New Requirements for Delaware Free Standing Surgical Centers

Written By Nate Trexler
On November 1, the Delaware Department of Health and Social Services (“DHSS”) promulgated new regulations governing the licensure and operation of free standing surgical centers (“FSSCs”), more commonly referred to as ambulatory surgery centers.  The comprehensive regulatory changes became effective November 11 and raise a number of new issues for owners and potential investors of FSSCs.

Most significant of these new changes is that any modification of ownership and control (“MOC”) of a facility will result in the current license being “void,” requiring the facility to seek licensure as a new applicant.  Importantly, the regulation explicitly states that the FSSC must then meet the current design and construction standards recognized by DHSS.  “MOC” is defined by the regulations to be “a change of ownership or transfer of responsibility for the FSSC’s operation” and will occur “whenever the ultimate legal authority for the responsibility of the FSSC’s operation is transferred.”  The regulation includes a number of examples of an MOC, including the transfer of a majority interest to a new owner.

In responding to comments on this new requirement, DHSS stated that it “follows a protocol to ensure the continuity of operations during the transition.”  Licensees have not been apprised of exactly what this “protocol” is or how it actually works.  What is troubling is that the FSSC license is “void” upon an MOC; this carries rather strong connotations.  Reapplication for a license following an MOC is apparently not just about approving ownership, but reapproving the operation and physical environment of a currently operational facility, regardless of the history of quality care and excellent patient outcomes.  Before going forward with an ownership change, the facility should reach out to DHSS to understand the protocol, the time frame for approval, and the impact on the viability of the facility that relies on ongoing relationships with providers.

Also of significance is the rule that licenses will be issued for specific hours of operation and FSSCs may not operate beyond those hours.  In addition, if a prospective licensee or a currently licensed FSSC wishes to accommodate patient stays of 23 hours and 59 minutes, it must request approval in writing from the local government having jurisdiction.

Multiple commenters inquired whether the new regulations would impact a 1995 Delaware Attorney General’s opinion that exempted single specialty diagnostic endoscopy and pain management centers from licensure as FSSCs.  While DHSS would not amend the regulations to specifically exempt these facilities, it did recognize that the Attorney General’s Office opinion was still in effect.

Finally, in one brief sentence, the new regulations provide that a license is subject, at any time, to revision or revocation by the State.  Unlike regulations that govern licensure of other types of facilities and health care providers, this regulation does not tie the revision or revocation to any specific reason (such as violation of the regulations) or detail any process due to the licensee to challenge such a decision.  The State Administrative Procedures Act does not apply to DHSS in regard to process for case decisions or judicial review of such decisions.

FSSC prospective licensees, current licensees, and potential investors in these facilities should review the new regulations carefully.  The former regulations were wholly rewritten, and in addition to the above, the new regulations set forth requirements relating to the governing body, administration and personnel, medical staff, and nursing services, among other things.  Current licensees should be aware that they are not grandfathered under the prior regulations, and will be subject to compliance with all new regulatory requirements.  
 

The regulations can be reviewed here.

HHS Office of Inspector General Fraud and Abuse Focus: FY 2015 Work Plan

Written By Nathan Trexler

Each year, the Office of Inspector General (“OIG”) at the Department of Health and Human Services announces the agency’s new and continuing initiatives to combat health care fraud and abuse.  The annual OIG Work Plan helps health care providers understand new, and some recurring, areas that the OIG believes are key in the fight to protect the federal fisc.  We have previously discussed such key initiatives to help Delaware providers identify and focus on potential areas of compliance risk before issues arise (2012, 2013, 2014).

The OIG released its FY 2015 Work Plan on October 31, and our review has revealed some key initiatives:

Physicians and other Practitioners:

• Anesthesia services and payments for personally performed services.  The OIG plans to review Part B claims for personally performed anesthesia services to determine whether claims met Medicare requirements and to determine whether services reported with the “AA” service code modifier met Medicare requirements.
• Ophthalmologist inappropriate and questionable billing.  In 2010, Medicare allowed more than $6.8 billion for services provided by ophthalmologists.  The OIG will review claims data to identify potentially inappropriate and questionable billing for services during calendar year 2012.
• Physician place-of-service coding errors.  The OIG will review coding on Part B claims for services performed in ASCs and hospital outpatient departments.  The OIG has previously determined that physicians are not always correctly coding nonfacility places of services, which may result in higher payments.
• Chiropractic services.  The OIG announced its continued intentions related to chiropractic services.  The agency previously discovered inappropriate payments and will continue its review to determine whether payments for chiropractic services were claimed in accordance with Medicare requirements.  The OIG has identified one example of a chiropractor with a 93% error rate and inappropriate Medicare payments of nearly $700,000.  The OIG plans to make recommendations to reduce Medicare vulnerabilities with respect to chiropractic services.
• Diagnostic Radiology.  The OIG will review high-cost diagnostic radiology tests to determine medical necessity and the extent to which utilization has increased.
• Independent clinical lab billing requirements.  The OIG plans to review Medicare payments to independent labs to determine compliance with billing requirements, and use the results to identify clinical labs that routinely submit improper claims in order to identify overpayments for recoupment.

Hospitals

• New inpatient admission criteria.  The OIG will continue to focus on how the two-midnight rule is impacting hospital billing and examine the variability among hospitals.
• Oversight of provider-based status.  Since provider-based status allows facilities to bill as hospital outpatient departments, it can result in high Medicare payments for services furnished at the facility and may increase beneficiary coinsurance liability.  The OIG will determine whether provider-based facilities are meeting CMS criteria.
• Inpatient claims for mechanical ventilation.  The OIG will review Medicare payments for inpatient claims with certain MS-DRG assignments that require mechanical ventilation.  The purpose of the review is to determine whether hospitals’ DRG assignments and Medicare payments were appropriate.

Hospice and Home Health   

• Hospices in assisted living facilities and hospice general inpatient care.  The OIG continues to scrutinize hospice billings, which are also a focus for False Claims Act relators, and will review the use of hospice general inpatient care to determine whether the level of care is being misused.
• Home health prospective payment system requirements.  Prior OIG work found that one in four home health agencies had questionable billing and CMS has designated newly enrolling agencies as high-risk providers.  With that in mind, the OIG will continue to review and scrutinize HHA documentation to determine whether it supports claims paid by Medicare.