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Critical Access Hospital Overview and Update

Critical Access Hospital Overview and Update. David H. Snow Hall, Render, Killian, Heath & Lyman, PC Oregon HFMA February 17, 2011. Overview of Topics. Review Status of CAH Program U. S. Oregon COPs etc. Beds etc. (OIG Audit Story) PB'd Limitations Definition of Campus

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Critical Access Hospital Overview and Update

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  1. Critical Access Hospital Overview and Update David H. Snow Hall, Render, Killian, Heath & Lyman, PC Oregon HFMA February 17, 2011

  2. Overview of Topics • Review Status of CAH Program • U. S. • Oregon • COPs etc. • Beds etc. (OIG Audit Story) • PB'd Limitations • Definition of Campus • Direct services requirement? • Excluded Units • County goes urban? • PB'd requirements • Relocations • Payment Updates/issues • Method II Status • 340B • Physician Supervision • Cost reimbursement for lab • TRICARE Change • MLR – Tribes • HPSA/PFS Bonus/CRNA • Good ole' fashion cost issues • Physician Practice Arrangements • Review of Green Bay Packer's Season 2

  3. Status of CAH Program • There are approximately 1,300 CAHs in the US, per CMS • >50% of US rural community hospital • About 22% of all US hospitals • Paid $1.3 billion > PPS - $1million/CAH • About 850 are Necessary Provider CAHs • 453 have “health clinics” (CMS’s term?) • 81 have psych units • 20 have rehab units 3

  4. CAH Program 4

  5. 25 Oregon CAHs 5

  6. Current Status of CAH Eligibility Requirements • CAHs must be >35 miles from a hospital unless: • Located in mountainous areas or have only secondary roads (15 miles) OR • Received state designation as a "necessary provider" • States CANNOT issue new NP designations after 12/31/2005 • Had to have NP designation, AND • Be certified as a CAH by January 1, 2006 • to be grandfathered from 35 mile rule • Proposals have circulated to reinstate NP authority! 6

  7. Current Status of CAH Eligibility Requirements • Effective 1/1/2004 CAHs may operate up to 25 inpatient beds in any combination of acute care and swing beds • Effective for cost reporting periods beginning after 10/1/2004CAHs may also have distinct part units: • Psych unit of up to 10 beds • Rehab unit of up to 10 beds • Excluded units do NOT count toward • 25 bed limit • ALOS calculation 7

  8. OIG Audit • CAH selected for OIG Office of Audit Services Review – 10-1-07 for 2004-06 years • Initial Request • Ownership, org chart, job descriptions, list of all employees • Policies & procedures as related to CoPs, cost reports, accounting • Annual reports, audited F/Ss & surveys of CAH • Chart of accounts • Cost reports & workpapers • List and copies of agreements with related parties 8

  9. OIG Audit • 3-4 OIG OAS personnel spent 4 months @ CAH • No CPAs or staff with prior cost report or COP background • Asked for depreciation and asset records, serial #s, for hospital beds • CAH set up point person for process and logged all info provided to OIG 9

  10. OIG Audit • Preliminary Findings: • Failed CoPs due to >25 beds • Bed roster included: • 4 swap out beds stored in non-patient areas for replacement parts • 2 basinets for infants to swap for adult beds when needed • Claimed unallowable costs of: • 2005 - $61,912 penalties for late lease payments • 2006 - $1,033 lobbying costs 10

  11. OIG Audit • CAH Response • Notified FI on costs • FI reopened 2005 to adjust • FI passed on 2006 – too small to bother • Fought tooth & nail on 25 beds • VP-Nursing had been at hospital association conference that discussed a CMS Open Door forum in which CMS speakers said swap out beds not counted • We had position that such beds stored in non-patient areas should not count • After much back & forth, OIG Final Report in 12/2009 agreed on bed count issue 11

  12. CAH Provider Based Limit • Final 2008 HOPPS rule – 11/27/07: • Any off campus location opened or acquired after 1/1/08 that meets provider based requirements must be >35(15 in M/SR areas) mile drive from any other hospital or CAH • Applies to excluded psych and rehab units also • Essentially includes all PB’d sites in determining whether 35/15 mile/NP Location Rules Met • Failure to comply: CAH status subject to termination unless the CAH terminates the off campus arrangement • Converting to free-standing should be sufficient • Not closing site 12

  13. CAH Provider Based Limit • Sites operated and qualified as provider based before 1/1/08 are grandfathered • “created or acquired after 1/1/08” • Converting free standing pre 1/1/08 site to PB’d after 1/1/08 is not grandfathered • CMS approval/attestation not required • Relocation of pre-1/1/08 PB’d site loses grandfather status - it is site specific!!! • May be outside CAH's control - lease termination • Changes at grandfathered site: • Addition of footprint or services • Construction of new building to replace old • Should be able to keep status – but confirm with regional office 13

  14. CAH Provider Based Limit • After 12/31/2007 - CAH corporation is NOT prohibited from: • Operating free standing sites, just PB’d. So lose option to get: • Cost on hospital o/p facility services • 15% bonus for Method II professional billing • Opening Hospital Based - Rural Health Clinics • Exempt because not part of hospital provider • Have separate provider number • Sites under development before 1/1/08 • Need CMS approval of prior plans/commitments • Were not required to file before 1/1/08 • Law does NOT limit PPS hospitals from opening PB’d sites within 35 miles of a CAH!!! 14

  15. CAH Provider Based Limit • CMS Guidance 12/21/08 and 6/12/09 • CAHs seeking a PB'd determination for newly created or acquired off campus sites MUST submit an attestation to Regional Office to determine location requirements • Regulation 413.65 says PB'd Attestations Optional • Follow Guidance • PB'd site may meet tests even though campus does not • And, remember 15 mile rule 15

  16. Off Campus Clinic Location Example 34 (CAH-NP) (PBC) 16 13 23 = Primary Roads = Secondary Roads 16

  17. Definition of Campus • So What is "On Campus" ???? • "Campus means the physical area immediately adjacent to the provider's main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider's campus" • Affects: • Ability to open new PB'd services given 12/31/07 restrictions • Relocation test • Provider based: on vs. off campus 17

  18. Definition of Campus • On Campus Case Study • CAH in midwest – Region 5 state • Key to lines • Blue = Owned land + 250 yards • Red = hospital building + 250 yards • Orange = hospital operated ambulance + 250 yards • Green = expansion parcel for new building to house PT/OT, various o/p ancillary & hospital admin/support, & physician offices • Portion of new building would be within Red & Orange 250 yard rules • Is the building on campus? • If yes, does it expand 250 yard footprint? 18

  19. Definition of Campus • Take aways • "Main buildings" not defined – CMS generally interprets as primarily I/P care. • Only main buildings enlarge footprint via 250 yard rule • Region 5 rarely has approved discretionary expansion • Maybe if nothing but open space between main buildings and new structure 20

  20. Direct Service Requirement? • 485.602 Definitions • Direct services mean services provided by employed staff of the CAH, not services provided through arrangements or agreements • 485.635 COP" Provision of Services • (b) Standard: Direct Services • Those diagnostic & therapeutic services and supplies commonly furnished in a physician's office, including: H&P, specimen collection, assessment & treatment • Basic lab: hemoglobin, blood glucose, stool, pregnancy, culturing • Radiology procedures • Emergency procedures 21

  21. Direct Service Requirement? • 485.635(c) Services provided through agreements or arrangements: • Inpatient hospital care • Physicians • Additional specialized diagnostic & clinical lab not available at CAH • Dietary & nutritional • 485.635(d) Nursing services - doesn't say direct • 485.635(e) PT/OT/ST doesn't say direct 22

  22. Direct Service Requirement? • So What to do about it? • CMS Region 5 has informally taken a strict interpretation of this – no agency nurses in ER for example • We have seen one survey deficiency citation • Would come up in survey as standard deficiency with a Plan of Correction requirement • State survey agency confirmed – no CMS directives to look for this or enforce • Talk to hospital association, office of rural health, national rural health orgs • Get it fixed…… 23

  23. Excluded Units • CAHs can have up to 10 bed psych &/or rehab • Paid under psych or rehab PPS – NOT cost • Process for exclusion • Can only be excluded on 1st day of cost reporting period • Surveys cannot be retroactive to before date of survey • Catch 22 - cannot get survey until operational • Need to use some of 25 beds for "unit" pre-exclusion to trigger survey • Need lots of advance planning/notice to DHFS and CMS 24

  24. CAHs in Counties Changed to Urban • Must be rural to be a CAH • Rural vs Urban defined by Census Bureau • 2008 – CB changed 3 counties to urban • None in Oregon (MO, IL, MN & KS) • Same thing happened in 2004 • CAHs had to apply for redesignation to rural to keep CAH • CMS amended regs to allow redesignation again – but did not make permanent • Will happen again following 2010 census 25

  25. CAH Provider Based Clarifications – Final Rule • CMS amended regulation to expressly state that CAH labs must meet the PB'd requirements • Technical interpretation of prior regulation excluded labs from PB'd rule • Ambulance • CAH operated ambulance providers, when there is no other ambulance w/i 35 miles, are paid at cost • In May CMS requested commentary on whether such CAH ambulance services should be required to meet the PB'd rules like other CAH departments and provider based entities (like RHCs) • CMS Decided NOT to apply PB'd rules in this case 26

  26. CAH: Relocations • At the new location a non-NP CAH must meet all of the CAH Conditions of Participation, including the location requirement • More than 35 miles from any hospital/CAH • Or, more than 15 miles of mountainous terrain or secondary roads between it & any other hospital or CAH • Primary roads = Federal highways & state highways with 2 or more lanes in each direction • Midwest states may not have originally used 15 mile rule. CMS has approved a NP switching to 15 mile status to allow a move 27

  27. NP CAH Relocation • CMS Position not CAH friendly • If relocating NP CAH does not satisfy original NP criteria AND 75% tests then - deemed a closed business • CAH provider agreement is terminated • Would need to recertify as a PPS hospital • CMS position that it can reassess NP and 75% up to 1 year AFTER move – Blind Leap Effect! 28

  28. NP CAH: Relocations • 42 CFR 485.610(d) (added 8/12/05) If a <1/1/06 NP CAH relocates >1/1/06 it can continue to meet location requirement based on NP ONLY IF: • Serve 75% of the same service area • Provide 75% of the same services • Staffed by 75% of the same staff • Despite CMS commentary in final rule: • “a NP CAH can relocate… provided it is essentially the same facility in its new location. To help ensure that the facility is the same we will require the relocated NP CAH to [meet the 75% tests]” • And other similar comments focusing on 75% tests • No other requirement in Regulation, BUT 29

  29. NP CAH Relocation • CMS takes the position that IN ADDITION to 75% tests NP CAH must: • Satisfy the exact same N.P. criteria the CAH originally met • Not any of state’s NP criteria, but the same one(s) the CAH was originally approved under • Must be re-verified by state agency • CMS bases position on final rule commentary: • “The state agencies and Regional Offices will closely monitor each NP CAH that relocates to ensure that it will continue to provide services based on the criteria that qualified the CAH to be designated as a NP” • No legal challenges yet – unlikely due to amount at stake (new hospital construction) 30

  30. So What is a Relocation? • Final Rule Commentary (8/12/05) • All new necessary provider CAH facilities that will be constructed after Jan. 1, 2006 will be considered relocated facilities • CMS issued interpretive guidance on the NP CAH relocation rule 11/14/05, 9/7/07, 1/18/08 and 6/12/09 • All discuss CMS position that a CAH with a grandfathered NP status must also meet the same criteria it originally met for NP CAH designation • Renovations or expansion of a CAH’s existing building or addition of buildings on the existing main campus of the CAH is not considered a relocation • As long as some portion of current building is kept and used for hospital purposes (allowable space), patient care or admin/support CAH can add anything, including all new beds footprint, within 250 yards 31

  31. NP CAH: Relocation • Relocating NP CAH must work with CMS RO and state rural health agency • Letter of assurance re NP criteria • Same 2 or 5 of 10 ???? • Or maybe not? • Pre-relocation attestation letter and Post-relocation process • NP verification • Document the three 75% tests • Get full survey & approval of all CAH COPs • Can take up to 1 year after move to obtain final CAH continuation approval 32

  32. "Landlocked" NP Options • Relocate and go back to PPS Payment (NOT) • Work to meet NP criteria (difficult, at best) • Work w/ CMS to obtain approval for: • As much renovation & reconfiguration as possible • w/o crossing relocation line • CMS will review plans and provide informal guidance that plans are not a relocation • Stay “as is” • Change the law…. 33

  33. Method II Election • “All Inclusive” Election • facility payment will be reasonable costs • plus 115% of the Medicare fee schedule for professional services • applies to all physician services to outpatients for entire year for which physician reassigns billing rights to CAH • Outpatient Services only not I/P • Must be in hospital (provider based) space • PC billed by CAH to FI on UB-04 • Physicians do not need to be employees (but will need a written contract - Stark, etc.) 34

  34. CMS Attempt to Kill Method II • 2010 Final Rule Stated that CAHs electing Method II would be paid 100% of costs instead of 101% • CMS believed this was correct statutory interpretation • Effective for cost reporting periods beg'g on or after 10/1/09 • 1% on all O/P cost could be more than 15% extra on physician fee schedule • Some CAHs decided to not re-up Method II election…… • But…. 35

  35. Method II Rescue • PPACA – HC Reform & 2011 IPPS Final Rule • Changed statute to clarify CAHs paid 101% for both Method I and II • Effective retroactively • FIs should not apply 100% to Method II electing CAHs for cost reporting periods beg'g on or after 10/1/09 • Was annual election by cost report year • Now a one-time election that carries over to subsequent years  Submit at least 30 days before start of cost reporting period • Unless revoked by CAH 30 days before start of next cost reporting period • Effective for cost reporting periods beginning after 10/1/10 36

  36. 340B Program Expansion • 340B Program Benefits Access Expanded by PPACA to include CAHs • Effective 1/1/2010 • Government or Non-Profit with a contract with state or local government to provide care to non-Medicare/caid patients • Estimated Savings: 25%-50% of a drug’s Average Wholesale Price (may be higher or lower) • Pharmaceutical manufacturers that sell O/P drugs to Covered Entities required to participate in 340B 37

  37. 340B Program Expansion • Program NOT limited to Medicare, Medicaid or low income patients. • Any patient of a Covered Entity may receive covered OUTPATIENT drugs purchased under the 340B Program. • Covered outpatient drugs can include • any drug used in an outpatient setting, except vaccines. Both prescription drugs and over-the-counter (OTC) drugs for which a there is a prescription can be covered by the 340B Program 38

  38. 340B Program Expansions • Program discount extends to all main campus and provider-based location patients. • Definition of a Covered Entity refers to the provider-based rules • Apply to HRSA – Office of Pharmacy Affairs to obtain approval • If approved, applies at the start of the next Federal quarter 39

  39. 340B Program Expansion • Maintain control of the patient’s medical records • Maintain primary responsibility for patient’s care. • Methods used to ensure compliance with Program standards • Up to the Covered Entity • Program and non- Program drug stock need not be physically separated • Maintain auditable records that can be used to prove 340B drugs used only for covered outpatients. 40

  40. Physician Supervision • The way we were – February 2010 • Therapeutic Services • 2010 Final Rule had required direct supervision for all – doc on campus or w/i off campus PB'd site ("NFL Catch Rule") • CAH's in uproar: • Observation services, etc. • Apparent conflict with CAH COPs • Diagnostic Services • 2010 Rule applied same general – direct – personal rules for physician offices to hospital O/P • BUT – CMS had informally confirmed this was N/A to CAHs – only applied to APC paid hospitals • New PR/CR/ICR Coverage N/A in CAHs 41

  41. Physician Supervision • Developments during 2010 • March 15 – CMS issues notice of non-enforcement of direct supervision policy for O/P therapeutic services in CAHs • July - Proposed CY 2011 HOPPS & PFS Regs released • Therapeutic – Staged direct to general • Include midlevels • Diagnostic • November – final CY 2011 HOPPS & PFS issued 42

  42. Physician Supervision • The way it is - January 2011 forward: Therapeutic • N/A to PT/OT/ST & ESRD • Direct supervision generally required, but • Extended duration non-surgical services convert to general after stabilization occurs • Observation, infusions, injections…. • Physicians & "NPP" acting w/i scope of practice • NPPs = CP, PA, NP, CNS, CNMW, LCSW • Must be "immediately available" on or off campus • NFL Catch rule eliminated for off campus • BUT – continue non enforcement through 2011 for CAHs AND rural hospitals <100 beds (TOPS) 43

  43. Physician Supervision • The way it is – Janaury 2011 forward – • Diagnostic • General/direct/personal apply as per PFS • ONLY physicians – NOT NPPs • Same "immediately available" standard on or off campus • STILL N/A to CAHs – only APC paid O/P services • PR/CR/ICR • CMS commentary - obviously (you fools) hospital here includes CAHs so these services can be covered in covered in CAHs • ONLY physicians NOT NPPs • NON enforcement for CAHs & <100 beds applies here also for CY 2011 44

  44. Cost Reimbursement for Lab • Payment for clinical diagnostic laboratory tests: • Cost only for CAH patients • Beneficiaries not liable for any cost-sharing or co-payment • Non-patients (reference) paid on fee schedule • OLD rule • Patient must be physically present in the hospital when the draw is done • Draw by hospital personnel elsewhere – such as nursing home is not sufficient 45

  45. Cost Reimbursement for Lab • MIPPA 2008 – effective 7/1/09 • CAH lab services "shall be treated as being furnished as part of outpatient critical access services without regard to whether the individual with respect to whom such services are furnished is physically present in the CAH, or in a SNF or a clinic (including a RHC) that is operated by the a CAH, at the time the specimen is collected." • Could be read to mean all reference work paid at cost……. • But not by CMS !!!! 46

  46. Cost Reimbursement for Lab • Effective 7/1/09: Cost payment if patient is physically present in the CAH (including PB'd dept's, but not entities) when the specimen is collected, OR at least 1 of following: • Individual receives o/p services in CAH on the same day the specimen is collected • Specimen is collected by CAH "employee" • Other bundling rules trump cost payment – SNF consolidated billing 47

  47. Cost Reimbursement for Lab • Individual receives o/p services in the CAH on the same day the specimen is collected, but it is not collected in the CAH: • Doesn't matter where specimen is collected • Home, Dr's office, back at SNF… • Or, who collects it • Patient, SNF staff, Dr. office staff… 48

  48. Cost Reimbursement for Lab • Collected by a CAH employee? • W-2 employee of CAH • Including employees of CAH PB'd dept's • But not employees of PB'd entity (RHC) (huh?) • Contracted lab staff ? • As long as not employed by an entity at site where specimen is collected (SNF employee contracted to CAH) can be considered employee for these purposes • No info on how this coordinates with CAH COP that lab services be provided directly 49

  49. Cost Reimbursement for Lab • Specimen collected by employee • CAH employee (as defined) must physically perform the specimen collection • Not enough to pick up the specimen • Example: CAH employee goes to SNF to do blood draw on part B resident, also picks up urine sample from SNF staff • Blood draw – cost reimbursed (851 bill type) • Urine sample – fee schedule (141 bill type) (unless patient also received CAH o/p services that day!) • See the cost reimbursement opportunity? 50

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