Wisconsin’s long-standing hospital regulation, DHS 124, will be significantly reformed beginning on July 1, 2016. DHS 124, described in the governor’s 2013 Regulatory Review Report as “outdated, duplicative, and confusing for health care operators,” has been the focus of regulatory reform efforts for more than a decade. Signed into law on April 8, 2014, the 2013 Wisconsin Act 236 (“Act 236”), which passed the legislature with strong bipartisan support, established a sunset date for significant portions of Wisconsin’s nearly 30-year-old hospital regulation.

Background

Beginning on July 1, Wisconsin hospitals, instead of working to comply with an outdated state rule in addition to federal standards, will work to comply with only the federal regulation, the Medicare Conditions of Participation (“Conditions”). The Conditions are updated regularly and, because of their reach through the Medicare program, in effect establish the prevailing industry standards. The Conditions also are the de facto state regulation in many other states. Beginning on July 1, the Wisconsin Department of Health Services (“DHS”) will be authorized to enforce the federal standards for state approval purposes. In other words, Act 236 simplified the regulation of hospitals for both the regulators and hospitals by establishing, for the most part, a single regulatory standard.

In brief, beginning on July 1:

  • Hospitals must meet the standards in the Medicare Conditions of Participation (42 CFR 482, or 42 CFR 485 for critical access hospital) for state approval purposes; and
  • A significant portion of DHS 124, including Subchapter II, Management; Subchapter III, Medical Staff; and Subchapter IV, Services, in effect, sunset.

Importantly, fundamental portions of DHS 124 will remain in place after July 1, including definitions, approval and plan review processes and fees and certain critical access hospital provisions (mostly to retain the necessary provider regulations). In addition to establishing a quasi-single set of standards for hospitals, Act 236 included a number of other key provisions.

  • A hospital accredited by an approved national accrediting organization is exempt from routine inspections to determine compliance with the requirements for hospitals.
  • The statute describes the DHS Secretary’s authority to grant a hospital a waiver or variance from the requirements for hospitals if certain conditions are met.
  • The statute recognizes that a hospital may grant any practitioner the opportunity to be a member of the hospital staff and obtain staff privileges if the membership and privileges are within the practitioner’s scope of practice and not otherwise prohibited.
  • DHS has been authorized to require psychiatric hospitals to meet, for state approval purposes, the Medicare Conditions of Participation for psychiatric hospitals since the effective date of Act 236 (April 10, 2014).
  • DHS retains the authority to establish additional state standards for hospitals. According to the scope statement published by DHS (the first step in the rule promulgation process) and work by their DHS 124 Advisory Committee, DHS is considering additional rules, including standards related to plans of correction, waivers and variances, maternity and neonatal care, patients rights and responsibilities in critical access hospitals, satellite emergency locations, physical environment and plan review and fee schedule. A copy of the scope statement is available here.

Practical Takeaways

All Wisconsin hospitals currently participate in the Medicare program and, thus, have been required to meet the standards established in the Medicare Conditions of Participation. Hospitals, however, have not been able to use some of the flexibility provided by the more current Conditions because of the need to comply with the dated state regulations. Given the significant reform of Wisconsin’s hospital regulation that goes into effect on July 1, over the coming months, Wisconsin hospitals should review their policies and procedures not only for compliance purposes but also to determine how Wisconsin’s new quasi-single standard might remove what have been barriers to updating existing or developing new practices.

Hospitals should watch for DHS to publish regulations to address standards related to plans of correction, waivers and variances, maternity and neonatal care, patients’ rights and responsibilities in critical access hospitals, satellite emergency locations, physical environment and plan review and fee schedule.