[Federal Register Volume 81, Number 209 (Friday, October 28, 2016)]
[Notices]
[Pages 75090-75092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26119]


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

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1661-FN]


Medicare Program; Approval of 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 for Rockwall Regional Hospital, Limited Liability Company 
Doing Business as (d/b/a) Texas Health Presbyterian Hospital Rockwall

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

ACTION: Final notice.

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

SUMMARY: This final notice announces our decision to approve the 
request of Rockwall Regional Hospital, Limited Liability Company (LLC) 
doing business as (d/b/a) Texas Health Presbyterian Hospital Rockwall 
(Texas Health Rockwall) for an exception to the prohibition on 
expansion of facility capacity.

DATES: Effective Date: This notice is effective on October 28, 2016.

FOR FURTHER INFORMATION CONTACT: [email protected].

SUPPLEMENTARY INFORMATION:

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, known as the 
rural provider exception, for physician ownership or investment 
interests in rural providers. 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)(D) 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. 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 facility 
expansion 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 request for the 
exception. Section 1877(i)(3)(H) of the Act states that the Secretary 
shall publish in the Federal Register the final decision with respect 
to the request for an exception to the prohibition against facility 
expansion not later than 60 days after receiving a complete 
application.

II. Exception Approval 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 include, 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

[[Page 75091]]

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)(ii)).
    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 the Centers for Medicare & Medicaid Services (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. Public Response to Notice With Comment Period

    On February 2, 2016, we published a notice in the Federal Register 
(81 FR 5463) entitled ``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.'' In 
the notice, we stated that, as permitted by section 1877(i)(3) of the 
Act and our regulations at Sec.  411.362(c), the following physician-
owned hospital requested an exception to the prohibition on expansion 
of facility capacity:
    Name of Facility: Rockwall Regional Hospital, LLC, d/b/a Texas 
Health Presbyterian Hospital Rockwall.
    Address: 3150 Horizon Road, Rockwall County, Texas 75032-7805.
    County: Rockwall County, Texas
    Basis for Exception Request: Applicable Hospital.
    In the notice, we solicited comments from individuals and entities 
in the community in which Texas Health Rockwall is located. We received 
43 comments during the 30-day public comment period. Forty-two comments 
were in favor of the request and one was in opposition.
    The commenter that opposed the expansion request asserted that 
Texas Health Rockwall did not meet the inpatient Medicaid admissions 
criterion at Sec.  411.362(c)(2)(ii). The commenter expressed concern 
that the HCRIS, the data source used by Texas Health Rockwall to 
demonstrate satisfaction of the inpatient Medicaid admissions 
criterion, does not accurately reflect all Medicaid admissions and 
discharges. The commenter expressed its belief that information from a 
different source, the Texas Health Care Information Collection (THCIC), 
does not indicate that Texas Health Rockwall's satisfied the inpatient 
Medicaid admissions criterion.
    On April 13, 2016, Texas Health Rockwall submitted a rebuttal 
statement in response to the comment opposing its request. The 
statement satisfactorily rebutted the commenters' assertions regarding 
the inpatient Medicaid admissions criterion and addressed the concerns 
expressed by the commenter regarding HCRIS and THCIC data.

IV. Decision

    This final notice announces our decision to approve Texas Health 
Rockwall's request for an exception to the prohibition against 
expansion of facility capacity. As required by the November 30, 2011 
final rule (76 FR 74122) and our public guidance documents, Texas 
Health Rockwall submitted the data and certifications necessary to 
demonstrate that it satisfies the criteria to qualify as an applicable 
hospital. In accordance with section 1877(i)(3) of the Act, we are 
granting Texas Health Rockwall's request for an exception to the 
expansion of facility capacity prohibition based on the following 
criteria:
     Texas Health Rockwall is located in a county that had a 
percentage increase in population that is at least 150 percent of the 
percentage increase in population of the State in which the hospital is 
located during the most recent 5-year period for which data are 
available as of the date that the hospital submitted its request;
     Texas Health Rockwall had an annual percent of total 
inpatient admissions under Medicaid that is equal to or greater than 
the average percent with respect to such admissions for all hospitals 
located in the county in which the hospital is located during the most 
recent fiscal year for which data are available as of the date that the 
hospital submitted its request;
     Texas Health Rockwall certified that it does not 
discriminate against beneficiaries of Federal health care programs and 
does not permit physicians practicing at the hospital to discriminate 
against such beneficiaries;
     Texas Health Rockwall is located in a State in which the 
average bed capacity in the State was less than the national average 
bed capacity during the most recent fiscal year for which data are 
available as of the date that the hospital submitted its request; and
     Texas Health Rockwall had an average bed occupancy rate 
that was greater than the average bed occupancy rate in the State in 
which the hospital is located during the most recent fiscal year for 
which data are available as of the date that the hospital submitted its 
request.
    Our decision grants Texas Health Rockwall's request to add a total 
of 60 operating rooms, procedure rooms, and beds. Pursuant to Sec.  
411.362(c)(6), 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 Texas Health Rockwall is 
licensed to exceed 200 percent of its baseline number of operating 
rooms, procedure rooms, and beds. Texas Health Rockwall certified that 
its baseline number of operating rooms, procedure rooms, and beds is 
60. Accordingly, we find that granting an additional 60 operating 
rooms, procedure rooms, and beds will not exceed the limitation on a 
permitted expansion.

V. 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.).


[[Page 75092]]


    Dated: October 3, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
[FR Doc. 2016-26119 Filed 10-27-16; 8:45 am]
 BILLING CODE 4120-01-P