Strategizing to Operationalize the Medicare Advantage and Part D Final Rule

by Anne W. Hance, Joel L. Michaels and Kate McDonald

CMS’s February 12, 2015 final rule further implements the last of the programmatic changes initially set out in the January 2014 proposed rule.  Prompt attention and advance planning will facilitate Medicare Advantage Organizations’ and Part D Plan Sponsors’ implementation of requirements effective for contract year 2016.

Read the full article here.

Lawmakers Reach Deal to End Government Shutdown, Raise Debt Ceiling

by Andrea M. Bergman, Karen S. Sealander, Erica Stocker and Eric Zimmerman

While the focus over the past 16 days has been on the shuttered government and the prospect of the United States defaulting on its debt obligations, there are subtexts that are relevant to the health care industry.  This On the Subject details five key health care takeaways.

Read the full article here.

The Most Challenging Compliance Issue You Never Heard Of: The "Access Report"

By Karen Sealander and Jennifer S. Geetter

In 2009, the Health Information Technology for Clinical and Economic Health (HITECH) Act created the Medicare and Medicaid electronic health record (EHR) incentive program, commonly known as the “Meaningful Use” program.  Included within HITECH is an often overlooked provision that seeks to dramatically expand the current HIPAA Privacy Rule framework for sharing information with individuals about disclosures of their protected health information (PHI).  Although more than four years have passed since enactment of HITECH, the regulations promulgating this expansion of “accounting of disclosures” requirements to newly include routine disclosures for treatment, payment and healthcare operations have not yet been finalized.  The delay underscores the difficulty in crafting regulations that are both technologically feasible and respond to demonstrated patient interest.  To aid in the process, the U.S. Department of Health and Human Services (HHS) just this week announced a virtual hearing and an opportunity for public input on the stalled “accounting of disclosures” proposed rulemaking.  Information about the hearing, including links to the agenda, the discussion questions and instructions about public participation are set forth under “Next Steps” below. 

Proposed Rule Creates New Patient Right to a Comprehensive List of Access to their Electronic Health Record

Prior to HITECH, accounting of disclosures requirements for covered entities and business associates were limited to accounting of certain non-routine disclosures of PHI.  The most common disclosures, those related to treatment, payment and healthcare operations, were specifically excluded from the requirement.  The 2009 amendments to HIPAA, however, reversed course and require that covered entities and business associates be prepared to provide an accounting of disclosures of PHI for up to three years for treatment, payment and healthcare operations, if the covered entity uses electronic health record technologies.  Thus, at the same time that HITECH seeks to incentivize the rapid adoption of EHR technologies, it also presents a significant, albeit under the radar, cost to doing so in that it significantly expands the record-keeping requirements on covered entities and their business associates. Importantly, however, the statute specifically mandates that any regulations implementing this expansion of accounting of disclosures must take into account "the interests of the individuals in learning the circumstances under which their protected health information is being disclosed and takes into account the administrative burden of accounting for such disclosures." In other words, the statute includes a mandatory balancing test as part of the rulemaking process.

The HHS Office for Civil Rights (OCR) issued a Notice of Proposed Rulemaking (NPRM or Proposed Rule) to implement this statutory change in May 2011.  The Proposed Rule makes targeted modifications to accounting of disclosures for non-routine disclosures and creates a new patient right to an “access report.”   Specifically, the Proposed Rule would give patients a new right to request a list of everyone who has accessed their electronic protected health information in a “designated record set” for treatment, payment and healthcare operations for up to three years preceding the request.  In essence, the access report is a comprehensive list of uses and disclosures of an individual’s electronic PHI maintained in a designated record set.  This “access report” must provide the following information about each access to the record:  date of access; time of access; name of natural person, if available, otherwise name of entity accessing the electronic DRS; a description of what information was accessed, if available; and a description of action by the user if available (e.g., create, modify, access or delete).  The access report does not need to specify what the purpose of the use or disclosure was because OCR determined that “the burden on covered entities and business associates in identifying the purpose of each access to electronic designated record set information significantly outweighs the benefit to individuals of learning of such information.”  (76 Fed. Reg. 31439) Not surprisingly, the Proposed Rule seeking to implement the statutory requirement to account for disclosures for treatment, payment and healthcare operations met with considerable concern and resistance. 

Provider, Payer and Vendor Response to the Proposed AOD Rule

Much of the concern about the approach put forth in the Proposed Rule revolves around anticipated costs to the covered entity community in light of existing technology.  For example, in comments filed in response to  the Proposed Rule, the American Academy of Family Physicians, the American Medical Association and 18 other physician associations describe the proposed access report requirements as “costly and overly burdensome to implement and difficult to achieve by physician practices and their business associates.”  The American Hospital Association (AHA) notes the “heavy administrative burdens involved in producing individualized, patient-friendly accounting of disclosures and the new required reports on electronic access.”  The AHA further finds that the proposed rule is “premised on a significant misunderstanding of the capabilities of technologies available to and used by covered entities to produce the relevant information that they must report” and “fundamentally misjudges the value of the particular information that must be reported under the proposed rule for individuals who seek to understand how their PHI is used and disclosed.”  America’s Health Insurance Plans calls the compliance cost to health plans “staggering,” and reports that 30% of plans who responded to a member survey expect costs to range between $10M and $50M while 7% of plans reported it would cost between $50 - $100M.  HIMSS, whose members represent the majority of installed EHRs, urged OCR to “rethink and consider withdrawal of the access report proposal entirely, which appears to us to be unworkable on many levels.” 

What’s at Stake

If the May 2011 Proposed Rule is finalized as proposed, then HIPAA covered entities and their business associates must develop the capacity to produce, upon request, a patient-understandable report aggregating information about access to a patient’s electronic PHI for treatment, payment and healthcare operations for up to a three-year period in all of the information systems that comprise a designated record set.

Next Steps

On Monday, September 30, 2013, the Privacy and Security Tiger Team, a workgroup of the Health Information Technology Policy Committee that advises the HHS Office of the National Coordinator (ONC) for Health Information Technology, will hold a virtual hearing on issues related to this rulemaking, including “realistic ways to provide patients with greater transparency about the uses and disclosures of their digital identifiable health information.”  Invited witnesses representing patient advocates, vendors, business associates, providers and payers will testify, and public comment is being accepted during the virtual hearing for 15 minutes from 4:45 pm – 5:00 pm (EDT).  The public may also respond in writing to posted questions.  Click here for the questions and information about how to post responses.

This presents an important opportunity for interested stakeholders to provide input to OCR and ONC with respect to the technological feasibility of the expanded accounting requirements, the extent and nature of expressed patient interest in different types of historical use and disclosure information, and anticipated costs, burdens and benefits relevant to the balancing test.  The four years that have passed since the legislation and the two years that have passed since the Proposed Rule may suggest the acute difficulty of navigating the interplay of protecting privacy, identifying material patient interests in understanding different types of uses and disclosures, assessing existing technological tools and predicting the next generation of IT platforms, and designing a report that informs but does not overwhelm, and may signal that no regulation immediately presents itself that successfully meets the patient benefit/provider burden balancing test.

China Intensifies Scrutiny of Multinational Pharmaceutical Companies

The Chinese government’s recent crackdown on alleged bribery and corruption of local officials by multinational pharmaceutical companies could signal a broad trend toward elevated scrutiny of all foreign corporations operating in the country—and provides an even greater incentive for companies to identify and implement anti-corruption practices focused on China’s unique business and legal culture.
In early July 2013, the government of the People’s Republic of China (PRC) announced a milestone investigation into GlaxoSmithKline Plc. (GSK) that has allegedly uncovered bribery involving millions of U.S. dollars that were funneled through more than 700 travel agents and other third parties over the last six years. The exact trigger for the inquiry is currently unknown, but there has been wide speculation about a variety of motives for the timing and targets of the case including a desire to reduce healthcare costs. The PRC government will be targeting foreign pharmaceutical companies with official “requests,” unannounced visits and dawn raids. Indeed, at least one other company has acknowledged being visited recently by government investigators in connection with this investigation.
In the wake of the Chinese government’s launch of a new round of aggressive investigations, multinational companies should begin scrutinizing their operations more carefully to ensure that their policies are well understood, and look for signs of potential bribery being carried out by their employees. To do so, they should truly localize their global compliance policy and program to specifically address their local operations in China, including the development and implementation of the following:
  1. Thorough and complete Foreign Corrupt Practices Act (FCPA) risk-based due diligence for mergers with, and acquisitions of, Chinese local companies
  2. Thorough due diligence review of third-party business partners, including but not limited to agents, distributors, consultants and travel agents
  3. A robust compliance program covering all critical functions, including sales and marketing personnel as well as compliance, legal, finance and human resources staff
  4. A well-run ethics helpline with active follow-up to all complaints and queries
  5. Ongoing compliance training for local management as well as employees
  6. Periodic compliance audits and immediate remediation as necessary
To fully benefit from these compliance efforts, multinationals should consider engaging professionals with the following skills and strengths:
  1. Familiar not only with FCPA requirements but also PRC anti-corruption laws and regulations
  2. Possess a deep understanding of Chinese business culture, along with a command of the unique nuances of compliance challenges in China, and able to identify and formulate effective responses to new and innovative forms of bribery and corruption
  3. Specialized in dealing with Chinese government investigations appropriately and licensed in China
The insights of such professionals would be helpful in minimizing risk and potential consequences, including reputational damage and executives’ liability. Ultimately, global compliance measures superimposed upon China’s unique business environment are not enough. A truly effective compliance program for China needs to be one that identifies and addresses the issues arising out of local business and legal culture.

CMS Changes to the Clinical Laboratory Fee Schedule

by Christine Park Song, John Warren and Eric Zimmerman

On Friday July 19, 2013, the Centers for Medicare & Medicaid Services (CMS) published the 2014 Medicare Physician Fee Schedule and the 2014 Medicare Hospital Outpatient Prospective Payment System Notices of Proposed Rulemaking.  The proposed rules are available in the Federal Register at pages 43282 and 43534, respectively.   These notices include three proposed changes to Medicare payment for Clinical Laboratory services that would address the rapid technological changes in the clinical diagnostic lab environment.

First, CMS is proposing a process that would allow for the systematic examination of payment amounts on the Clinical Laboratory Fee Schedule (CLFS).   The process would:

  • Identify those CLFS codes that had undergone “technological changes” affecting the price of the test. CMS defines a technological change as any change to the tools, machines, supplies, labor, instruments, skills, techniques and devices that results in changes to the resources required to perform the test, the types of personnel required to perform the test and/or the volume, frequency and site of service of the testing;
  • Review all CLFS codes over a five-year period, beginning with the oldest codes, reviewing a portion of the total codes each year; and,
  • Make appropriate adjustments to payment rates on the CLFS whenever necessary.  CMS anticipates that most adjustments will be decreases; however, they note that the process could result in increased payments as well.

Notably absent from their review is an analysis of the costs of the resources needed and used to develop tests,  including intellectual property costs, which can be a significant portion of the costs of newer tests and costs which are generally not accounted for under the CLFS.

The full list of codes that CMS is proposing to package is available on CMS' website (Addendum P).

The second proposal involves proposed changes to the Hospital Outpatient Prospective Payment System (OPPS) for CY 2014.  Specifically, the Notice of Proposed Rulemaking includes a proposal to bundle clinical laboratory payments into the OPPS payments for related services.  CMS believes that, in general, clinical laboratory tests essentially support the underlying outpatient encounter. CMS argues that, because the OPPS is meant to be an all-inclusive payment system and not a fee schedule, bundling clinical laboratory payments into the OPPS payment is appropriate.

CMS proposes two exceptions to this policy: 

  • If a lab test is unrelated to the primary service, that is, if the test was ordered for purposes unrelated to the OPPS encounter, it would continue to be paid separately. Lab tests meeting this exception criterion would also need to be ordered by a physician other than the physician ordering the OPPS service. 
  • Exempt molecular diagnostic tests, citing the novelty and different use patterns for these tests. 

The third proposal would limit Medicare payments for non-facility based services paid under the Physician Fee Schedule (PFS) to the amount paid when the service is performed in the facility setting. CMS believes that anomalies in data used to set rates under the PFS and the way that data are used in the PFS’s resource-based Practice Expense (PE) methodology leads to inaccurate payments for certain services. CMS believes that PE input data voluntarily submitted to the Relative Value Scale Update Committee (RUC) may be inaccurate, incomplete or biased. Further, the lack of a comprehensive review and evaluation of PE inputs is believed to contribute to these discrepancies. For most services, this proposed policy change will have a small impact (-2 percent to +1 percent); however, for clinical laboratories in particular, CMS estimates that this proposal will reduce payments by 25 percent.

If finalized, these three proposals would operate to substantially affect Medicare payment for clinical laboratory services, and could likewise affect market demand for some tests.

New Developments Regarding ACA Contraception Coverage Requirements

by Amy M. Gordon, Anne W. Hance and Susan M. Nash

The U.S. Department of Health and Human Services (HHS), the U.S. Department of Labor’s Employee Benefits Security Administration and the U.S. Department of the Treasury’s Internal Revenue Service issued a proposed rule on February 1, 2013 presenting a revised approach for the coverage of women’s contraception by certain religious employers under the Affordable Care Act. The proposed rule, which is open for public comment through April 8, 2013, has significant implications for employers, health insurers and third-party administrators (TPAs). 

The Landscape

The Affordable Care Act requires non-grandfathered group health plans and health insurance issuers offering individual and group health insurance coverage to provide first-dollar coverage for select preventive services. For women with reproductive capacity, this includes FDA-approved contraceptive, sterilization procedures and patient education, as prescribed by a health care provider. The agencies adopted an exemption from this requirement for group health plans sponsored by religious employers. The agencies also established a temporary enforcement safe harbor for non-grandfathered group health plans sponsored by certain nonprofit organizations with religious objections to providing contraception coverage for plan years beginning before August 1, 2013. The proposed rule is the agencies’ latest attempt to balance access to these health care services and accommodation of organizations’ religious beliefs.

The Proposed Rule

Exemption for Religious Employers

The proposed rule simplifies the definition of a “religious employer” that is exempt from the contraceptive coverage requirement to mean any nonprofit entity referenced in Sections 6033(a)(3)(A)(i) or (iii) of the Internal Revenue Code.

Accommodation for Eligible Organizations

A separate accommodation will be established for group health plans sponsored by an “eligible organization,” defined as an organization that: (1) opposes providing coverage for some or all of any contraceptive services required to be covered on account of religious objections; (2) is organized and operates as a nonprofit entity; (3) holds itself out as a religious organization; and (4) self-certifies that it meets these criteria and specifies the contraceptive services for which it objects to providing coverage.

Contraceptive coverage will still be made available to women participating in group health plans sponsored by an “eligible organizations” on a no-cost basis.  The proposed rule will require health insurance issuers providing fully-insured coverage to group health plans sponsored by eligible organizations to enroll participants into separate individual health insurance policies that provide contraception coverage without cost sharing or additional premiums. For self-insured group health plans, the applicable TPA would arrange for the enrollment of participants into individual health insurance policies that provide contraception coverage without cost sharing or additional premiums, whether through voluntary enrollment, automatic enrollment or by the TPA becoming the plan administrator for this purpose.

HHS proposes to recognize contraception-only policies as a new category of “excepted benefit” coverage, although certain consumer protections, such as guaranteed renewability and annual/lifetime limit prohibitions, still would apply. 

The proposed rule anticipates that health insurance issuers would offset the cost of providing contraceptive coverage under individual policies issued to participants of self-funded group health plans by claiming a reduction to user fees imposed on issuers participating in Federally Facilitated Exchanges (FFEs).

Next Steps

  • Entities that may qualify for the “eligible organization” accommodation, including religious institutions of higher learning, will need to consider whether they can self-certify to this new status. They also will have to work with their insurer or TPA to address how coverage will be provided to participants.
  • The proposed rule raises numerous legal, financial and operational issues for health insurance issuers, including development of a new type of excepted benefit coverage, coordination of enrollment and benefits with self-funded group health plans, the cost of providing this coverage, and the potential risks associated with requesting a reduced FFE user fee based on costs relating to these new policies. 
  • TPAs will need to consider how they will arrange for contraception coverage to participants of self-funded plan customers that certify to being an eligible organization, a challenging process if different customers seek different approaches. TPAs also will have consider how to recover administrative costs from issuers issuing coverage policies (and receiving FFE reductions). An additional consideration is how to fund contraception coverage from the coverage effective date, September 1, 2013, until dollars become available in connection with the FFE user fees. 

Senate Finance Committee Leaders Release Comprehensive Report on Combating Waste, Fraud and Abuse in Medicare & Medicaid Programs

by Erica Stocker

On January 31, a group of six current and former members of the Senate Finance Committee—led by current Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT)—released a comprehensive report detailing recommendations on combating waste, fraud and abuse in the Medicare and Medicaid programs. The report is a compilation of recommendations received from more than 160 health care industry stakeholders following a solicitation of such information in May 2012, and also includes proposals from the group of Senate Finance leaders themselves.

Senators Baucus and Hatch were joined by Senators Tom Coburn (R-OK), Ron Wyden (D-OR), Chuck Grassley (R-IA) and Tom Carper (D-DE) in soliciting the recommendations and releasing the report. In the coming months, this group of six intend to work not only within the Finance Committee—which has jurisdiction over Medicare and Medicaid—but also with other relevant Senate Committees, the Centers for Medicare and Medicaid Services (CMS), other appropriate federal agencies and interested stakeholders.

Specifically, the bipartisan report focuses on five key themes: improper payments; beneficiary protection; audit burden; data management; and enforcement. Several changes of note—some of which are within CMS’ authority to make and will not require legislation—include:

  • Increasing state Medicaid anti-fraud program funding;
  • Making changes to payment policies that tend to lead to waste, fraud and abuse due to inconsistent pricing;
  • Requiring the Centers for Medicare and Medicaid Services (CMS) to use currently un-utilized statutory authorities, such as mandatory compliance programs;
  • Making operational changes with regard to CMS audit contractors, in order to promote efficiency and effectiveness;
  • Clarifying appropriate settings for care (inpatient vs. outpatient, for example); and
  • Creating a balance between Medicare contractor incentives for identifying overpayments versus penalties when findings are overturned through appeals to CMS.

Upon the report’s release, Chairman Baucus noted that the Committee had received nearly 2,000 pages of input from stakeholders. “Now we must take these ideas and put them to work and strengthen Medicare and Medicaid, ensuring the programs continue to care for those they serve,” Baucus stated.

The Finance Committee press release with a link to the full PDF report can be found here.

As these recommendations advance, we can assist clients in expressing any ideas or concerns to relevant legislators and policymakers.

New ACA Regulations Address Minimum Essential Coverage and Exemptions

by Anne W. Hance and Amy M. Gordon

The U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) released on January 30, 2013, two proposed rules and a final rule relating to the Affordable Care Act’s (ACA) requirement that individuals maintain “minimum essential coverage” (MEC) or be subject to a “shared responsibility” payment.

  • IRS Final Rule: The IRS issued final regulations in May 2012 addressing eligibility for the health insurance premium tax credit, which is available to certain low-income individuals purchasing a qualified health plan on a health insurance exchange.  The January 30, 2013 final rule supplements these regulations by finalizing the requirement that “affordability” of coverage available for the employee under an employer-sponsored group health plan is determined based on self-only coverage (and not family coverage).
  • IRS Proposed Rule: The proposed rule addresses (1) the obligation each taxpayer has to make a “shared responsibility payment” for himself, herself and any dependents who, for a calendar month, do not have MEC, and (2) exemptions to this payment obligation.  The limited exceptions for this payment obligation include individuals who lack access to affordable MEC.  The proposed rule addresses the difference in determining affordable MEC for an employee eligible for coverage under a group health plan (as described above) versus affordability for a “related individual.”  A “related individual” is one for whom an Internal Revenue Code Section 151 deduction can be claimed.
  • HHS Proposed Rule: The HHS proposed rule sets forth standards and processes by which a health insurance exchange will make eligibility determinations and grant exemptions from the shared responsibility payment.  This proposed rule also (1) identifies certain types of coverage deemed to be MEC , and (2) sets forth standards by which HHS may designate certain health benefits coverage as MEC. 

    For example, self-funded student health insurance coverage and Medicare Advantage Plans are proposed to be designated as MEC.  Additionally, sponsors of other types of coverage that meet designated criteria, such as providing consumer protections required by the Affordable Care Act, may apply to HHS for recognition as MEC.

Next Steps

Health insurance issuers will want to consider whether the various products they offer or administer will meet the MEC requirements set forth in HHS’s proposed rule, in order to respond to inquiries from customers, to meet notice requirements (including inserting model statements into existing plan documents, as applicable), and potentially to respond to exchanges making eligibility determinations.  If a product does not constitute MEC, issuers may want to consider whether to continue to offer the product in its current form or revise the coverage to meet the MEC requirements.

Sponsors of group health plans will need to consider the separate affordability standards for employees and for related individuals and the implications for group health plan participants, and either modify coverage to meet the MEC standards, or consider the consequences of the shared responsibility payment.

Deputy Director Dafny: FTC Focuses on Diversion Ratios, Not Geographic Markets for Hospital Mergers

by Stephen Wu

During an American Bar Association (ABA) program on antitrust and health care issues on October 1, 2012, U.S. Federal Trade Commission (FTC) Deputy Director for Health Care and Antitrust, Leemore Dafny, said that the FTC will focus on how patients purportedly react to price increases, as measured by "diversion ratios," when deciding which hospital mergers to investigate further for potential anticompetitive effects. 

Dafny stated that the FTC will focus on diversion ratios rather than geographic markets because relying on geographic market overlaps in hospital mergers may do a poor job of identifying the true source of potential competition problems.  Instead, the FTC has and will continue to evaluate hospital mergers to look at whether patients would be willing and able to substitute one hospital for the other if one hospital decided to raise prices for services, using the diversion ratio or the proportion of patients who would switch between them in response to a change in prices.  Importantly, the diversion ratio does not rely on any one particular geographic market definition to give the FTC what it believes to be an accurate idea of how a hospital merger might affect competition. 

To the extent the FTC considers geography, its staff begins by examining the primary service area of the hospitals – the area from which the hospitals draw about 75 percent of their patients – when conducting a preliminary evaluation of a merger to determine whether overlaps exist.  According to Dafny, the more significant the overlaps, the higher the likelihood of a potential competition problem.

CMS Issues Final Rule on Incorrectly Classified SCHs

by Amy Hooper Kearbey and Eric Zimmerman

The Facts

On August 1, 2012, the Centers for Medicare & Medicaid Services (CMS) posted the Inpatient Prospective Payment System (IPPS) final rule for fiscal year 2013.  In the rule, CMS finalized a revision to its regulations to address situations where a hospital was incorrectly classified as a Sole Community Hospital (SCH).  Under the revised regulation, an SCH is required to report “any factor or information that could have affected its initial classification [as an SCH].”  If a hospital makes such a report, and CMS subsequently determines that the hospital should not have been classified as an SCH initially, CMS will revoke SCH status effective 30 days after CMS’s determination.  If the hospital fails to report, CMS may recoup overpayments consistent with existing reopening rules  (i.e. for cost reporting periods that are within the 3-year reopening period).

CMS’s proposed rulemaking drew a number of comments from stakeholders.  Although CMS addressed several concerns raised in the comments, CMS did not respond to questions regarding the level of due diligence that a hospital is expected to exercise to discover errors in its initial classification as an SCH status or the extent to which a hospital should be able to rely on CMS’s final determination regarding SCH status.  In particular, stakeholders requested that CMS incorporate an express “awareness” requirement into the regulatory language, such that a hospital has a duty to report only if it becomes aware of a factor or information that could have affected its initial classification as an SCH, but CMS declined to do so.  CMS instead instructed that a hospital must report if it “suspects that it should not have qualified as an SCH,” without addressing what standard would be used to determine whether a hospital should have had a suspicion about its SCH classification.  Stakeholders also requested that CMS expressly clarify that only the regulations and interpretations that were effective at the time of the initial classification are relevant.  CMS confirmed this in the preamble, but it did not incorporate this concept into the regulatory language.

What’s at Stake

The new regulation calls into question whether a hospital can rely on CMS’s determination that the hospital qualifies for SCH status.  The regulation also creates a meaningful incentive to report any suspicion regarding SCH status because the financial implications of not reporting are significant – the potential for retrospective revocation for all cost reports subject to reopening. 

While this issue is of particular concern to SCHs, all hospitals should take note of CMS’s view that a hospital may not always rely on a final determination rendered by the Agency.

Steps to Consider

SCHs that have reason to suspect that they may not have initially satisfied all of the qualification criteria required for SCH status should consider investigating that suspicion, and making a report to CMS to avoid severe recoupments for failing to report.  Because of the significant legal and reimbursement implications associated with these investigations and reports, it is advisable to conduct these activities under the oversight of legal counsel.

In addition to the new regulatory requirement regarding initial classifications, SCHs should continue to be mindful of existing regulations at 42 C.F.R. § 412.92 that require the hospital to monitor certain changes to the circumstances under which it qualified for SCH status, such as the opening of a new hospital in the area or a change to the hospital’s geographic classification, and to report such changes to CMS.