On April 3, 2020, the Centers for Medicare & Medicaid Services (CMS) issued Quality, Safety & Oversight memorandum QSO-20-24-ASC (the QSO Memo), addressed to state survey agencies to provide guidance on processing attestation statements from ambulatory surgical centers (ASCs) that are temporarily enrolling as hospitals during the Coronavirus (COVID-19) pandemic in accordance with Section 1135 waivers. Each ASC should carefully consider how the facility can meet applicable Medicare participation requirements for hospitals and ensure that conversion to a hospital is consistent with state licensure and state emergency preparedness and pandemic plans before converting its Medicare enrollment from an ASC to a hospital. ASCs and hospitals should also be mindful that the guidance released from CMS applies only to Medicare participation requirements and that ASC-to-hospital conversions must also be reviewed for compliance with federal and state fraud and abuse laws and other payor participation requirements.

IN DEPTH

On April 3, 2020, CMS issued the QSO Memo to provide direction to state survey agencies regarding the process for ambulatory surgery centers (ASCs) to temporarily enroll in Medicare as hospitals. Allowing ASCs to temporarily convert to hospitals is intended to support efforts to expand capacity and Medicare payment for inpatient and outpatient hospital services in light of the COVID-19 pandemic.

Background

On March 13, 2020, President Donald Trump declared a national emergency under the National Emergencies Act and made an emergency determination under the Stafford Act. This announcement followed the January 31, 2020, declaration of a public health emergency under the Public Health Service Act by the Secretary of the US Department of Health and Human Services (HHS). These actions opened the door for the authorization of waivers of certain Medicare, Medicaid and Children’s Health Insurance Program (CHIP) requirements as provided by Section 1135 of the Social Security Act (collectively, Section 1135 waivers).

In the most recent Section 1135 waivers published on March 30, 2020, CMS briefly noted that an ASC could enroll as a hospital during the public health emergency, provided the ASC satisfied Medicare hospital conditions of participation (CoPs) not waived by the Section 1135 waivers.

CMS also provided a series of nationwide Section 1135 waivers applicable to the physician self-referral law (the Stark Law) on March 30, 2020. Specifically, one waiver addresses the ability of physician-owned ASCs to convert to a hospital to expand their capabilities to provide care to patients in light of the COVID-19 pandemic. Under the waiver, referrals by a physician owner to an ASC that converts to a temporary hospital may be permitted, provided the remuneration is “solely related to COVID-19 Purposes.” For additional details on the Section 1135 waivers applicable to the Stark Law, please see our analysis, here.

Though the Section 1135 waivers issued on March 30 indicated that ASCs could temporarily convert to hospitals during the COVID-19 public health emergency, the QSO Memo contains the first detailed operational guidance regarding the process for an ASC to temporarily enroll in Medicare as a hospital during the pandemic.

Process and Limitations for ASCs Enrolling as Hospitals

Medicare-enrolled ASCs are temporarily permitted to enroll in Medicare as hospitals for the duration of the public health emergency, subject to certain limitations. An ASC must ensure that enrolling as a hospital is not inconsistent with the state’s emergency preparedness or pandemic plan.

Enrolling an ASC as a Hospital

Any Medicare-certified ASC that wishes to enroll as a hospital will need to complete the following steps:

• Notify the Medicare administrative contractor (MAC) that serves their jurisdiction by calling the MAC’s provider enrollment hotline
• Submit a signed attestation statement to the MAC.

Once the ASC has submitted a signed attestation statement to the MAC, the MAC will review and send the attestation to the applicable CMS regional office (the RO). The RO will review the ASC’s attestation and will evaluate the ASC’s history of “immediate jeopardy” survey deficiencies, as discussed below. If the CMS RO’s historical survey review is favorable, the CMS RO will approve the attestation statement within two business days from receipt, assign a hospital CMS certification number (CCN) and send a final determination permitting the ASC’s enrollment (known as a tie-in notice) as a hospital to the MAC. The former ASC’s date of enrollment will be retroactive to the date when the attestation was accepted by the MAC.

An on-site survey is not required for approval, but the CMS RO may authorize a survey by the state survey agency at a later date to ensure quality and safety requirements are met.

An ASC can elect to revert back to ASC status at any time upon providing notice to the MAC. In addition, ASCs are expected to come back into compliance with ASC conditions for coverage and other federal participation requirements once there is no longer a need for the ASC to be a hospital under its state’s emergency preparedness or pandemic plan.

Immediate Jeopardy Findings

In reviewing the ASC’s attestation, the RO will review all past survey activity of the ASC to determine whether the facility has had any immediate jeopardy deficiencies in the previous three years. In general, an immediate jeopardy finding involves a determination by a state survey agency that the ASC has failed to comply with one or more conditions for coverage applicable to ASCs and that such noncompliance has caused, or is likely to cause, serious injury, harm, impairment or death to a patient. Immediate jeopardy is the most serious level of noncompliance, and requires immediate corrective action to prevent serious injury, harm, impairment or death from occurring or recurring.

An ASC will be permitted to enroll as a hospital if the ASC has no immediate jeopardy-level findings in the previous three years, or if the immediate jeopardy findings were identified but subsequently removed through the normal state survey process.

If the ASC has had any immediate jeopardy-level deficiencies cited by a state survey agency within the last year and enforcement activities are currently ongoing (i.e., the survey cycle remains open), the RO will not accept the ASC’s attestation and will notify the MAC that the ASC will be denied temporary hospital enrollment.

Billing Implications

ASCs will not be permitted to be enrolled in Medicare as an ASC and as a hospital at the same time. The ASC will have its ASC billing privileges deactivated for the duration of the time it is enrolled as a hospital and will be reimbursed as a hospital. At the end of the public health emergency, the RO will terminate the hospital CCN and send a tie-out notice to the applicable MAC. The MAC will deactivate the hospital billing privileges and reinstate the ASC billing privileges effective on the date the ASC terminates its hospital status. If the ASC wishes to participate as a hospital after the public health emergency has ended, it must submit form CMS-855A and undergo an initial survey by the state agency or accreditation organization in order to determine compliance with hospital CoPs.

Compliance with Hospital Conditions of Participation

Importantly, if an ASC chooses to temporarily enroll in Medicare as a hospital, the ASC must meet the hospital CoPs, to the extent such CoPs are not waived by Section 1135 waivers. The attestation statement highlights particular CoPs that must be satisfied, including the following:

•  Nursing Services:
  • Ensure adequate numbers of licensed registered nurses and other personnel are available to provide nursing care to all patients as needed
  • Provide 24-hour nursing services furnished or supervised by a registered nurse
  • Ensure drugs and pharmaceuticals are prepared and administered in accordance with federal and state laws and according to the orders of the practitioner(s) responsible for the patient’s care.
• Pharmaceutical Services:
  • Provide pharmaceutical services that meet the needs of the patients
  • Have a pharmacy directed by a registered pharmacist or a drug storage area under competent supervision
  • Provide a full-time, part-time or consultant pharmacist who is responsible for all activities of the pharmacy services
  • Provide an adequate number of personnel to ensure high-quality pharmaceutical services, including emergency services
  • Ensure drugs listed in Schedules II, III, IV and V of the Comprehensive Drug Abuse and Prevention and Control Act of 1970 are kept locked within a secure area.
• Infection Control:
  • Appoint a qualified individual as the infection preventionist/infection control professional
  • Employ methods for preventing and controlling the transmission of infections within the hospital and between other providers
  • Create an infection control surveillance plan to control healthcare-acquired infections
  • Establish a hospital-wide antibiotic stewardship program in accordance with national standards.
• Respiratory Services:
  •  Ensure that the facility has a director of respiratory care services who is a doctor of medicine or osteopathy and who is available on a full- or part-time basis to supervise and administer respiratory services
  • Ensure an adequate number of qualified respiratory therapists and technicians
  • Ensure all respiratory services are delivered in accordance with medical staff directives.

Any other CoPs that are not waived by Section 1135 waivers must also be met before the facility converts to a hospital.

Key Takeaways

While ASCs may be eager to take advantage of the flexibility provided by CMS to enroll in Medicare as a hospital—which status includes higher reimbursement—compliance with hospital CoPs is a fundamental requirement of participating in Medicare as a hospital. The attestation that must be submitted by the ASC to convert into a hospital requires the facility to attest that it will meet all applicable federal participation requirements. Submission of this attestation before the facility confirms that it can and will meet all hospital CoPs could later expose the ASC to liability.

Before moving forward with an ASC-to-hospital conversion, ASCs will also need to carefully consider state law implications. As an initial matter, the ASC must ensure that enrolling as a hospital is not inconsistent with the state’s emergency preparedness or pandemic plan. The ASC must also ensure that the state will allow for the ASC to be licensed as a hospital or otherwise provide and hold itself out as providing hospital-level services without a hospital license.

While Medicare will recognize and reimburse a converted ASC for hospital services if the above requirements are satisfied, it is unclear whether other payors, including state Medicaid programs and commercial payors will similarly recognize and reimburse the ASC for services provided at hospital reimbursement rates after the facility converts from an ASC to a hospital.

ASCs with physician owners must also consider federal and state fraud and abuse laws when deciding to temporarily convert to a hospital. While CMS has provided a nationwide blanket Stark Law waiver that permits referrals by a physician-owner to an ASC that temporarily converts to a hospital, use of the Stark Law waiver requires that the arrangement satisfies a COVID-19 purpose and the particular facts and circumstances of the arrangement should be considered and documented before the facility moves forward with a conversion. The Office of Inspector General (OIG) has not issued similar Anti-Kickback Statute waivers and documentation of the purpose of the arrangement is also important for assessing Anti-Kickback Statute compliance.