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CMS Issues Instructions on the Impact of Sequestration on Survey and Certification Activities – How Will it Affect Providers?

Impact of Sequestration(May 20, 2013) In April, 2013, CMS issued S&C: 13-23-ALL which discusses the impact of sequestration on survey and certification activities.  This action could directly and significantly affect providers. First, the memo instructs that providers who elect not to take assignment of provider agreements during acquisitions may face longer wait-times for on-site surveys that are necessary for Medicare participation.  This will place more pressure on providers to accept assignment and will increase the risk of successor liability.  Thus, providers who might otherwise have considered declining assignment and now take assignment will need to increase the intensity of their due diligence during the acquisition period, and also make stronger provisions in the purchase agreement for such things as “buckets” and escrow accounts.

There may be longer wait times for IPPS exclusions or requests to add locations for existing providers.  This includes longer wait-times for on-site surveys and certification activities for branches or secondary locations to an existing home health agency, hospice, hospice inpatient units, outpatient PT extension sites, swing beds or ESRD services, and new exclusions from IPPS for rehabilitation, psychiatric units or hospitals.

States will now be required to obtain Regional Office approval before conducting second revisit surveys and Central Office approval before conducting third or fourth revisit surveys, and there may be loner wait times before revisits are conducted.  What is not specified is any tolling of statutory time frames for denial of payment for new admissions or termination.  This will place even greater pressure on providers to ensure continuing compliance and strong survey management.

Special Focus Facilities (“SFF”) will also be affected. States are instructed to schedule a final “last chance” onsite visit for facilities that have been on the SFF list for more than 18 months, which may result in termination unless the survey “reveal[s] appropriate improvement or unless there is a major new development that CMS concludes is very likely to eventuate in timely and enduring improvement in the quality of care or safety.”  Additionally, states are instructed to review the progress of all facilities on the SFF list for more than 12 months and to discuss with CMS staff the plan for further action.  Finally, no new facilities will be selected for the SFF list until further notice.  The result is stated to speed final resolution, but “temporarily reduce” the number of SFFs.

The memo also instructs states to discontinue all further Tier II targeted surveys for home health agencies but to continue to ensure that no agency goes without a survey for more than three years.  Finally, there are requirements for Critical Access Hospitals, Life Safety Code in nursing facilities, organ transplant program surveys, and compliant investigations of hospitals.

Liles Parker attorneys have a wealth of experience in addressing survey and certification issues in a wide variety of areas.  Anyone seeking guidance in the area should contact Michael Cook at (202) 298-8750 for a free consultation.

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