In the Hospital Outpatient Prospective Payment System and CY 2011 Payment Rates final rule (HOPPS CY 2011 Final Rule), to be published in the Federal Register on November 24, 2010, the Centers for Medicare and Medicaid Services (CMS) has liberalized its definition of “direct supervision” as it relates to hospital outpatient therapeutic services.

As a condition of payment for physician supervision of therapeutic services provided to hospital outpatients incident to a physician’s service, CMS has long required direct supervision by a physician. 65 Fed. Reg. 18434, 18524-26 (Apr. 7, 2000). In its CY 2009 and CY 2010 hospital outpatient prospective payment system rules, CMS attempted to clarify its rules. The amendments that CMS made a year ago largely resolved prior concerns that hospitals had with respect to the physician supervision requirements for services furnished in a hospital’s main buildings. The more troublesome requirement was CMS’s insistence that for off-campus sites, the physician had to be located in the department, and could not be located in adjacent nonhospital space, no matter how close that space was. 73 Fed. Reg. 68502, 68702-04 (Nov. 18, 2008); 74 Fed. Reg. 60316, 60679-80 (Nov. 20, 2009). Effective January 1, 2011, CMS has loosened its requirements for off-campus provider-based sites.

The relevant portion of the amended regulation states: “For services furnished in the hospital or CAH, or in an outpatient department of the hospital or CAH, both on and off-campus . . . ‘direct supervision’ means that the physician or nonphysician practitioner must be immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician or nonphysician practitioner must be present in the room when the procedure is performed.” HOPPS CY 2011 Final Rule, CMS, 827-28 and 1791 (Nov. 2, 2010) (available by clicking here) (to be published in the Federal Register, Nov. 24, 2010) (to be codified at 42 C.F.R. § 410.27(a)(1)(iv)).

Despite the new language, CMS emphasizes that it is “not relaxing the requirement that, for direct supervision, the supervisory physician must be immediately available.” Id. at 829-30. In the preamble of the HOPPS CY 2011 Final Rule, CMS defines “immediately available” to mean “physically present, interruptible, and able to furnish assistance and direction throughout the performance of the procedure but without reference to any particular physical boundary.” Id. at 828. As in prior rules, CMS has declined to define “immediately available” in terms of distance or time, although CMS rejects availability by telephone as being sufficient. Id. at 830-31.