On November 12, 2021, the Centers for Medicare & Medicaid Services (CMS) issued finalized guidance (“Guidance”) clarifying that hospitals can share space, services, or personnel with another hospital or health care provider so long as they demonstrate independent compliance with the Medicare Conditions of Participation (CoPs). This Guidance, which finalizes the prior draft guidance issued on May 3, 2019, explains how CMS and state agency surveyors will evaluate a hospital’s space sharing or contracted staff arrangements when assessing the hospital’s compliance with the Medicare CoPs.  The Guidance took effect immediately upon publication on November 12, 2021.

As relayed by CMS, hospitals have increasingly co-located with other hospitals or other healthcare entities as they seek efficiencies and develop different delivery systems of care. Co-location occurs when two Medicare certified hospitals or a Medicare certified hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services. CMS provides the following common examples of co-location:

• One hospital entirely located on another hospital’s campus or in the same building as another hospital;

• Part of one hospital’s inpatient services (e.g., at a remote location or satellite) is in another hospital’s building or on another hospital’s campus; and

• Outpatient department of one hospital is located on the same campus of or in the same building as another hospital or a separate Medicare-certified provider/supplier such as an ambulatory surgical center (ASC), rural health clinic (RHC), federally-qualified health center (FQHC), an imaging center, etc.

All co-located hospitals are required to demonstrate independent compliance with the hospital CoPs. The CMS Guidance clarifies how hospitals may organize shared spaces, services, personnel, and emergency services to meet specific regulatory requirements. Ultimately, when hospitals choose to co-locate, they must consider the risk to compliance through any shared space or shared service arrangements. The CMS State Operations Manual Appendix A will be revised to include this co-location Guidance as a component of the hospital survey process. Hospitals must be mindful of this updated Guidance in connection with shared space arrangements because licensure surveyors will be obligated to use the Guidance in the future to assess a hospital’s compliance with the CoPs.

(a) Space

A Medicare-participating hospital is evaluated as a whole for compliance with the CoPs and is required at all times to meet the definition of a hospital at Section 1861(e) of the Social Security Act and to have spaces of operation consistent with the CoPs at 42 C.F.R. Part 482. CMS specifically calls out the following areas of consideration when sharing space: (i) patient rights (including privacy and confidentiality of patient records), (ii) infection prevention and control, (iii) governing body, and (iv) physical environment (including patients receiving care in a safe environment).

The hospital must consider whether the hospital’s spaces that are used by another co-located provider risk their compliance with these requirements. For example, a complaint may be triggered against a co-located hospital for a deficiency related to a shared space that is cited during a survey of the hospital.

(b) Contracted Services

Co-located hospitals are each responsible for providing its services in compliance with the hospital CoPs and under the oversight of the respective hospital’s governing body (see 42 C.F.R. §482.12(e)) as if provided directly by the hospital. Services which may be provided under contract or arrangement in a co-located hospital, include laboratory, dietary, pharmacy, maintenance, housekeeping, security services, food preparation and delivery services, and utilities such as fire detection and suppression, medical gases, suction, compressed air, and alarm systems, such as oxygen alarms.

(c) Staffing

A hospital is responsible for meeting staffing requirements of the CoPs and for any of the services that the hospital provides, including staffing provided under arrangement or contract with a co-located hospital. When hospital staff are obtained under arrangement from another entity, the hospital’s staff must meet the needs of patients for whom they are providing care and meet the statutory and regulatory requirements for the activity. All individuals providing services to a hospital patient under contract or arrangement should receive appropriate education and training in all relevant hospital policies and procedures, the same as would be provided to employees of the hospital so that the quality of care and services being provided is the same.

When utilizing staffing contracts, under the contracted services standard at 42 C.F.R. §482.12(e), the governing body is responsible for ensuring: adequacy of staff levels; adequate oversight and periodic evaluation of contracted staff; the proper training and education of contracted staff; that contracted staff have knowledge of and adhere to the quality and performance improvement standards of the individual hospital; and that there is accountability of the contracted staff related to clinical practice requirements.

With regards to medical staff, each co-located hospital would be responsible for meeting the applicable medical staff requirements at 42 C.F.R. §482.22. With regard to nursing staff, each co-located hospital would be responsible for ensuring an organized nursing service pursuant to 42 CFR §482.23.

(d) Emergency Services

 While hospitals must provide care to patients in an emergency, hospitals are not required to have an emergency department (ED). Under the CoP at 45 C.F.R. §482.12(f)(2), hospitals that do not have EDs and are not identified as providing emergency services must have appropriate policies and procedures in place for addressing individuals’ emergency care needs at all times. Hospitals should have policies and procedures to address potential emergency scenarios typical of the patient population they routinely care for and ensure staffing that would enable them to provide safe and adequate initial treatment of an emergency. Policies and procedures should include: (1) identifying when a patient is in distress, (2) how to initiate an emergency response, (3) how to initiate treatment, and (4) recognizing when the patient must be transferred to another facility to receive appropriate treatment.

Appraisal and initial treatment performed in one hospital (e.g., a rehab facility) may require an appropriate transfer of the patient to another provider such as a co-located hospital (e.g., acute care hospital with an ED), for continuation of care. If the co-located hospital being surveyed is identified as providing emergency services or has an ED, the hospital would be subject to the emergency services requirements (see 45 C.F.R. §482.55) and must meet the requirements of EMTALA. See Section 1867 of the Social Security Act; 45 C.F.R. §489.20-21; and 45 C.F.R. §489.22-24.

 See page six of the Guidance to read the related surveyor procedures.

 Comparison to Prior Draft Guidance

Following the comment period, several changes were made to the prior draft guidance that was issued on May 3, 2019.  Notably, in this final version of the Guidance, CMS has struck certain staffing requirements requiring contracted staff to be immediately available to provide the contracted services and prohibiting staff from “floating” between facilities or performing the same functions in co-located facilities simultaneously. Likewise, CMS has struck from this final version the requirement that when contracting with another hospital or entity for the appraisal and initial treatment of patients experiencing an emergency, contracted staff must not be working/on duty simultaneously at another hospital or healthcare entity. These omissions offer some flexibility and imply that certain arrangements may be permissible as long as the needs of the patients are met, and all statutory and regulatory requirements are satisfied. The final Guidance also clarifies the procedures related to identification of deficiencies as between co-located facilities.