The Notice explained that, "CMS believed [the supervision] requirement to be a clarification of longstanding policy, but the rule has generated concern among some rural providers who had previously interpreted the CMS policy to require only 'general supervision' and who believe that it may be difficult to meet this requirement."  Following this Notice, CMS posted a statement on its Critical Access Hospitals Center web-page informing providers of this action.  (See: http://www.cms.hhs.gov/HospitalOutpatientPPS/downloads/WebNotice.pdf).

Here, CMS stated that it plans to revisit the issue of supervision for therapeutic services provided to hospital outpatients in CAHs through the annual rulemaking cycle for calendar year (CY) 2011. CMS also emphasized that it continues to expect CAHs to fulfill all other Medicare program requirements when providing services to Medicare beneficiaries and when billing Medicare for those services. While CMS is instructing contractors not to enforce the supervision requirements in CAHs for CY 2010, it continues to emphasize quality and safety for services provided to all patients in CAHs.

This action comes less than a week from the most recent CMS Rural Health Open Door Forum call where the discussion focused on supervision requirements and drew many questions and concerns from rural hospitals struggling to meet the supervision requirements.  Of particular concern is the fact that the Medicare Conditions of Participation for CAHs do not require a physician to be present 24/7 but that outpatient therapeutic services require direct supervision by a clinically-appropriate physician/mid-level supervisor as a condition of Medicare payment.  Callers indicated that this requirement is particularly difficult for after-hours services such as overnight observation.  Another potential source of frustration is that the regulation for therapeutic services only addressed conditions for "hospitals" until this year when the regulation was changed to read "hospitals or CAHs."  In the CY 2010 final rule, CMS explained this change was merely to correct a drafting oversight, but the recent decision to decline enforcement activities could be CMS' recognition of the further confusion it created for CAHs.  CMS is expected to address the outpatient supervision requirements in CY 2011 rulemaking.       

Importantly, this decision to decline enforcement of the therapeutic supervision requirements only applies to CAHs.  All other PPS hospitals, including rural hospitals paid under PPS, are still subject to the current regulations regarding direct supervision of outpatient therapeutic services.

If you have any questions regarding this update please contact Joan L. Lowes (jlowes@hallrender.com), Regan E. Tankersley (rtankersley@hallrender.com), or Lori A. Wink (lwink@hallrender.com).