Archive June 2018 XIX, No. 6

Legal Update: Surgical Hospitals Stripped of Hospital Status

Medicare targeting facilities that don't keep enough patients overnight.

Lorin Patterson, Esq.


Robert Holland

Robert Holland


INPATIENT CARE Surgical hospitals that don't treat enough inpatients could lose their CMS hospital designation.

When is a surgical hospital not a hospital? When it doesn't keep enough patients overnight, according to CMS, which terminated a surgical hospital's Medicare designation as a hospital because it failed to meet Medicare standards for hospital enrollment. In other words, the hospital treated too few inpatients relative to its number of outpatients to qualify as a hospital. While Medicare's Conditions of Participation have always required that a hospital be "primarily engaged" in treating inpatients, it never specified what a hospital had to do to meet this requirement. But now we have a better sense of Medicare's daily census (at least 2 inpatients) and length-of-stay (at least 2 midnights) requirements.

Inpatient-to-outpatient ratio

State health officials conducted an unannounced survey of Blue Valley Hospital (BVH) in Overland Park, Kan., last November and found BVH, which specializes in weight-loss surgery, did not have any inpatients at the time. A subsequent state report cited hospital-provided data showing about 309 outpatient surgeries over a yearlong period, compared with 146 inpatient surgeries. CMS determined that Blue Valley wasn't "primarily engaged" in providing inpatient care and informed the facility that it did not meet the criteria to be certified as a hospital.

Last September, CMS provided new criteria to state survey agencies to measure whether a facility was "primarily engaged" in providing services to inpatients as required for hospitals to participate in Medicare. According to the updated guidance, the most important factors in determining whether a facility is "primarily engaged" in providing inpatient care are whether the facility has, at a minimum, an average daily census (ADC) of at least 2 inpatients (not including patients on "observation" status) and an average length of stay (ALOS) for its inpatients of at least 2 midnights, when measured over the prior 12 months.

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