Hospital and health care systems should note that the Centers for Medicare and Medicaid Services has finalized the proposed provision that would permit a multi-hospital system to have a single governing body.  The final rule also proposed to augment  the proposed rule through the addition of a requirement that a hospital/health system governing body include at least one member of the hospital’s medical staff (or a medical staff member of one hospital, if for a health system).

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In a final rule published May 16, 2012, the Centers for Medicare and Medicaid Services (CMS) finalized the proposed provision that would permit a multi-hospital system to have a single governing body.  In addition, the final rule proposed to augment the proposed rule through the addition of a requirement that a hospital/health system governing body include at least one member of the hospital’s medical staff (or a medical staff member of one hospital, if for a health system).

In the preamble to the final rule, CMS explained that the changes related to the governing body are intended to provide hospital systems with increased flexibility to determine the appropriate governing structure for their systems.  Under CMS rules, a health care system may choose to continue to operate under separate governing bodies for each component hospital, or to create a structure that has a single governing body with oversight for multiple facilities within the system.  Note that the CMS rule does not preempt any state or local laws/regulations or other rules that may presume or require that each facility have a separate governing body.

Regarding the proposed requirement that a medical staff member serve on the governing body, CMS expressed the belief that having such an individual serve on the governing body would “build an important element of continuity and ensure regular communication between a hospital’s governing body and its medical staff(s) . . . .”  CMS also clarified that in the case of multi-hospital systems with a single governing body, CMS would not require that the governing body include a member of each hospital’s medical staff, only that the governing body include a member of the medical staff of at least one system hospital.  CMS further noted that it expected that the governing body would consider the needs of the patient population of each hospital and medical staff in determining the number and composition of medical staff members to appoint to the governing body.  CMS expects that the medical staff member will “hold some measure of enhanced standing within the governing body.” 

This proposed provision led to concern in the hospital community.  Certain hospitals, such as governmental hospitals whose board is appointed by the local government or elected, expressed that they would have significant difficulty mandating that a medical staff member be part of the governing body.  On June 5, 2012, the American Hospital Association sent a letter to CMS expressing concerns about this change, and on June 13, 2012, the American Medical Association sent a letter in support.  On June 15, 2012, CMS issued a memorandum to state survey agency directors stating that the new requirement for a hospital governing body to include a member of the medical staff was being reconsidered due to “the numerous comments that have been received since publication.”  As a result, state agency surveyors were instructed to not attempt to assess compliance or cite deficiencies related to the new requirement “without receiving instructions from CMS.”  Accrediting bodies (such as the Joint Commission) were cautioned to not revise their standards or survey processes in this area until the issue has been fully resolved.