CMS Relaxes Supervision Requirements for Hospital Outpatient Departments

02 November 2009 Publication
Authors: Maria E. Gonzalez Knavel Gary D. Koch Shirley P. Morrigan Chris E. Rossman Robert D. Sevell Lawrence W. Vernaglia Judith A. Waltz

Legal News Alert: Health Care

Many hospital administrators will be happy to know that the 2010 Outpatient Prospective Payment System final rule (Rule) released by CMS on October 30, 2009 addresses concerns over supervision requirements for outpatient services, in addition to covering all the usual payment changes for hospital outpatient and ambulatory surgery center payments. Hospital organizations throughout the country had expressed concerns regarding the supervision requirements that arose from prior regulatory and sub-regulatory guidance, in which CMS stated that a physician must provide direct supervision in the actual provider-based department (PBD) for all outpatient therapeutic services billed to Medicare by the hospital. In responding to widespread criticism of this requirement, CMS stated in the new Rule that it is balancing beneficiary access and appropriate supervision by qualified practitioners and thus proposes to “revise or further define” its current policies for supervision of outpatient services. The Rule was posted as a display copy by CMS on October 30, 2009 and will go into effect on January 1, 2010.

CMS announced some significant changes in the Rule. First, in calendar year 2010, CMS will allow certain nonphysician practitioners (NPPs) — specifically, physician assistants, nurse practitioners, clinical nurse specialists, certified nurse-midwives, and licensed clinical social workers — to provide direct supervision for all hospital outpatient therapeutic services that they are authorized to perform personally according to their state’s scope of practice rules and hospital-granted privileges. As noted above, under current CMS policy, only physicians can provide the direct supervision for these services. CMS refused to remove the on-site supervision requirement entirely, even for critical access hospitals, as the agency believes that permitting NPPs to provide the supervision should relieve the burden providers face in attempting to arrange for physician supervision. This raises a potential issue: Hospitals should ensure that the appropriate NPP is supervising outpatient services. For example, licensed clinical social workers will be limited in their supervision more than physician assistants or nurse practitioners. The expansion of supervision to certain NPPs does not apply to pulmonary, cardiac, and intensive cardiac rehabilitation services, as these services continue to require supervision by a doctor of medicine or osteopathy.

Further, CMS proposes to define “direct supervision” of an on-campus hospital outpatient therapeutic service to mean the presence of either a physician or NPP “anywhere on the hospital campus” and immediately available to furnish assistance and direction throughout the performance of the procedure. This is much more relaxed than the previous interpretation, which required “presence” in one of the hospital’s on-campus outpatient departments — and possibly within each specific outpatient department. An important provision of the Rule permits the supervising physician (or NPP) to be in an on-campus location that is not a PBD such as a physician office, an on-campus skilled nursing facility, rural health clinic, “or other nonhospital space.”

With respect to off-campus hospital outpatient departments, the Rule expanded a compliance restriction. The Rule provides that the supervising physician “must be in each PBD of a particular off-campus outpatient location, but that does not mean that the physician must be in the room when the procedure is performed.” This means that if one off-campus facility has multiple PBDs, then there would need to be multiple supervising physicians or NPPs. Thoughtful planning in the provider-based site design and attestation process can help mitigate the potential undue burdens that may flow from this requirement.

Lastly, CMS finalized its earlier proposal that the supervision levels under the Medicare Physician Fee Schedule would apply for all hospital outpatient diagnostic services that are provided directly or under arrangement, whether in the main buildings of the hospital, in a PBD, or at a nonhospital location.

These changes to CMS policy regarding supervision requirements in hospital outpatient departments provide welcome relief from requirements that many hospitals found impractical and unnecessary.


Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our health care clients and colleagues.

If you have any questions about this alert or would like to discuss this topic further, please contact your Foley attorney or any of the following individuals:

Shirley P. Morrigan
Los Angeles, California
213.972.4668
smorrigan@foley.com

Lawrence W. Vernaglia
Boston, Massachusetts
617.342.4079
lvernaglia@foley.com

Additional Authors:

Maria E. Gonzalez Knavel
Milwaukee, Wisconsin
414.297.5649
mgonzalezknavel@foley.com

Gary D. Koch
Tampa, Florida
813.225.4124
gkoch@foley.com

Chris E. Rossman
Detroit, Michigan
313.234.7112
crossman@foley.com

Robert D. Sevell
Los Angeles, California
213.972.4804
rsevell@foley.com

Michael Scarano
San Diego/Del Mar, California
858.847.6712
mscarano@foley.com

Judith A. Waltz
San Francisco, California
415.438.6412
jwaltz@foley.com

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