October 22, 2019

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CMS Issues Memorandum Detailing Effects of Sequestration on Survey & Certification

The Centers for Medicare & Medicaid Services has responded to the financial reductions from sequestration by planning for longer wait times and delays of some, and outright elimination of other, survey and certification activities.  Hospitals and health care facilities across the country will be impacted by these effects and should consider them when planning their ongoing operations.

On April 5, 2013, the U.S. Centers for Medicare & Medicaid Services (CMS) issued a memorandum describing the effects of the Balanced Budget and Emergency Deficit Control Act, as amended (commonly known as sequestration), on state agency (SA) and CMS survey and certification activities (S&C 13-23-ALL (April 5, 2013)).  The goal of the sequestration “adjustments” described in the memorandum is to protect the availability of SAs to continue onsite complaint investigations and surveys of existing providers, while reducing expenses, suspending additions to the current workload, reducing time spent on areas identified by CMS as “lower risk” and reducing the services provided by the CMS Central Office.  Reductions related to sequestration are identified as 2.5 percent to 3 percent from fiscal year 2012 budget levels on a national basis.

The sequestration adjustments fall into five basic categories:

1. Longer wait times and delays to complete survey, certification and validation activities 

  • Entities that acquire enrolled providers and decline assignment of the provider’s Medicare certification (i.e., acquirers that refuse assignment of a provider’s CMS Certification Number) will experience longer wait times for the necessary onsite survey and certification work prior to an initial certification survey being conducted and Medicare participation being resumed.  This adjustment is anticipated regardless of who might conduct the survey (e.g., the SA, accrediting organization or CMS).
  • Requests to establish or add locations excluded from the Inpatient Prospective Payment System will experience longer wait times for the necessary survey and certification work.  This includes establishing new exclusions for rehabilitation, psychiatric units or hospitals, adding branches or additional locations to an existing home health agency or hospice, and adding swing beds and end-stage renal disease services.
  • Hospitals planning to convert to critical access hospital (CAH) status and to obtain certification by CMS as a CAH provider will face longer wait times for the survey and certification work necessary to that process.

2. Limitations and additional approvals to conduct certain surveys

  • Both deemed and non-deemed status hospitals and critical access hospitals will see complaint investigations limited to those allegations that, if substantiated, would likely result in a Condition-level finding or a finding of “immediate jeopardy.” 
  • For deemed status hospitals, complainants will be informed of their option to file a complaint directly with the relevant accrediting organization and be provided with the contact information to do so (with substantial allegations continuing to be investigated by the SA, as noted above).
  • Longer wait times are expected for revisit surveys conducted to confirm a provider has resolved identified health and safety noncompliance issues and come into compliance with CMS requirements.  CMS regional office (RO) approval will also be required for second onsite revisits, in addition to third or fourth onsite revisits.

3. Revision of timelines for skilled nursing facilities designated as “Special Focus Facilities.” 

  • Nursing homes designated as “Special Focus Facilities” due to a “persistent pattern of poor quality” for a period of 18 months or more will be subject to a “last chance” onsite survey.  The CMS RO may approve the issuance of a termination notice if the “last chance” survey does not reveal improvement or if CMS concludes the results do not indicate a move toward “timely and enduring” improvement.  Other “Special Focus Facilities” would be subject to individualized reviews by CMS to determine next steps and the need for further action.

4. Discontinuation or reduction of certain survey activities

  • The frequency of organ transplant program surveys will be reduced from an average of once every three years to once every four years, and states that conduct such surveys will work to transition the surveys to a national contractor.
  • Tier II targeted surveys for home health agencies (HHAs) will be discontinued.  HHAs will remain subject to an onsite recertification survey at least every three years.

5. Attenuated life safety surveys

  • Certain nursing homes that are fully “sprinklered” and have a history of good life safety code compliance may be surveyed for life safety code compliance using a short form survey rather than the standard full-length survey form.  Additional information on this adjustment is provided in a separate memorandum (S&C 13-22-NH (April 5, 2013)).
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About this Author

Sandra DiVarco, Hospitals Attorney, Health Systems Lawyer, McDermott Will Emery, Chicago Law Firm

Sandra DiVarco is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office. Sandy focuses her practice on the representation of hospitals and health systems. She has counseled health care facility and system clients regarding all aspects of health law transactions and health system restructurings. As a registered nurse, Sandy regularly advises clients on the legal aspects of clinical issues and policy/procedure matters. Sandy also has significant experience in assisting clients with...