[Federal Register Volume 86, Number 46 (Thursday, March 11, 2021)]
[Notices]
[Pages 13901-13903]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05095]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1758-FN]


Medicare Program: Approval 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: Final notice.

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SUMMARY: This final notice announces our decision to approve the 
request from Solutions Medical Consulting, LLC d/b/a Serenity Springs 
Hospital for an exception to the prohibition on expansion of facility 
capacity.

DATES: This decision is applicable beginning March 11, 2021.

FOR FURTHER INFORMATION CONTACT: 
    [email protected].
    Joi Hosley, (410) 786-2194.
    Patricia Taft, (410) 786-4561.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 1877 of the Social Security Act (the Act), also known as 
the physician self-referral law--(1) prohibits

[[Page 13902]]

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.
    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 our regulations at 42 CFR 
411.362(c)(2) and (3)) and has been granted an exception to the 
facility expansion prohibition by 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.
    Our regulations at Sec.  411.362(c)(5) require us to 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 the regulations in place at the 
time the request was filed, 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)).\1\ 
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).
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    \1\ When approving an expansion exception request, we are 
required to follow the regulations in effect as of the date the 
request is filed. The regulations at 42 CFR 411.362(c)(6) were 
modified effective January 1, 2021 (85 FR 85866; https://www.federalregister.gov/documents/2020/12/29/2020-26819/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment.
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III. Public Response to Notice With Comment Period

    On December 11, 2020, we published a notice in the Federal Register 
(85 FR

[[Page 13903]]

80111) 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 December 2020 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: 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.

    In the December 2020 notice, we solicited comments from individuals 
and entities in the community in which Solutions Medical Consulting, 
LLC d/b/a Serenity Springs Hospital is located. During the 30-day 
public comment period, we received no public comments.

IV. Decision

    This final notice announces our decision to approve Solutions 
Medical Consulting, LLC d/b/a Serenity Springs Hospital's request for 
an exception to the prohibition against expansion of facility capacity. 
Solutions Medical Consulting, LLC d/b/a Serenity Springs Hospital 
submitted the data and certifications necessary to demonstrate that it 
satisfies the criteria to qualify as a high Medicaid facility as 
specified in the November 30, 2011 final rule. In accordance with 
section 1877(i)(3) of the Act, we are granting Solutions Medical 
Consulting, LLC d/b/a Serenity Springs Hospital's request for an 
exception to the expansion of facility capacity prohibition based on 
the following criteria:
     Solutions Medical Consulting, LLC d/b/a Serenity Springs 
Hospital 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 submitted its 
request, Solutions Medical Consulting, LLC d/b/a Serenity Springs 
Hospital had 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
     Solutions Medical Consulting, LLC d/b/a Serenity Springs 
Hospital 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.
    Our decision grants Solutions Medical Consulting, LLC d/b/a 
Serenity Springs Hospital's request to add a total of 18 operating 
rooms, procedure rooms, and beds. Under the regulations in place at the 
time the request was filed, 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 Solutions Medical 
Consulting, LLC d/b/a Serenity Springs Hospital is licensed to exceed 
200 percent of its baseline number of operating rooms, procedure rooms, 
and beds. Solutions Medical Consulting, LLC d/b/a Serenity Springs 
Hospital certified that its baseline number of operating rooms, 
procedure rooms, and beds is 18. Accordingly, we find that granting an 
additional 18 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.).
    The Acting Administrator of the Centers for Medicare & Medicaid 
Services (CMS), Elizabeth Richter, 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: March 8, 2021.
Lynette Wilson,
Federal Register Liaison, Department of Health and Human Services.
[FR Doc. 2021-05095 Filed 3-10-21; 8:45 am]
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