Question:

Our hospital has a nonprofit subsidiary that employs physicians.  Will Medicare payments to this subsidiary be covered by the new “3-day window rule”?

Answer:

No, as long as the hospital does not completely control the operations of the subsidiary. Under the 3-day window rule, a hospital (or an entity that is “wholly owned” or “wholly operated” by the hospital) must include on the claim for a Medicare beneficiary’s inpatient stay, the diagnoses, procedures, and charges for all outpatient diagnostic services and admission-related outpatient non-diagnostic services that are furnished to the beneficiary during the 3-day payment window. 42 C.F.R. §412.2(c)(5).  Diagnostic services have long been subject to this rule. The current effective date for this rule as it pertains to non-diagnostic services is July 1, 2012.  The key question is whether a subsidiary employing physicians is “wholly owned” or “wholly operated” by the hospital so as to trigger the applicability of the rule.

Medicare regulations, at 42 C.F.R. §412.2(c)(5)(i), provide:

An entity is wholly owned by the hospital if the hospital is the sole owner of the entity.  An entity is wholly operated by a hospital if the hospital has exclusive responsibility for conducting and overseeing the entity’s routine operations, regardless of whether the hospital also has policymaking authority over the entity.

Commentary from CMS issued with the 2012 physician fee schedule program payment policies in the November 28, 2011 Federal Register provided some guidance on how CMS interprets the “wholly owned and wholly operated” provisions of the 3-day window rule.  CMS stated that at the present time, physician practices self-designate whether they are owned or operated by a hospital on the 855B enrollment form filed with Medicare.  76 Fed. Reg. 73285.  These regulations went on to restate guidance from 1998 regulations when the 3-day window rule was first adopted and applied to diagnostic services.  However, this commentary was not particularly helpful in that it simply gave examples of physician practice entities wholly owned by a hospital, which CMS said would be subject to the 3-day window rule, contrasted with a physician practice entity and a hospital both owned by a third corporation, which CMS said would not be subject to the rule.  The commentary never addressed the meaning of “wholly owned” or “wholly operated” beyond parroting the regulations.

The Medicare Claims Processing Manual, CMS Pub. 100-04, §90.7, as amended by Transmittal 2373 (Dec. 21, 2011), also restated the regulations when it purported to give guidance on the meaning of “wholly owned” or “wholly operated,” by saying:  “Wholly owned or wholly operated entities are defined in 42 CFR §412.2; ‘An entity is wholly owned by the hospital if the hospital is the sole owner of the entity.’  And, ‘an entity is wholly operated by a hospital if the hospital has exclusive responsibility for conducting and overseeing the entity’s routine operations, regardless of whether the hospital also has policymaking authority over the entity.'”

Since CMS has never issued any guidance as to the meaning of “wholly owned” or “wholly operated” other than the provisions cited above, these terms are to be interpreted based on their plain meaning. As a nonprofit corporation, the subsidiary in your case is not “owned” by anyone since nonprofit corporations have no owners or shareholders.

Furthermore, the subsidiary would not be “wholly operated” as long as the hospital does not have exclusive responsibility for conducting and overseeing the routine operations of the subsidiary.  As long as the subsidiary has separate staff who are responsible for its day-to-day operations, it would not be considered to be wholly operated by the hospital for the purposes of the 3-day window rule.

Question:

Emergency Departments have been volatile places for a time now, so our hospital has had a policy on managing difficult ED patients for a while.  But now our staff is clamoring about disruptive inpatients and visitors, Security wants to post large “no weapons allowed” signs at all access points of the hospital, and searching patients and visitors has been raised.  What kind of policies are hospitals putting into place to try to manage all of this?  And just what the heck is going on?

Answer:

Patient violence and disruption are becoming increasingly common, and scary.  Violence (or the threat of it) has led hospitals to adopt no weapons policies, which include appropriate signage and the searching of patients and visitors, as needed, in the ED.  Disruptive patient policies are becoming more common.  (Disruptive patients are different from violent patients.  Disruptive patients are noncompliant as to hospital rules, respecting staff and personnel, and rules of civility.)   Disruptive family members of patients are not uncommon.  Hospitals have adopted policies concerning the taking of audio recordings, photographs or moving images by cell phone or other handheld devices to prevent visitors from taping the care of patients (for potential use against those providing the care).   In-service programs on defusing violence and/or escalating situations are often held in multiple hospital units, not simply the ED.  Outpatient clinics and practices are dealing with more disruptive patients and visitors.  Physicians are trying to deal with patients who are getting multiple medication prescriptions from multiple providers. (These patients often use multiple pharmacies to prevent discovery of their ruse.)   Physician “firings” of patients because of this behavior are on the rise.  So are firings due to patient noncompliant behavior.

The reasons for all this?  There are many:  enhanced levels of stress (high unemployment and depressed wages); mental instability issues (psychiatric and drug and alcohol-based); societal breakdowns in civil behavior; hospitals as prime spots for emotional distress, outbursts and confrontations; hospitals open 24 hours a day; the list goes on and on.  There is no easy answer to this, nor any one answer.  That’s why we are seeing hospitals adopting more behavioral policies of these kinds (and behavioral patient treatment contracts) to try to manage difficult situations in all parts of the hospital, and with all populations of the hospital.

QUESTION:

Can our hospital’s Institutional Review Board (“IRB”) be structured like and function as a medical staff committee?

ANSWER:

No.  The federal Food and Drug Administration regulations pertaining to IRBs, 21 C.F.R. §56.101 et seq., define an IRB as “any board, committee, or other group formally designated by an institution to review, to approve the initiation of and to conduct periodic review of biomedical research involving human subjects.”  The Department of Health and Human Services’ regulations echo the “institutional” aspect of the formal designation of IRBs (45 C.F.R. Part 46).  Federal regulations require the IRB to be a committee formally designated by a hospital’s Governing Board to review biomedical research involving human subjects at the hospital.

Therefore, we recommend that the IRB be created by a Board resolution and thereafter function as a committee of the hospital, rather than the medical staff, with its independent authority derived from the Board.  For this reason, a medical staff committee should not act as the IRB.  There may be substantial overlap of the IRB membership with those of a medical staff committee.  However, the IRB should be constituted as a separate committee of the Board in accordance with the membership requirements set forth in the federal regulations.

Question: Why does Horty Springer always schedule its audio conferences during clinic hours?  It is very difficult for a busy physician to carve out these blocks of time.  How about 11:30 or noon?

Answer: We get this question a lot, so we thought we’d take a minute to address it, as we have always struggled to find a time that works best for all.  The problem is that we serve physicians and hospitals in five different time zones!  This makes it difficult – if not impossible – for us to find a time that is convenient for all, or even most.

But don’t be discouraged!  We appreciate your interest in our programs and this is why we make all of our audio conferences available on CD and MP3.  This provides even the busiest professional the opportunity to listen at his or her convenience.

 

Check out our library of past titles on our new website (yes, we really do want to show it off!) or keep an eye out for upcoming audio conferences coming to an iPod near you!