2012, CMS released an instruction for Medicare contractors to not evaluate or enforce this requirement for critical access or small rural hospitals with fewer than 100 beds through CY 2013.

The continued instruction to forbear from enforcing this requirement for critical access and small rural hospitals is critical because the direct supervision requirement for outpatient therapeutic services is a condition for payment. Absent the enactment of this statute, reimbursement for services provided without meeting this requirement would be subject to potential repayment for any services rendered in 2014. Ongoing monitoring will be required to see if HHS continues the enforcement moratorium for future calendar years.

Editors note: After this article was posted, we received notice of this proposed legislation.

Legislation proposed in the House on January 6, 2015 seeks to extend the Medicare nonenforcement instruction through 2015. Unlike the 2014 extension, the 2015 legislation calls for a study by the Secretary of Health and Human Services on the therapeutic outpatient supervision requirement’s economic impact on critical access and small rural hospitals. If the study is not submitted 90 days prior to end of the calendar year, the nonenforcement instruction would be extended for another year.

We will continue to monitor this proposed legislation and provide updates as necessary.”

Julie A. Knutson

Zachary J. Buxton

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