[Federal Register Volume 85, Number 239 (Friday, December 11, 2020)]
[Notices]
[Pages 80111-80113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27354]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS- 1758-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: Notice with request for comment.

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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 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 
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: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on January 11, 2021.

ADDRESSES: In commenting, refer to file code CMS-1758-PN.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    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-1758-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: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1758-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: Patricia Taft at 410-786-4561 or Joi 
Hosley at 410-786-2194; [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 website as soon as possible after they have been 
received: http://www.regulations.gov. Follow the search instructions on 
that website to view public comments. CMS will not post on 
Regulations.gov public comments that make threats to individuals or 
institutions or suggest that the individual will take actions to harm 
the individual. CMS continues to encourage individuals not to submit 
duplicative comments. We will post acceptable comments from multiple 
unique commenters even if the content is identical or nearly identical 
to other comments.

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 payable by Medicare to 
an entity with which he or she (or an immediate family member) has a 
financial relationship, 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 any improperly referred designated health services. A 
financial relationship may be an ownership or investment interest in 
the entity or a compensation arrangement with the entity. The statute 
establishes a number of specific exceptions and grants the Secretary of 
the Department of Health and Human Services (the Secretary) the 
authority to create regulatory exceptions for financial relationships 
that do not pose a risk of program or patient abuse.
    Section 1877(d) of the Act sets forth exceptions related to 
ownership or investment interests held by a physician (or an immediate 
family member of a physician) in an entity that furnishes designated 
health services. Section 1877(d)(2) of the Act provides an exception 
for ownership or investment interests in rural providers (the ``rural 
provider exception''). In order to qualify for the rural provider 
exception, the designated health services must be furnished in a rural 
area (as defined in section 1886(d)(2) of the Act) and substantially 
all the designated health services furnished by the entity must be 
furnished to individuals residing in a rural area, and, in the case 
where the entity is a hospital, the hospital meets the requirements of 
section 1877(i)(1) of the Act no later than September 23, 2011. Section 
1877(d)(3) of the Act provides an exception for ownership or investment 
interests in a hospital located outside of Puerto Rico (the ``whole 
hospital exception''). In order to qualify for the whole hospital 
exception, the referring physician must be authorized to perform 
services at the hospital, the ownership or investment interest must be 
in the hospital itself (and not merely in a subdivision of the 
hospital), and the hospital meets the requirements of section 
1877(i)(1) of the Act no later than September 23, 2011.

II. Prohibition on Facility Expansion

    Section 6001(a)(3) of the Patient Protection and Affordable Care 
Act (Affordable Care Act) (Pub. L. 111-148) amended the rural provider 
and whole hospital exceptions to provide that a hospital may not 
increase the number of operating rooms, procedure rooms, and beds 
beyond that for which the hospital was licensed on March 23, 2010 (or, 
in the case of a hospital that did not have a provider agreement in 
effect as of this date, but did have a provider agreement in effect on 
December 31, 2010, the effective date of such provider agreement). 
Thus, since March 23, 2010, a physician-owned hospital that seeks to 
avail itself of either exception is

[[Page 80112]]

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. Section 6001(a)(3) of the Affordable Care Act added 
new section 1877(i)(3)(A)(i) of the Act, which required the Secretary 
to establish and implement an exception process to the prohibition on 
expansion of facility capacity for hospitals that qualify as an 
``applicable hospital.'' Section 1106 of the Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) amended section 
1877(i)(3)(A)(i) of the Act to require the Secretary to establish and 
implement an exception process to the prohibition on expansion of 
facility capacity for hospitals that qualify as either an ``applicable 
hospital'' or a ``high Medicaid facility.'' These terms are defined at 
sections 1877(i)(3)(E) and 1877(i)(3)(F) of the Act.
    The requirements for qualifying as an applicable hospital are set 
forth at Sec.  411.362(c)(2) and the requirements for qualifying as a 
high Medicaid facility are set forth at Sec.  411.362(c)(3). An 
applicable hospital means a hospital: (1) That is located in a county 
in which the percentage increase in the population during the most 
recent 5-year period (as of the date that the hospital submits its 
request for an exception to the prohibition on expansion of facility 
capacity) is at least 150 percent of the percentage increase in the 
population growth of the State in which the hospital is located during 
that period, as estimated by the Bureau of the Census; (2) whose annual 
percent of total inpatient admissions under Medicaid is equal to or 
greater than the average percent with respect to such admissions for 
all hospitals in the county in hospital is located during the most 
recent 12-month period for which data are available (as of the date 
that the hospital submits its request for an exception to the 
prohibition on expansion of facility capacity); (3) that does not 
discriminate against beneficiaries of federal health care programs and 
does not permit physicians practicing at the hospital to discriminate 
against such beneficiaries; (4) that is located in a state in which the 
average bed capacity in the state is less than the national average bed 
capacity; and (5) that has an average bed occupancy rate that is 
greater than the average bed occupancy rate in the State in which the 
hospital is located. The regulations at Sec.  411.362(c)(2)(ii), (iv), 
and (v) specify acceptable data sources for determining whether a 
hospital qualifies as an applicable hospital. A ``high Medicaid 
facility'' means a hospital that--(1) is not the sole hospital in a 
county; (2) with respect to each of the three most recent 12-month 
periods for which data are available, 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; and 
(3) does not discriminate against beneficiaries of federal health care 
programs and does not permit physicians practicing at the hospital to 
discriminate against such beneficiaries. Section 411.362(c)(3)(ii) 
specifies the acceptable data sources for determining whether a 
hospital qualifies as a high Medicaid facility. On November 30, 2011, 
we published the CY 2012 OPPS/ASC final rule in the Federal Register, 
which set forth the process for a hospital to request an exception from 
the prohibition on facility expansion (the exception process) at Sec.  
411.362(c) and related definitions Sec.  411.362(a) (76 FR 74122).
    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 website at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html.

III. 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 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 
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 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, under our current regulations, 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

[[Page 80113]]

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).

IV. 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: Solutions Medical Consulting, LLC d/b/a Serenity 
Springs Hospital
Location: 1495 Frazier Road, Ruston, Louisiana 71270-1632
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 
website at: http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. We solicit public 
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.
     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 above and state whether or not they are in the community in 
which the hospital is located.

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.).

VI. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. 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.
    The Administrator of the Centers for Medicare & Medicaid Services 
(CMS), Seema Verma, having reviewed and approved this document, 
authorizes Lynette Wilson, who is the Federal Register Liaison, to 
electronically sign this document for purposes of publication in the 
Federal Register.

    Dated: December 8, 2020.
Lynette Wilson,
Federal Register Liaison, Centers for Medicare & Medicaid Services.
[FR Doc. 2020-27354 Filed 12-10-20; 8:45 am]
BILLING CODE 4120-01-P