CMS Mulls Regulating Shared Space in Provider-based Settings

Original story posted on: April 17, 2019

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    2019 Survival Guide for Off-Campus Provider-Based Clinics

Guidance expected to address when a provider-based location shares space with a clinic or another hospital.

At the American Health Lawyers Association Medicare and Medicaid conference in March, David Wright, acting deputy director for the Center for Clinical Standards and Quality from the Centers for Medicare & Medicaid Services (CMS) described forthcoming guidance from CMS revising the policy related to shared space in a provider-based setting. 

First, I want to start by saying a huge thank you to Mr. Wright.  The fact that government officials take time out of their day to interact at these conferences is truly a great thing.  I can’t say I agree with everything Mr. Wright said but it was a very helpful dialogue.

The new guidance will address situations in which a provider-based location shares space with a clinic or another hospital.  Over the last few years, CMS regional offices have taken some very aggressive, and I would say unsupportable, positions asserting that the existence of any shared space like a common waiting room or a common hallway prevents the hospital from considering that location to be provider-based.  Perhaps the highest profile example occurred in Montana where the government asserted there was a large overpayment because the shared space meant space wasn’t hospital space. 

Sometime, in the very near future, a transmittal is going to explain that shared waiting areas and hallways are acceptable. I want to emphasize that this will not be a regulation, it will be part of the manuals, which have far less legal significance than statutes or regulations.  It sounds as though the new focus of the policy will be on whether patients must walk through treatment areas like an emergency room or ICU to reach the shared space.  My understanding is that the guidance will indicate that if patients from Site A walk though patient areas of Site B, CMS will question provider-based status. 

 In addition, if two organizations share a medical record the government will view that as problematic.  Simultaneously shared staff will also be problematic.  Staff may work for one organization on Monday, Wednesday and Friday and the other Tuesday/Thursday, but temporal separation will be expected.  In addition, each location would be expected to have separate emergency response equipment like crash carts.

The supposed rationale for this is accountability.  I don’t understand that.  You could have accountability by stating “if anything is wrong with a shared service, both facilities will face penalties.” That would seem to increase, rather than decrease accountability and safety. 

While the change in position is welcome, and will certainly help, I would assert it still does not go far enough, and that CMS could allow more flexibility while still furthering the patient safety goals.  For example, I don’t understand the argument that a combined medical record somehow interferes with health and safety.  Having organizations keep parallel medical records seems far riskier than having a combined record. There has been a huge push for clinical integration.   Perhaps more importantly, I still think that much of this guidance exceeds the regulatory authority of CMS. Regulations prevent independent diagnostic testing facilities and DME vendors from sharing space.  The provider-based regulations contain no similar prohibition.  Therefore, I think the policy of trying to limit space-sharing by provider-based facilities exceeds the authority of CMS.

 The guidance is promised “soon,” though no one knows what soon means. Mr. Wright suggested that anyone in a dispute about provider-based space dispute now should confirm with the CMS regional office that the surveyors are applying the still unpublished, but more lenient guidance.  The agency expects surveyors to use the more flexible policy even before the Transmittal is issued.

While I fear that the revised policy may still be more restrictive than the regulations, I am glad to see CMS recognize that its past position was problematic. And I am extremely grateful for the time that so many CMS officials took to present at, and attend, the conference. 


David M. Glaser, Esq.

David M. Glaser, Esq., is a shareholder in Fredrikson & Byron’s Health Law Group. David helps clinics, hospitals, and other healthcare entities negotiate the maze of healthcare regulations, providing advice about risk management, reimbursement, and business planning issues. He has considerable experience in healthcare regulation and litigation, including compliance, criminal and civil fraud investigations, and reimbursement disputes. David’s goal is to explain the government’s enforcement position and to analyze whether the law supports this position. David is a popular panelist on Monitor Mondays and a member of the RACmonitor editorial board.


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