Health Care Law Blog

Stipulations for Entities Entering Co-Location Agreements

The Final Guidance reversed unpopular sub-regulatory guidance that otherwise prohibited co-location within hospital spaces. Sharing hospital space will be allowed so long as co-location arrangements comply with the Hospital Medicare Conditions of Participation (“Hospital CoPs”).

In this final draft, CMS has excluded private physician offices and Critical Access Hospitals (“CAHs”) from the definition of “health care providers” despite being included in the Prior Draft Guidance.

How the Final Guidance Departs from Prior Draft Guidance        

Previous CMS policies prohibited space sharing between hospitals and other providers, but with initial proposals to introduce greater flexibility, the Prior Draft Guidance made a point to differentiate between defined and distinct spaces with examples of permissible shared space locations. However, the Final Guidance eliminates references to shared or distinct spaces along with other important clarifications on “public spaces,” “public paths of travel,” and any mention of permissible examples of sharing spaces. While many distinctions were left out, CMS did acknowledge supply storage as permissible for location sharing purposes.

In another departure from the Prior Draft Guidance, the Final Guidance eliminates the requirement that surveyors review a floor plan showing how the space will be utilized by each of the co-located providers. In place of this specific procedure, the Final Guidance instructs surveyors to evaluate more generally in terms of whether the hospital maintains compliance with the Hospital CoPs—taking into account patient rights, infection prevention, governing body, and the physical environment.

The Final Guidance also eliminates the requirement for surveyors to obtain a list of all services that the hospital expects to contract out to co-located entities. Surveyors may still choose to review this information as part of their surveys, but are not required to do so.

Additionally, the Final Guidance no longer restricts a hospital from using staff from a co-located hospital to respond to emergencies.

Procedures for Shared Arrangements—Services, Staffing, and Training

A welcome change in the Final Guidance eliminated the prohibition on the sharing of staff between co-located providers during the same shift. The Final Guidance notes that when hospital staff are obtained under arrangement from another entity, there should be evidence that the staff are meeting the needs of patients for whom they are providing care.

For contracted staff, CMS does not explicitly require that they receive the same training and education as what is provided to directly employed staff. However, the governing body of the hospital is still responsible for ensuring that proper staff training, education, oversight, and evaluation all adhere to clinical practice requirements—even for contracted staff.

Key Takeaways—More Flexibility and Less Certainty

Ultimately, the Final Guidance will offer more flexibility for hospitals to co-locate with other providers, but CMS left an air of uncertainty around how it will treat co-location arrangements with private physician offices and CAHs.

Providers who are considering co-location agreements should still exercise caution and consider seeking legal counsel to ensure compliance.

If you have further questions or concerns about this updated guidance, please contact a member of our health care practice team.