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OCH APPEAL DISMISSED: FEDERAL DEFINITION CASE PROMPTS INDUSTRY GUIDANCE

September 14th, 2017

Springfield, MO – Ozarks Community Hospital (OCH) has filed a motion dismissing a request for an Administrative Law Judge Hearing with the Civil Remedies Division of the Department of Health and Human Services Departmental Appeals Board following a recent memorandum issued by The Centers for Medicare and Medicaid Services (CMS).

CMS has amended the State Operations Manual to address the issues Ozarks Community Hospital encountered during a survey process and appeal related to the federal definition of a hospital set in a provision of the Social Security Act.

Hospital surveyors are now required to consider whether the hospital is primarily engaged in providing inpatient services and there is a minimum standard and specific guidance on factors to consider.

According to OCH Health System Chief Executive Officer Paul Taylor, “The guidance in the amended Manual which tells surveyors how to audit hospital operations is exactly what we were asking CMS to do. Give us a rule and we will satisfy it. Before this change, it was like being ticketed for speeding even though there was no established speed limit. CMS showed up and said our inpatient census was not high enough compared to the volume of outpatient care we were doing. We increased our inpatient volume and CMS accepted our Plan of Correction which stated we would maintain that increased inpatient census. A few months later, for reasons known only to CMS, they showed up again and decided what we were doing—which they had approved—was not enough. In other words, they changed the speed limit. We asked CMS to tell us how much was enough and CMS said they could not.”

Under the new guidance, a hospital with no inpatients on the day the survey commences, will not be surveyed and the CMS regional office will conduct an investigation to determine whether the hospital has maintained an average daily census (ADC) of 2 for the prior 12 month period. If not, the hospital will be presumed to have failed to meet the standard. If the hospital had more than an ADC of 2, the hospital will be surveyed and the new guidance provides a number of factors to be considered.

Taylor added, “There is no mention in this new guidance of the volume of primary care being done by the hospital—which was the critical factor in the final decision on OCH by CMS. CMS said OCH looked more like a primary care clinic organization than a hospital. We always believed that we were doing a good thing by filling a need for primary care in the patient population we served, which was mostly people covered by governmental programs or uninsured. Had this guidance been in place in 2015, we would never have had a problem with CMS.”

Ozarks Community Hospital suspended the Springfield hospital license last summer after CMS published notice the hospital did not meet the federal definition of a hospital. Taylor filed an appeal last fall and has been focusing his efforts on communication and education in order to advocate for a change in CMS regulations. In a reply brief filed in the appeal, Taylor wrote, “CMS’s refusal to establish a fixed standard or quantitative interpretation of ‘how much’ less than ‘more than’ is sufficient to meet the definition results in arbitrary and capricious enforcement of the definition—as it has in this case.  Since the hospital industry has evolved (primarily through CMS mandates) to provide more outpatient than inpatient services as a whole and as individual facilities, CMS must promulgate a standard so that the hospital industry has some inkling of how far below more (i.e. 51%) the hospital can fall before it has fallen too far. CMS has refused to provide or divulge that standard.”

“Since there was very little chance OCH would reopen the facility as a general acute care hospital, we appealed the decision so that what happened to OCH’s Springfield hospital would not happen to another hospital. With this new guidance from CMS, the hospital industry has an ascertainable standard to assert as a shield against the subjective whim of individual decision-makers who, even when well-intentioned, can get things wrong where there is no standard. We now know the speed limit and it will be our own fault if we get caught speeding. For that reason, we have dismissed our appeal,” Taylor said.

The OCH Health System is a safety-net organization encompassing a hospital and a multitude of clinics located throughout the Southwest Missouri, Northwest Arkansas and Northeast Oklahoma area. OCH can accept Medicaid, Medicare, UHC Military and other insurances. For more information, visit www.OCHonline.com.

CMS Memo Primarily Engaged is available by clicking on the attached link.

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