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New CMS Advice to CAHs Adding a Provider-Based Location

on Tuesday, 5 November 2019 in Health Law Advisory: Zachary J. Buxton, Editor

A new publication by CMS’s Quality, Safety and Oversight Group Director seeks to coordinate two important steps prior to the addition of any new practice location for a critical access hospital (CAH).  This is intended to emphasize the requirement for CAHs that any new provider-based location located off-campus is more than a 35 mile drive from another hospital or CAH.  This is a regulatory requirement that appears at 42 CFR 485.610(e)(2).   

CMS notes that there is a general process for adding a provider-based location by submitting the Form CMS-855 application to the CAH’s Medicare Administrative Contractor (MAC).  Upon receipt of the application form, the MAC reviews the submission for compliance with the regulatory provider-based requirements at 42 CFR 413.65.  The MAC then submits its recommendation to the CMS Regional Office (RO). 

At that point, the CMS RO Division of Financial Management and Fee for Service Operations makes the final determination as to provider-based regulatory compliance. 

Importantly, there is a concurrent process by which the CMS RO Division of Survey and Certification verifies that the CAH, and its new off-campus provider-based location, is more than a 35 mile drive from another hospital or CAH.  In the case of mountainous terrain or an area with only secondary roads, the distance must be more than a 15-mile drive. 

The new step for the applicant CAH comes up when submitting Form CMS-855 concerning the new provider-based location.  It must be accompanied by documentation showing how the CAH (including the new location) continues to comply with the CAH distance requirement. 

It is incumbent upon the MAC, upon completion of its review of Form CMS-855, to forward the form and accompanying documentation to the CMS RO Division of Survey and Certification for review of the new location and its compliance with the 35-mile rule.  If the Division of Survey and Certification finds that the rule is met, it issues a “tie-in” notice to the MAC, the CMS RO Division of Financial Management and F/S Operations and the relevant state agency. 

If, to the contrary, the CMS RO Division of Survey and Certification finds that the new location will violate the 35-mile rule, it is required to notify the CMS Central Office, the MAC, the CMS RO Division of Financial Management and F/S Operations and the state agency.  The MAC refrains from activating the new location until after a decision is made by the CAH. 

The CAH is advised that it will no longer meet the 35-mile rule to qualify as a CAH if the provider-based location is added.  If the CAH proceeds, it will be placed on a 90-day involuntary termination track, or the CAH can voluntarily terminate its participation from the program immediately.  Alternatively, the CAH can retain its CAH status by terminating the provider-based location arrangement within the 90-day termination period or by moving the location so that the distance requirement is met.  The CAH can continue to participate in Medicare by converting to a hospital.  In that event, it would be required to submit another Form CMS-855 to the MAC to enroll as a hospital.  The effective date of that new enrollment would coincide with the termination of CAH status. 

Obviously, it will be important for any CAH seeking to enroll a new provider-based location off-campus to ensure that that new location will not cause it to run afoul of the 35-mile requirement.  As long as all is well on this requirement, documentation should be added to the submission of Form CMS -855 for that new location.  It would be best to avoid this CMS process if possible. 

Barbara E. Person

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