Health Law Daily Wrap Up, CONDITIONS OF PARTICIPATION—CMS LETTERS: Sequestration may result in delayed expansion of facilities and longer timeframes for penalties, (Apr 10, 2013)

By Jay Nawrocki, MA

CMS is making certain adjustments to the survey and certification procedures in response to budget cuts due to sequestration for fiscal year (FY) 2013 (CMS Memorandum to State Survey Agency Directors, S&C: 13-23-ALL, April 5, 2013). Skilled nursing facilities (SNFs) may be terminated from Medicare sooner and providers, such as hospitals, that are looking to add locations may have to wait longer to be surveyed. In addition, revisit surveys after the first revisit survey following a finding of noncompliance may not occur as rapidly as before, resulting in penalties being imposed for longer periods of time. The budget for survey and certification functions is being reduced by 5 percent from the FY 2012 levels, which will result in a $19 million cut in survey and certification functions for the remainder of FY 2013. Allocations to the states to perform these functions will be reduced by 2.5 to 3.0 percent, with the remainder of the cuts being absorbed by CMS regional office operations. State survey agencies will be expected to continue to perform onsite complaint investigations and surveys of existing providers while reducing expenses, suspending additions to the workload, and reducing the amount of time spent on lower risk areas.

Hospitals. Hospitals that are adding locations or services may experience longer wait times for necessary surveys to be conducted. Onsite investigation of hospitals or critical access hospitals should be limited to complaints that, if found to be substantiated, would lead to a condition level deficiency or a finding of immediate jeopardy. Individuals making complaints will also be informed by the state survey agency that they may wish to make the complaint to the accrediting organization, as opposed to the state survey agency. This also applies to new exclusions from the inpatient prospective payment system (IPPS) for rehabilitation psychiatric units or hospitals. Finally, the frequency of organ transplant program surveys will be extended from once every three years to once every four years and the survey process will be transitioned from the state survey agency to the national contractor. Funding to the state survey agencies for 2013 surveys will be honored

SNFs. SNFs that have been on the special focus facility (SFF) list for more than 18 months and have failed to improve are to be given a “last chance” survey. A Medicare Termination Notice may be issued if this survey does not show appropriate improvement or reveals a new major noncompliance. All SNFs that have been on the SFF list for 12 months or more should be reviewed and appropriate action with CMS staff should be discussed. No new SNFs are to be placed on the SFF to replace a facility that is terminated or removed from the list because it has improved.

Revisit surveys. Providers should be wary of being found not be in compliance with any Medicare conditions of participation, as revisit surveys may not be happening as quickly as in the past. This may result in a provider’s penalty period being longer than it has been in the past. State survey agencies are to obtain approval from the CMS regional office before conducting any second, third, or fourth onsite revisit surveys after the first onsite revisit has found that the provider did not return to substantial compliance. State survey agencies are to tell providers that the time before a revisit survey may be longer than normal.

Other providers. All tier II targeted surveys of home health agencies (HHAs) are to be suspended. Tier II surveys are targeted surveys in addition to the triennial survey HHAs receive. HHA’s hospices, hospice inpatient units of a hospital, outpatient physical therapy extension sites, swing bed hospitals, and end stage renal disease facilitates that intend to expand, add a branch, or a secondary unit should be notified of a delay in necessary surveys and certifications for the additional facilities.

Providers that acquire other practices and decline assignment of Medicare certification should be informed that there may be longer wait times for the onsite survey and certification work necessary for an initial certification. These providers are to be notified that this may result in a delay in Medicare participation.

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