Many hospitals share space with other health care entities. Despite this, the Centers for Medicare & Medicaid Services (CMS) has given mixed signals — and never issued formal guidance — concerning the permissibility of shared spaces under the Medicare Conditions of Participation (CoP). This has created great confusion and uncertainty for hospitals as they try to meet the challenges of a rapidly changing health care system.

That’s all about to change!

On May 3, 2019, CMS issued draft guidance for hospitals that “co-locate.” According to CMS, co-location occurs when “two hospitals or a hospital and another healthcare entity are located on the same campus or in the same building and share spaces, staff, or services.” Under prior informal guidance, CMS prohibited co-location between a hospital and a non-hospital, but CMS seems to have had a change of heart (we hope!).

As described below, CMS’s proposed guidance generally approves of co-location, although with some limitations. The guidance is broken down into three categories: shared spaces, contracted services (including staffing), and emergency services.

CMS will accept comments on the proposed guidance until July 2, 2019.

Shared spaces

Here, CMS distinguishes between clinical and non-clinical spaces. First, CMS believes that the sharing of clinical spaces poses a safety risk to patients, due to infection control, patient management, the patient’s right to privacy, and the confidentiality of medical records.

As a result, CMS appears unwilling to approve of shared clinical spaces at this time. Examples of clinical spaces provided by CMS include outpatient clinics, laboratories, pharmacies, imaging services, operating rooms, post-anesthesia care units, and emergency departments.

This prohibition includes any “paths” between entities that go through a clinical space. For example, it is not permissible if a patient accesses a co-located entity by traveling through a hospital’s clinical department. In contrast, a public path of travel — such as a main corridor with distinct entrances to different departments, with signs that identify which entity operates which department — is permissible.

Second, non-clinical public spaces — such as lobbies, waiting rooms, restrooms, staff lounges, elevators, and main corridors — may be shared by the co-located entities. However, a shared waiting room and reception area must have separate check-in areas and signs that identify which check-in area is used by which entity. CMS also notes that some types of areas pose specific risks if they are shared. For example, if the same area is used by both entities for admissions and medical records, it could “potentially pose a risk to patient privacy as an unauthorized person could have access to patient records without consent.”

Importantly, “any non-compliance found in [a shared] space could be considered non-compliance for both entities.” The entity that is not being surveyed may be reported to the State Survey Agency or CMS for further review.

When surveying a hospital, CMS will instruct the appropriate State Survey Agency to review a hospital’s floor plan to ensure compliance with the shared space requirements. The spaces within the hospital must be correctly identified as belonging to one or the other entity, or to both, to help stave off any further investigation by the surveyor.

Contracted Services

CMS generally approves of providing services under a contract or other arrangement with a co-located entity. Examples of services include laboratory, dietary, food preparation and delivery, pharmacy, maintenance, housekeeping, fire detection and suppression, and security services. CMS does not identify any specific services that could not be provided under a contact with a co-located entity.

However, there are special concerns for staffing contracts. Generally, to comply with hospital staffing requirements, staff may not simultaneously provide services to both entities or “float” between them during the same “shift.” For example, a nurse may not perform services at one hospital while at the same time being “on call” with respect to a co-located hospital. In contrast to general staff, a member of the medical staff (i.e., a physician) who is privileged and credentialed at each hospital may float between them, except when providing certain emergency services (see below). CMS has stated that surveyors will review staffing schedules to ensure compliance with these requirements.

All shared staff must also, with respect to each co-located entity: (1) be trained in the entity’s relevant policies and procedures; (2) receive adequate oversight and periodic evaluation; (3) adhere to quality and performance improvement standards; and (4) be accountable to clinical practice requirements.

When surveying a hospital, in addition to the floor plan, CMS will request a list of all services the hospital has contracted with a co-located entity to provide. Hospitals should be diligent about creating and maintaining such a list.

Finally, CMS notes that a hospital “is not necessarily required to notify its patients and their representative[s] of all services provided under a contract or arrangement,” so long as such services are provided under the oversight of the hospital’s governing body.

Emergency services

CMS notes that hospitals without emergency departments must have in place “appropriate policies and procedures” to address emergencies 24/7. These policies and procedures include: identifying when a patient is in distress; how to initiate an emergency response; how to initiate treatment; and recognizing when the patient must be transferred to another facility for treatment.

A hospital without an ER may contract with a co-located entity for staff who will perform the appraisal and initial treatment in emergency situations, so long as such contracted staff are working solely for the hospital at the time and are immediately available in the event of an emergency. The contracted staff may not be simultaneously working at the co-located entity or any other entity. There may be circumstances where a patient requires an appropriate transfer to the other co-located entity for further care, which would be permissible.

In contrast, if a hospital without an ER contracts with a co-located hospital’s emergency department to provide “emergency services” (as opposed to simply using contracted staff to perform the appraisal and initial treatment), the hospital without the ER is “considered to provide emergency services and must meet the requirements of [the Emergency Medical Treatment & Labor Act (EMTALA)].” However, the proposed guidance is not clear on when exactly EMTALA obligations will be triggered based on the nature of the contracted services provided by the co-located entity.

Co-located hospitals will need to carefully consider what arrangement will work best for providing emergency services.

Lingering questions

CMS’s proposed guidance leaves several key terms undefined. For example:

  • It is not clear what types of “health care entities” hospitals may co-locate with and what types of entities a hospital may not co-locate with. Relationships between hospitals and physicians are very important, and the draft guidance does not address whether physicians or physician groups constitute “health care entities.”
  • CMS does not define what a “shift” is so that hospitals may prevent impermissible floating between entities by shared staff.
  • CMS does not define what “emergency services” would trigger EMTALA obligations for a hospital without an ER that contracts with a co-located hospital’s emergency department.

CMS also fails to address the sharing of an electronic health records system by co-located entities, or how the draft guidance affects compliance with provider-based requirements (as opposed to the Medicare CoP).

Finally, CMS notes that certain types of entities participating in Medicare have specific location and separateness requirements, such as psychiatric hospitals, ambulatory surgery centers, rural health clinics, and Independent Diagnostic Testing Facilities. This guidance does not address those specific requirements. Those entities should ensure that any co-location does not violate their CoP.

Any hospitals or other health care entities that may or do share space should review the proposed guidance in detail and submit comments by the July 2, 2019, deadline. We believe CMS will receive thousands of comments, which may cause CMS to change or expand the draft guidance before it is finalized.