On March 13, OOSS apprised you of CMS’ guidance governing the option to convert ASCs to hospital status during the COVID-19 pandemic.  CMS has also modified its rules to enable hospitals to contract under arrangement to outside providers like ASCs to deliver hospital services.  Allison Shuren, Partner, Arnold & Porter, has provided OOSS members and friends with a summary of this new opportunity for ASCs.

Should you have any questions regarding this issue, please contact Allison Shuren at allison.shuren@apks.com or Michael Romansky at mromansky@OOSS.org. 

Summary by Allison Shuren, Partner, Arnold & Porter

On March 30, 2020, the Centers for Medicare and Medicaid Services (CMS) issued an Interim Final Rule with Comment Period (IFC)[1] implementing a number of temporary adjustments to existing Medicare regulations to give hospitals, physicians, and other health care providers greater flexibility during the public health emergency (PHE) to meet the country’s unparalleled need for medical services. 
 
Among the regulatory waivers, CMS authorized hospitals to contract for inpatient and outpatient services with independent facilities (referred to as “under arrangement”).  Hospitals already had the ability to obtain therapeutic and diagnostic services under arrangement, but could not do so for routine hospital services.  This change permits hospitals to furnish a full range of inpatient and outpatient services through third-party contracts, provided the hospital continues to exercise sufficient control and responsibility over those services.  For example, a hospital could contract with an ambulatory surgery center (ASC) for use of the facility, equipment, and perhaps staff.  For owners with ASCs closed due to bans on elective surgery, this option could be a way to keep the ASC operational and providing much needed services. 
             
The under arrangements option may be a less onerous option for ASC than changing their enrollment in Medicare to one of a hospital and meeting all the related requirements.  In addition, for hospitals with experience with such arrangements, the contracting process should be accomplished expeditiously creating the additional surge space need to care for patients. 
 
Services provided under an arrangements contract are hospital services, and the hospital must maintain control over the services and continue to meet hospital condition for participation (unless the condition has been waived for PHE (e.g. physical plant conditions).  Hospital submits the claim for the service whether outpatient or inpatient service, and depending on the scope of the services to be furnished by the ASC, it may be possible to continue to provide ASC services and contracted hospital services. 
 
The parties should remember that if the ASC is owned by physicians who refer patients to the hospital both the Stark Law and federal Anti-Kickback Statute will apply to the arrangement and will need to be taken into consideration.
 
If interested, you should contact your local hospital to identify and possibly implement such arrangements.

[1] Medicare and Medicaid Programs; Policy and Regulatory Revisions in Response to the COVID-19 Public Health Emergency, Interim Final Rule with Comment Period (Mar. 31, 2020), https://www.cms.gov/files/document/covid-final-ifc.pdf.