September 21, 2020

Volume X, Number 265

September 21, 2020

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September 18, 2020

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Hospital Medicare Certification at Risk? CMS Clarifies Inpatient Volume Expectations

Hospitals with dangerously low inpatient volume and micro hospitals focused primarily on the delivery of outpatient and/or emergency room services instead of inpatient services beware: CMS (Centers for Medicare and Medicaid Services) recently released long awaited clarifications to its prior guidance to CMS surveyors as to what it means to qualify as a “hospital” in the Medicare Program. Under these clarifications CMS surveyors will determine whether a facility purporting to be a hospital is “primarily engaged in providing inpatient services.” If it is not, the facility may not be certified by CMS as a hospital or, if already certified, be at risk of having its provider agreement revoked. Whether these clarifications will spawn new challenges by CMS to the status of newly applying or currently certified hospitals as we have seen over the course of the last several years remains to be seen, but nonetheless should be taken seriously by the provider community.

Hospitals with low inpatient census concerned about their compliance with this standard, should keep the following key aspects of the guidance in mind:

  • CMS looks at a variety of factors, and not any one benchmark, in order to determine compliance with the standard, including average daily census (ADC), average length of stay (ALOS), the number of outpatient locations, the number of provider-based emergency departments, the number of inpatient beds relative to the size of the facility and services offered, the volume of outpatient surgeries compared to inpatient surgeries, etc.;

  • Among other factors, CMS will use benchmarks for average daily census (ADC) of at least two and hospitals’ average length of stay (ALOS) of at least two midnights data as initial measures in determining if the hospital is primarily engaged in providing inpatient services and care to inpatients;

  • CMS states that if the facility does not have a minimum ADC of two inpatients and an ALOS of at least two nights over the past 12 months, the facility is most likely not primarily engaged in providing care to inpatients, and CMS will consider the above list of factors to determine whether a second survey should be attempted, or recommend a denial of an initial applicant or termination of a provider agreement. CMS will look at the facility in totality when making a final determination.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VII, Number 269


About this Author

Bragg E. Hemme, Polsinelli PC, Medical Licensure Lawyer, State Hospital Regulatory Attorney

In order to assist health care clients address their targeted business concerns, Bragg Hemme draws on a wealth of practical experience and a solid understanding of the industry gained during her time as both external and internal counsel. Her experience includes advising clients regarding the complex and ever-changing federal and state regulatory environment. She focuses her practice on government payer concerns such as:

  • Medicare, Medicare advantage and Medicaid reimbursement

  • Enrollment issues and...

Stephanie Saladino, Polsinelli Law Firm, Chicago, Healthcare Law Attorney

Stephanie Saladino is dedicated to providing effective, efficient, and innovative legal healthcare solutions. As an associate in the Health Care Services practice, Stephanie focuses on transactional and regulatory health care law. Clients rely on her to analyze health care matters and develop a strategic approach to representation based on the client’s immediate and long-term goals.

Stephanie works closely with seasoned Polsinelli attorneys to represent a variety of healthcare-related businesses and organizations with transactional and regulatory matters, including: 

  • Healthcare fraud, abuse, and anti-kickback laws 
  • HIPAA and privacy issues 
  • Medicare enrollment 
  • Billing and reimbursement 
  • Transactional support for healthcare merger and acquisition deals


  • Illinois Association of Healthcare Attorneys
  • Chicago Bar Association
  • American Health Lawyers Association
Ross E. Sallade, Polsinelli PC, Medicare Enrollment Lawyer, Diligence Reports Attorney

Ross Sallade provides value to clients by tackling the complex legal regulatory, operational, reimbursement and enrollment matters that others might be reluctant to handle. Ross does so by drawing upon specialized knowledge for each matter which enables him to quickly evaluate urgent issues and provide practical recommendations. He also leverages a unique skill set that enables him to identify and work with the right federal and state regulators to pinpoint the heart of the issue and make recommendations to reach appropriate resolution. His previous experience...

Gabriel Scott, Polsinelli Law Firm, Raleigh, Health Care Law Attorney

Gabriel Scott has a deep understanding of the evolving health care regulatory environment and the changes occurring at both the national and state levels. Prior to joining Polsinelli, Gabriel spent several years in federal civil service and the private industry. His experience, with both payor and provider sides, allows him to offer a unique perspective to clients’ regulatory and transactional challenges. Gabriel previously worked at the Centers for Medicare and Medicaid Services (CMS), first in the Center for Medicare & Medicaid Innovation (CMMI) and later in the...

Joseph Van Leer, Polsinelli Law Firm, Chicago, Healthcare Law Attorney

Joseph Van Leer strives to obtain victories for the firm's clients. These victories may come as the result of negotiating transaction terms or identifying ways to structure a business relationship to work for all parties. Regardless of the issue, Joe acts as a business and legal advocate for clients, ensuring they have full-service representation and support.