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Healthcare Law Alert: CMS Releases Draft Guidance for Hospital Co-Location

May 13, 2019

On May 3, 2019, the Centers for Medicare and Medicaid Services (CMS) released a draft of long-anticipated guidance regarding the requirements for the co-location of hospitals with other hospitals or other healthcare facilities. CMS defines “co-location” as occurring “where two hospitals or a hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services.” CMS had issued prior sub-regulatory guidance appearing to prohibit the co-location of hospitals with other healthcare entities which has caused much uncertainty and confusion for providers in recent years. Recognizing that hospitals seek co-location with other entities both to increase efficiency and create new care delivery models, CMS rescinds its previous policy and clarifies that, in certain circumstances, “Hospitals can be co‑located with other hospitals or other healthcare entities.” CMS’s stated intent is to ensure safety and accountability without being overly prescriptive.

The draft guidance, which will be added to Appendix A of the CMS State Operations Manual, clarifies how a hospital can be co-located with another healthcare provider and still demonstrate independent compliance with the Medicare Conditions of Participation (CoPs) for shared spaces, services, personnel and emergency services. In general, CMS will permit the sharing of public areas such as entrances or waiting rooms; however, the use of shared clinical space will remain limited. The guidance also addresses CMS’s expectations for the sharing of clinical services, personnel and emergency services.

The proposed guidance can be found here. CMS requests comments from stakeholders on the proposed guidance by July 2, 2019. CMS also notes that this guidance is specific to the requirements under the hospital CoPs and does not address the specific separateness and location requirements of any other Medicare-participating entity such as independent diagnostic testing facilities.