[Federal Register Volume 81, Number 145 (Thursday, July 28, 2016)]
[Notices]
[Pages 49662-49664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17928]


-----------------------------------------------------------------------

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1667-PN]


Medicare Program; Request for an Exception to the Prohibition on 
Expansion of Facility Capacity Under the Hospital Ownership and Rural 
Provider Exceptions to the Physician Self-Referral Prohibition

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Proposed notice.

-----------------------------------------------------------------------

SUMMARY: The Social Security Act prohibits a physician-owned hospital 
from expanding its facility capacity, unless the Secretary of the 
Department of Health and Human Services (the Secretary) grants the 
hospital's request for an exception to that prohibition after 
considering input on the hospital's request from individuals and 
entities in the community where the hospital is located. The Centers 
for Medicare & Medicaid Services (CMS) has received a request from a 
physician-owned hospital for an exception to the prohibition against 
expansion of facility capacity. This notice solicits comments on the 
request from individuals and entities in the community in which the 
physician-owned hospital is located. Community input may inform our 
determination regarding whether the requesting hospital qualifies for 
an exception to the prohibition against expansion of facility capacity.

DATES: Comment Date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on August 29, 2016.

ADDRESSES: In commenting, please refer to file code CMS-1667-PN. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of three ways (please choose only 
one of the ways listed):
    1. Electronically. You may submit electronic comments on this 
exception request to http://www.regulations.gov. Follow the 
instructions under the ``More Search Options'' tab.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-1667-PN, P.O. Box 8010, 
Baltimore, MD 21244-1850.

Please allow sufficient time for mailed comments to be received before 
the close of the comment period.

    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Department of Health and Human Services, 
Attention: CMS-1667-PN, Mail Stop C4-26-05, 7500 Security Boulevard, 
Baltimore, MD 21244-1850.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: [email protected].

SUPPLEMENTARY INFORMATION:

Inspection of Public Comments

    All comments received before the close of the comment period are 
available for viewing by the public, including any personally 
identifiable or confidential business information that is included in a 
comment. We post all comments received before the close of the comment 
period on the following Web site as soon as possible after they have 
been received: http://www.regulations.gov. Follow the search 
instructions on that Web site to view public comments.
    We will allow stakeholders 30 days from the date of this notice to 
submit written comments. Comments received timely will be available for 
public inspection as they are received, generally beginning 
approximately 3 weeks after publication of this notice, at the 
headquarters of the Centers for Medicare & Medicaid Services, 7500 
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of 
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view 
public comments, please phone 1-800-743-3951.

[[Page 49663]]

I. Background

    Section 1877 of the Social Security Act (the Act), also known as 
the physician self-referral law--(1) prohibits a physician from making 
referrals for certain ``designated health services'' (DHS) payable by 
Medicare to an entity with which he or she (or an immediate family 
member) has a financial relationship (ownership or compensation), 
unless the requirements of an applicable exception are satisfied; and 
(2) prohibits the entity from filing claims with Medicare (or billing 
another individual, entity, or third party payer) for those DHS 
furnished as a result of a prohibited referral.
    Section 1877(d)(2) of the Act provides an exception for physician 
ownership or investment interests in rural providers (the ``rural 
provider exception''). In order for an entity to qualify for the rural 
provider exception, the DHS must be furnished in a rural area (as 
defined in section 1886(d)(2) of the Act) and substantially all the DHS 
furnished by the entity must be furnished to individuals residing in a 
rural area.
    Section 1877(d)(3) of the Act provides an exception, known as the 
hospital ownership exception, for physician ownership or investment 
interests held in a hospital located outside of Puerto Rico, provided 
that the referring physician is authorized to perform services at the 
hospital and the ownership or investment interest is in the hospital 
itself (and not merely in a subdivision of the hospital).
    Section 6001(a)(3) of the Patient Protection and Affordable Care 
Act (Pub. L. 111-148) as amended by the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) (hereafter referred to 
together as ``the Affordable Care Act'') amended the rural provider and 
hospital ownership exceptions to the physician self-referral 
prohibition to impose additional restrictions on physician ownership 
and investment in hospitals and rural providers. Since March 23, 2010, 
a physician-owned hospital that seeks to avail itself of either 
exception is prohibited from expanding facility capacity unless it 
qualifies as an ``applicable hospital'' or ``high Medicaid facility'' 
(as defined in sections 1877(i)(3)(E), (F) of the Act and 42 CFR 
411.362(c)(2), (3) of our regulations) and has been granted an 
exception to the prohibition by the Secretary of the Department of 
Health and Human Services (the Secretary). Section 1877(i)(3)(A)(ii) of 
the Act provides that individuals and entities in the community in 
which the provider requesting the exception is located must have an 
opportunity to provide input with respect to the provider's application 
for the exception. For further information, we refer readers to the CMS 
Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html.

II. Exception Request Process

    On November 30, 2011, we published a final rule in the Federal 
Register (76 FR 74122, 74517 through 74525) that, among other things, 
finalized Sec.  411.362(c), which specified the process for submitting, 
commenting on, and reviewing a request for an exception to the 
prohibition on expansion of facility capacity. We published a 
subsequent final rule in the Federal Register on November 10, 2014 (79 
FR 66770) that made certain revisions. These revisions included, among 
other things, permitting the use of data from an external data source 
or data from the Hospital Cost Report Information System (HCRIS) for 
specific eligibility criteria.
    As stated in regulations at Sec.  411.362(c)(5), we will solicit 
community input on the request for an exception by publishing a notice 
of the request in the Federal Register. Individuals and entities in the 
hospital's community will have 30 days to submit comments on the 
request. Community input must take the form of written comments and may 
include documentation demonstrating that the physician-owned hospital 
requesting the exception does or does not qualify as an ``applicable 
hospital'' or ``high Medicaid facility,'' as such terms are defined in 
Sec.  411.362(c)(2) and (3). In the November 30, 2011 final rule (76 FR 
74522), we gave examples of community input, such as documentation 
demonstrating that the hospital does not satisfy one or more of the 
data criteria or that the hospital discriminates against beneficiaries 
of Federal health programs; however, we noted that these were examples 
only and that we will not restrict the type of community input that may 
be submitted. If we receive timely comments from the community, we will 
notify the hospital, and the hospital will have 30 days after such 
notice to submit a rebuttal statement (Sec.  411.362(c)(5)).
    A request for an exception to the facility expansion prohibition is 
considered complete as follows:
     If the request, any written comments, and any rebuttal 
statement include only HCRIS data: (1) The end of the 30-day comment 
period if CMS receives no written comments from the community; or (2) 
the end of the 30-day rebuttal period if CMS receives written comments 
from the community, regardless of whether the physician-owned hospital 
submitting the request submits a rebuttal statement (Sec.  
411.362(c)(5)(i)).
     If the request, any written comments, or any rebuttal 
statement include data from an external data source, no later than: (1) 
180 Days after the end of the 30-day comment period if CMS receives no 
written comments from the community; and (2) 180 days after the end of 
the 30-day rebuttal period if CMS receives written comments from the 
community, regardless of whether the physician-owned hospital 
submitting the request submits a rebuttal statement (Sec.  
411.362(c)(5)(ii)).
    If we grant the request for an exception to the prohibition on 
expansion of facility capacity, the expansion may occur only in 
facilities on the hospital's main campus and may not result in the 
number of operating rooms, procedure rooms, and beds for which the 
hospital is licensed to exceed 200 percent of the hospital's baseline 
number of operating rooms, procedure rooms, and beds (Sec.  
411.362(c)(6)). The CMS decision to grant or deny a hospital's request 
for an exception to the prohibition on expansion of facility capacity 
must be published in the Federal Register in accordance with our 
regulations at Sec.  411.362(c)(7).

III. Hospital Exception Request

    As permitted by section 1877(i)(3) of the Act and our regulations 
at Sec.  411.362(c), the following physician-owned hospital has 
requested an exception to the prohibition on expansion of facility 
capacity:
    Name of Facility: Deaconess Women's Hospital of Southern Indiana d/
b/a The Women's Hospital.
    Location: 4199 Gateway Blvd., Newburgh, IN 47630.
    Basis for Exception Request: High Medicaid Facility.
    We seek comments on this request from individuals and entities in 
the community in which the hospital is located. We encourage interested 
parties to review the hospital's request, which is posted on the CMS 
Web site at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. We especially 
welcome comments regarding whether the hospital qualifies as a high 
Medicaid facility. Under Sec.  411.362(c)(3), a high Medicaid facility 
is a hospital that satisfies all of the following criteria:
     Is not the sole hospital in the county in which the 
hospital is located.

[[Page 49664]]

     With respect to each of the 3 most recent 12-month periods 
for which data are available as of the date the hospital submits its 
request, has an annual percent of total inpatient admissions under 
Medicaid that is estimated to be greater than such percent with respect 
to such admissions for any other hospital located in the county in 
which the hospital is located.
     Does not discriminate against beneficiaries of federal 
health care programs and does not permit physicians practicing at the 
hospital to discriminate against such beneficiaries.
    Individuals and entities wishing to submit comments on the 
hospital's request should review the DATES and ADDRESSES sections and 
state whether or not they are in the community in which the hospital is 
located.

IV. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

V. Response to Public Comments

    We will consider all comments we receive by the date and time 
specified in the DATES section of this preamble, and, when we proceed 
with a subsequent document, we will respond to the comments in the 
preamble to that document.

    Dated: July 14, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2016-17928 Filed 7-27-16; 8:45 am]
BILLING CODE 4120-01-P