Final Rule for Hospital OPPS Includes Provisions to Impact CAHs
On November 2, 2007, the Centers for Medicare & Medicaid Services (CMS) released the 2008 payment rates and the final rule for changes to the Hospital Outpatient Prospective Payment System (OPPS). The final rule was relaxed for Critical Access Hospitals (CAHs) operating certain provider-based facilities. However, severe restrictions remain for CAHs entering into co-location arrangements with other hospitals since the final rule is the same as the proposed rule.
Final ruling for CAH provider-based facilities
A necessary provider CAH or a CAH without a necessary provider designation that acquires or creates an off-campus facility on or after January 1, 2008 must comply with the CAH distance requirement:
- 35-mile drive to the nearest hospital or CAH
- 15 miles in mountainous terrain or areas with only secondary roads
Exceptions to the distance requirement
According to this excerpt from the final rule, the distance requirement for provider-based facilities only applies to off-campus locations. Rural health clinics are also excluded from the distance requirement.
Final ruling for co-location of necessary provider CAHs
Necessary provider CAHs are no longer permitted to enter into co-location arrangements between CAHs and hospitals unless they are in place prior to January 1, 2008 and the services offered by the co-located facility with the necessary CAH don’t change.
Consequences for noncompliance
Beginning January 1, 2008, any CAH with a necessary provider designation that enters into a co-location arrangement or acquires or creates an off-campus facility that does not satisfy the CAH distance requirement will be placed on a 90-day track to terminate the CAH provider agreement. If the CAH corrects the situation within the 90-day period, the termination action against the CAH will cease.
Based on the public comments received in response to the proposed changes (published in the Federal Register on August 2, 2007), CMS recognizes that a number of CAHs have plans underway to build or acquire provider-based facilities and the plans won’t be completed by January 1, 2008. For those CAHs that demonstrate such planning and/or construction, the CMS regional office will evaluate the situations on a case-by-case basis.
The final rule is scheduled to be published in the Federal Register on November 27, 2007. CMS will accept comments until 60 days from the date of the publication.
Ask a reimbursement specialist
Provider-based entity designations and co-location arrangements require a significant amount of reimbursement analysis. For advisement, contact Steve Rader at 1-888-529-2648 or srader@larsonallen.com.
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