Co-Location of Hospital Space: CMS Issues Draft Guidance for Public Comment

13 May 2019 Health Care Law Today Blog

On May 3, 2019, the Centers for Medicare & Medicaid Services (CMS) issued long-awaited draft interpretive guidance for hospitals relating to the “co-location” of services provided by separate healthcare entities. Co-location occurs where two hospitals or a hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services.  The draft guidance is intended to introduce some flexibility for hospitals that share space, or co-locate, with other hospitals or healthcare entities.  

The big picture of the draft guidance is that clinical space must always be dedicated to the hospital, and that patients of a co-located entity cannot pass through the hospital’s clinical space (or vice versa), reflecting CMS’ concerns with infection control and patient privacy and security.  But if space can be adequately described as a “public area,” “public space,” or “public path of travel,” then the concurrent use of that space will not violate the CMS co-location draft guidance.  Sharing of staff and contracted services is also permissible, so long as there is no “floating,” such that staff is exclusively providing services for one co-located entity at any one time, and each of the co-located entities have sufficient oversight and maintain independent responsibility for compliance with Medicare Conditions of Participation (CoPs).

The draft guidance was released as a memorandum to State Survey Agency Directors from the CMS Director of the Quality, Safety & Oversight Group. In an unusual move for these sorts of releases, CMS is seeking comments.  Comments will be accepted up to July 2, 2019. 


For a provider-based department, remote location or satellite facility of a hospital to qualify for provider-based status, the facility must be held out to the public and payers as part of the hospital, and adequately identified to assure that patients know they are entering a part of the hospital. (42 C.F.R. § 413.65(b)((3)(iv)) Although this standard does not expressly address co-location, since at least 2011, CMS has taken a restrictive view in regional office guidance and public presentations (e.g., presentation of David Eddinger, CMS Technical Director, Hospital Survey & Certification, for American Health Lawyers Association (AHLA) webinar on March 25, 2015), enforced through the survey and accreditation process,, to require that co-located facilities must demonstrate separateness of space – including both clinical and non-clinical (e.g., registration and waiting areas) space, with limited exceptions.  The generally recognized CMS’ view was that patients could enter into a common atrium, and use a common elevator, but then they would need to turn right to go to one provider and left to go to another – they could not traverse one provider’s space to access another.  Nor could the providers take advantage of shared waiting rooms or common non-clinical areas.  

Proposed Guidance

The draft guidance, if finalized, would introduce a level of flexibility to permit co-location, with limitations, overturning the more restrictive prior standards applied by CMS. We anticipate that the flexibility will be welcomed by many in the hospital community, as it would not only introduce greater clarity and uniformity in the survey process, but also permit co-located providers to effectively share certain “public” spaces and paths of travel. Clinical space designated for patient care, or separate space necessary for patient confidentiality or security, would need to be kept distinct to each provider/entity.  Providers would be individually responsible for compliance with CoPs in all areas of the co-located facility, including both the shared “public” space and the segregated clinical space.  State licensure and accreditation standards will also need to be taken into account in structuring any arrangement.

Under the draft guidance, hospitals and other “healthcare entities” would specifically be able to share “public” spaces such as:  

  • Main entrances;
  • Waiting areas;
  • Bathrooms;
  • Staff Lounges;
  • Elevators;
  • Main corridors through non-clinical areas;
  • Lobbies; and
  • Reception areas (with separate “check-in” areas and clear signage).

These types of spaces are now treated as “common areas” and “public spaces and public paths of travel.” They may share this space in a co-located environment.  On the other hand, clinical space may still not be shared between the hospital and another co-located healthcare entity.  

A second issue which was addressed in the draft guidance was somewhat unexpected. The draft guidance permits sharing of staff so long as they are clearly dedicated to work for the hospital and some other entity at distinct times.  In other words, the staff would need to be assigned exclusively to the hospital during a given shift.  Staff cannot “float” between two hospitals (or be “on-call” for a hospital and a co-located entity) during that same work shift. There is some ambiguity as to whether the exclusivity requirement would apply for purposes of both clinical and non-clinical staff, which is likely to be clarified in the final guidance. Medical staff (physicians and others as recognized by the hospital), in any event, may be shared or “float” between co-located hospitals if they have appropriate privileges and are credentialed for both facilities. This makes sense as members of the medical staff are not considered part of the hospital’s work force. 

Hospitals must also have appropriate policies and procedures in place for addressing emergency care needs 24 hours per day and 7 days per week.  If the hospital contracts for emergency support services, the services need to be provided exclusively and without any overlap with the co-located entity that might impede delivery of care.

The draft guidance further recognizes that hospitals may obtain services under contract or arrangement with the co-located hospital or healthcare entity, including laboratory, food services, pharmacy, maintenance, housekeeping and security services, in compliance with CoPs.  

In surveying a hospital, surveyors would follow interpretive guidance and survey procedures applicable to quality assurance and performance improvement (QAPI) and contracted services. (42 C.F.R. §§ 482.21 and 482.12(e), respectively)

As comments are likely to be coming in from multiple sources, we anticipate further refinement of this draft guidance by CMS.  Foley & Lardner LLP is assembling comments for submission.  In addition, Foley & Lardner LLP is participating in a webinar sponsored by AHLA’s Regulatory, Accreditation and Payment Practice Group on June 5, 2019.  That webinar will include some of the authors and interpreters of the guidance at CMS, including David Wright, CMS’ Acting Deputy Center Director, Center for Clinical Standards and Quality, Karen Tritz, Director of CMS’ Division of Acute Care Services, and Danielle Miller, CMS’ subject matter expert on co-location.  We expect additional insights to be developed during and after that webinar.  

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