CMS Provides Flexibility for Independent Freestanding Emergency Departments to Enroll in Medicare as Hospitals During the COVID-19 Pandemic

On April 21, 2020, CMS issued a QSO Memo, QSO-20-27-Hospital, to provide direction to state survey agencies regarding Freestanding EDs, including guidance for those Freestanding EDs that choose to temporarily enroll in Medicare as hospitals. CMS is providing flexibility to Freestanding EDs to expand capacity for inpatient and outpatient hospital services for patients in light of the COVID-19 pandemic. Specifically, Freestanding EDs may choose to: (1) affiliate with a Medicare-participating hospital under existing Section 1135 waivers; (2) enroll with state Medicaid agencies as a Medicaid clinic; or (3) temporarily enroll in Medicare as a hospital. CMS also highlighted these flexibilities for Freestanding EDs in a press release.

Background

On March 13, 2020, President Donald Trump declared a national emergency under the National Emergencies Act and made an emergency determination under the Stafford Act. This announcement followed the January 31, 2020, declaration of a public health emergency under the Public Health Service Act by the Secretary of the US Department of Health and Human Services (HHS). These actions opened the door for the authorization of waivers of certain Medicare, Medicaid and Children’s Health Insurance Program requirements as provided by Section 1135 of the Act (collectively, Section 1135 waivers). In the published Section 1135 waivers, CMS noted that hospitals are permitted to establish and operate as part of the hospital any location meeting the Medicare hospital conditions of participation (CoPs) not waived by the Section 1135 waivers. For additional guidance on Section 1135 waivers, please see our guidance here.

CMS provided guidance on April 3, 2020, to state survey agencies regarding the process for ambulatory surgery centers (ASCs) to temporarily enroll in Medicare as hospitals in a Quality, Safety & Oversight memorandum, QSO-20-24-ASC. The most recent guidance permitting Freestanding EDs to enroll in Medicare is substantially similar to the guidance provided to ASCs. For additional details on ASC-to-hospital conversions, please see our analysis here.

Licensed Independent Freestanding Emergency Departments

Freestanding EDs are not recognized as certified Medicare providers and cannot bill Medicare or Medicaid for services. Medicare generally reimburses only EDs that bill under the National Provider Identifier of a Medicare-participating hospital. Therefore, although Freestanding EDs may provide care to Medicare beneficiaries, reimbursement for services provided in such facilities is generally limited to the reimbursement provided to physicians or other professionals for their services.

Currently, only four states license Freestanding EDs: Colorado, Delaware, Rhode Island and Texas. All other states that license freestanding emergency departments require the ED to have an affiliation with a hospital.

CMS has identified Freestanding EDs as a resource to expand capacity for inpatient and outpatient hospital services during the COVID-19 pandemic, and highlighted three options for these EDs in this regard:

• The Freestanding ED may affiliate with an existing Medicare-participating hospital. This would result in the Freestanding ED being treated as a hospital outpatient department of the Medicare-participating hospital under existing flexibility provided under Section 1135 waivers.
• The Freestanding ED may work with the state Medicaid agency to enroll as a Medicaid-certified clinic.
• The Freestanding ED may temporarily enroll in Medicare as a hospital, as detailed below.

Regardless of the option the Freestanding ED chooses to pursue, it should contact its state health department and state survey agency to determine the options under the state’s emergency and pandemic plan.

Affiliation with an Existing Hospital

Freestanding EDs are permitted to pursue an affiliation with a Medicare-participating hospital for the duration of the COVID-19 public health emergency, subject to certain limitations. The hospital and the Freestanding ED will need to work with the state where the facilities are located to ensure that the Freestanding ED will be permitted under state licensure requirements to operate as an outpatient department of the hospital. Freestanding EDs that choose to affiliate with a hospital will not be required to submit a Medicare enrollment application. Freestanding EDs that operate as an outpatient department of a hospital will not directly bill and collect for services; rather, the hospital will do so (as the Freestanding ED will function, for payment purposes, as part of the hospital). Accordingly, this option will entail the Freestanding ED entering into a contractual arrangement with the involved hospital on the financial and business terms of the arrangement.

Freestanding EDs Enrolling as a Medicaid-Certified Clinic

CMS has previously provided states with the ability to revise Medicaid state plan policies in light of the COVID-19 pandemic, including benefits covered by the state Medicaid program. States may submit an emergency State Plan Amendment to expand coverage to include Freestanding EDs as a facility eligible to provide services to Medicaid beneficiaries. A Freestanding ED may choose to enroll with the state Medicaid agency as a Medicaid-certified clinic. Freestanding EDs that elect this option will need to reach out to the state Medicaid agency to evaluate whether the state will cover services provided in Freestanding EDs and to enroll as a Medicaid-certified clinic. This option would permit Freestanding EDs to serve Medicaid beneficiaries and be reimbursed directly by the state Medicaid program for that care.

Process and Limitations for Freestanding EDs Enrolling as Hospitals

Freestanding EDs are temporarily permitted to enroll in Medicare as hospitals for the duration of the COVID-19 public health emergency, subject to certain limitations. The Freestanding ED must ensure that enrolling as a hospital is not inconsistent with the state’s emergency preparedness or pandemic plan.

Any Freestanding ED that wishes to enroll as a hospital will need to:

• Notify the Medicare Administrative Contractor (MAC) that serves the jurisdiction by calling the MAC’s provider enrollment hotline and following instructions provided in a Medicare provider enrollment FAQ
• Submit a signed attestation statement to the MAC, as described below.

Once the Freestanding ED has submitted a signed attestation statement to the MAC, the MAC will review and send the attestation to the applicable CMS Regional Office ( RO). The RO will review the Freestanding ED’s attestation and approve the attestation statement, assign a hospital CMS Certification Number (CCN) and send a final determination permitting the ASC’s enrollment (known as a tie-in notice) as a hospital to the MAC. The Freestanding ED’s date of enrollment will be retroactive to the date when the attestation was accepted by the MAC.

An on-site survey is not required for approval, but the CMS RO may authorize a survey by the state survey agency at a later date to ensure quality and safety requirements are met. While survey activity has largely been suspended during the COVID-19 public health emergency, CMS, state agencies and accrediting organizations continue to conduct surveys related to infection control and patient safety. Once enrolled as a certified hospital, Freestanding EDs would be subject to the same enforcement actions as regularly certified hospitals.

Compliance with Hospital Conditions of Participation

Importantly, if a Freestanding ED chooses to enroll in Medicare as a hospital, the Freestanding ED must meet the hospital CoPs, to the extent such CoPs are not waived by Section 1135 waivers.

The attestation statement required by the MAC as part of the temporary enrollment process highlights particular CoPs that must be met. A Freestanding ED that is temporarily converting to a hospital must ensure that the facility satisfies the following requirements before submitting the attestation to the MAC:

• Nursing Services
  • Ensure adequate numbers of licensed registered nurses and other personnel are available to provide nursing care to all patients as needed
  • Provide 24-hour nursing services furnished or supervised by a registered nurse
  • Ensure drugs and pharmaceuticals are prepared and administered in accordance with Federal and State laws and according to the orders of the practitioner(s) responsible for the patient’s care
• Pharmaceutical Services
  • Provide pharmaceutical services that meet the needs of the patients
  • Have a pharmacy directed by a registered pharmacist or a drug storage area under competent supervision
  • Provide a full-time, part-time or consultant pharmacist who is responsible for all activities of the pharmacy services
  • Provide an adequate number of personnel to ensure high quality pharmaceutical services, including emergency services
  • Ensure drugs listed in Schedules II, III, IV and V of the Comprehensive Drug Abuse and Prevention and Control Act of 1970 are kept locked within a secure area
• Infection Control
  • Appoint a qualified individual as the Infection Preventionist/Infection Control Professional
  • Employ methods for preventing and controlling the transmission of infections within the hospital and between other providers
  • Create an Infection Control Surveillance plan to control Healthcare Acquired Infections
  • Establish a hospital-wide antibiotic stewardship program in accordance with national standards
• Respiratory Services
  • Ensure that the facility has a director of respiratory care services who is a doctor of medicine or osteopathy who is available on a full or part-time basis to supervise and administer respiratory services
  • Ensure an adequate number of qualified respiratory therapists and technicians
  • Ensure all respiratory services are delivered in accordance with medical staff directives

Any other CoPs that are not waived by Section 1135 waivers must also be met before the facility converts to a hospital.

In addition, a Freestanding ED that temporarily enrolls as a hospital will be required to provide a Medicare Outpatient Observation Notice (MOON) (CMS-10611) to all Medicare beneficiaries, including Medicare Advantage enrollees, informing beneficiaries that they are outpatients receiving observation services and are not inpatients of the hospital.

Key Takeaways

Despite the flexibility provided by CMS to expand options available to Freestanding ED to participate in Medicare and Medicaid, the Freestanding ED will need to ensure that any option it chooses to pursue is not inconsistent with the state emergency and pandemic plan. A Freestanding ED should contact its state health department and survey agency to determine the options under the particular state’s emergency and pandemic plan, and to coordinate on any plans to change its enrollment status.

While Freestanding EDs may be eager to take advantage of the flexibility provided by CMS to enroll in Medicare as a hospital and take advantage of higher reimbursement, such Freestanding EDs should be aware that complying with hospital CoPs is a fundamental requirement of participating in Medicare as a hospital. The attestation that must be submitted by the Freestanding ED to convert into a hospital requires the facility to attest that it will meet all applicable federal participation requirements. While many CoPs have been waived by CMS under Section 1135, the ability to meet the non-waived CoPs may be a challenge for Freestanding EDs. As such, submission of the attestation confirming that the facility can and will meet all hospital CoPs could later expose the Freestanding ED to liability if it does not achieve and maintain compliance during the period it is enrolled as a hospital.

Similarly, before deciding to move forward with either a conversion or an affiliation with a Medicare-participating hospital, Freestanding EDs will need to carefully consider the state law implications. As an initial matter, the Freestanding ED must ensure that enrolling as a hospital or affiliating with an existing hospital is not inconsistent with the state’s emergency preparedness or pandemic plan. The Freestanding ED must also ensure that the state will allow for the facility to be licensed as a hospital or otherwise recognize the unique operating circumstances created by the COVID-19 pandemic and supports the ED’s proposed conversion or affiliation. Freestanding EDs will also want to ensure that there is a pathway to revert to their existing state licensure (as applicable) after the COVID-19 public health emergency ends.

Finally, while Medicare will recognize and reimburse a converted Freestanding ED for hospital services, it is unclear at this point whether commercial payors will similarly recognize and reimburse such Freestanding EDs for services provided at hospital reimbursement rates after the facility converts from an ED to a hospital.