26566 Federal Register / Vol. 80, No. 89 / Friday, May 8, 2015 / Notices 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

[CMS–1640–PN] 

Medicare Program; Request for an 

Exception to the Prohibition on 

Expansion of Facility Capacity Under 

the Hospital Ownership and Rural 

Provider Exceptions to the Physician 

Self-Referral Prohibition 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed notice. 

SUMMARY: The Social Security Act 

prohibits a physician-owned hospital 

from expanding its facility capacity, 

unless the Secretary of the Department 

of Health and Human Services (the 

Secretary) grants the hospital’s request 

for an exception to that prohibition after 

considering input on the hospital’s 

request from individuals and entities in 

the community where the hospital is 

located. The Centers for Medicare & 

Medicaid Services (CMS) has received a 

request from a physician-owned 

hospital for an exception to the 

prohibition against expansion of facility 

capacity. This notice solicits comments 

on the request from individuals and 

entities in the community in which the 

physician-owned hospital is located. 

Community input may inform our 

determination regarding whether the 

requesting hospital qualifies for an 

exception to the prohibition against 

expansion of facility capacity. 

DATES: Comment Date: To be assured 

consideration, comments must be 

received at one of the addresses 

provided below, no later than 5 p.m. on 

June 8, 2015. 

ADDRESSES: In commenting, please refer 

to file code CMS–1640–NC. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

three ways (please choose only one of 

the ways listed): 

1. Electronically. You may submit 

electronic comments on this exception 

request to http://www.regulations.gov. 

Follow the instructions under the ‘‘More 

Search Options’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–1640–NC, P.O. Box 8010, 

Baltimore, MD 21244–1850. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Department of 

Health and Human Services, Attention: 

CMS–1640–NC, Mail Stop C4–26–05, 

7500 Security Boulevard, Baltimore, MD 

21244–1850. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Patricia Taft, (410) 786–4561 or Teresa 

Walden, (410) 786–3755. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments 

All comments received before the 

close of the comment period are 

available for viewing by the public, 

including any personally identifiable or 

confidential business information that is 

included in a comment. We post all 

comments received before the close of 

the comment period on the following 

Web site as soon as possible after they 

have been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

We will allow stakeholders 30 days 

from the date of this notice to submit 

written comments. Comments received 

timely will be available for public 

inspection as they are received, 

generally beginning approximately 3 

weeks after publication of this notice, at 

the headquarters of the Centers for 

Medicare & Medicaid Services, 7500 

Security Boulevard, Baltimore, 

Maryland 21244, Monday through 

Friday of each week from 8:30 a.m. to 

4 p.m. To schedule an appointment to 

view public comments, please phone 1– 

800–743–3951. 

I. Background 

Section 1877 of the Social Security 

Act (the Act), also known as the 

physician self-referral law—(1) prohibits 

a physician from making referrals for 

certain ‘‘designated health services’’ 

(DHS) payable by Medicare to an entity 

with which he or she (or an immediate 

family member) has a financial 

relationship (ownership or 

compensation), unless the requirements 

of an applicable exception are satisfied; 

and (2) prohibits the entity from filing 

claims with Medicare (or billing another 

individual, entity, or third party payer) 

for those DHS furnished as a result of a 

prohibited referral. 

Section 1877(d)(3) of the Act provides 

an exception, known as the ‘‘whole 

hospital exception,’’ for physician 

ownership or investment interests held 

in a hospital located outside of Puerto 

Rico, provided that the referring 

physician is authorized to perform 

services at the hospital and the 

ownership or investment interest is in 

the hospital itself (and not merely in a 

subdivision of the hospital). 

Section 1877(d)(2) of the Act provides 

an exception for physician ownership or 

investment interests in rural providers 

(the ‘‘rural provider exception’’). In 

order for an entity to qualify for the 

rural provider exception, the DHS must 

be furnished in a rural area (as defined 

in section 1886(d)(2) of the Act) and 

substantially all the DHS furnished by 

the entity must be furnished to 

individuals residing in a rural area. 

Section 6001(a)(3) of the Patient 

Protection and Affordable Care Act 

(Pub. L. 111–148) as amended by the 

Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152) (hereafter referred to together as 

‘‘the Affordable Care Act’’) amended the 

whole hospital and rural provider 

exceptions to the physician self-referral 

prohibition to impose additional 

restrictions on physician ownership and 

investment in hospitals and rural 

providers. Since March 23, 2010, a 

physician-owned hospital that seeks to 

avail itself of either exception is 

prohibited from expanding facility 

capacity unless it qualifies as an 

‘‘applicable hospital’’ or ‘‘high Medicaid 

facility’’ (as defined in sections 

1877(i)(3)(E), (F) of the Act and 42 CFR 

411.362(c)(2), (3) of our regulations) and 

has been granted an exception to the 

prohibition by the Secretary of the 

Department of Health and Human 

Services (the Secretary). Section 

1877(i)(3)(A)(ii) of the Act provides that 

individuals and entities in the 

community in which the provider 

requesting the exception is located must 

have an opportunity to provide input 

with respect to the provider’s 

application for the exception. For 

further information, we refer readers to 

the CMS Web site at: http://

www.cms.gov/Medicare/Fraud-andAbuse/PhysicianSelfReferral/Physician_

Owned_Hospitals.html. 

II. Exception Request Process 

On November 30, 2011, we published 

a final rule in the Federal Register (76 

FR 74122, 74517 through 74525) that, 

among other things, finalized 

§ 411.362(c), which specified the 

process for submitting, commenting on, 

and reviewing a request for an exception 

to the prohibition on expansion of 

facility capacity. We published a 

subsequent final rule in the Federal 

Register on November 10, 2014 (79 FR 


asabaliauskas on DSK5VPTVN1PROD with NOTICES
Federal Register / Vol. 80, No. 89 / Friday, May 8, 2015 / Notices 26567 

66770) that made certain revisions. 

These revisions include, among other 

things, permitting the use of data from 

an external data source or data from the 

Hospital Cost Report Information 

System (HCRIS) for specific eligibility 

criteria. 

As stated in regulations at 

§ 411.362(c)(5), we will solicit 

community input on the request for an 

exception by publishing a notice of the 

request in the Federal Register. 

Individuals and entities in the hospital’s 

community will have 30 days to submit 

comments on the request. Community 

input must take the form of written 

comments and may include 

documentation demonstrating that the 

physician-owned hospital requesting 

the exception does or does not qualify 

as an ‘‘applicable hospital’’ or ‘‘high 

Medicaid facility,’’ as such terms are 

defined in § 411.362(c)(2) and (3). In the 

November 30, 2011 final rule (76 FR 

74522), we gave examples of community 

input, such as documentation 

demonstrating that the hospital does not 

satisfy one or more of the data criteria 

or that the hospital discriminates 

against beneficiaries of Federal health 

programs; however, we noted that these 

were examples only and that we will 

not restrict the type of community input 

that may be submitted. If we receive 

timely comments from the community, 

we will notify the hospital, and the 

hospital will have 30 days after such 

notice to submit a rebuttal statement 

(§ 411.362(c)(5)(ii)). 

A request for an exception to the 

facility expansion prohibition is 

considered complete as follows: 

• If the request, any written 

comments, and any rebuttal statement 

include only HCRIS data: (1) The end of 

the 30-day comment period if CMS 

receives no written comments from the 

community; or (2) the end of the 30-day 

rebuttal period if CMS receives written 

comments from the community, 

regardless of whether the physicianowned hospital submitting the request 

submits a rebuttal statement 

(§ 411.362(c)(5)(i)). 

• If the request, any written 

comments, or any rebuttal statement 

include data from an external data 

source, no later than: (1) 180 days after 

the end of the 30-day comment period 

if CMS receives no written comments 

from the community; and (2) 180 days 

after the end of the 30-day rebuttal 

period if CMS receives written 

comments from the community, 

regardless of whether the physicianowned hospital submitting the request 

submits a rebuttal statement 

(§ 411.362(c)(5)(ii)). 

If we grant the request for an 

exception to the prohibition on 

expansion of facility capacity, the 

expansion may occur only in facilities 

on the hospital’s main campus and may 

not result in the number of operating 

rooms, procedure rooms, and beds for 

which the hospital is licensed exceeding 

200 percent of the hospital’s baseline 

number of operating rooms, procedure 

rooms, and beds (§ 411.362(c)(6)). The 

CMS decision to grant or deny a 

hospital’s request for an exception to the 

prohibition on expansion of facility 

capacity must be published in the 

Federal Register in accordance with our 

regulations at § 411.362(c)(7). 

III. Hospital Exception Request 

As permitted by section 1877(i)(3) of 

the Act and our regulations at 

§ 411.362(c), the following physicianowned hospital has requested an 

exception to the prohibition on 

expansion of facility capacity: 

Name of Facility: Doctors Hospital at 

Renaissance. 

Location: 5501 South McColl Road, 

Edinburg, Texas 78539. 

Basis for Exception Request: 

Applicable Hospital. 

We seek comments on this request 

from individuals and entities in the 

community in which the hospital is 

located. We encourage interested parties 

to review the hospital’s request, which 

is posted on the CMS Web site at: 

http://www.cms.gov/Medicare/Fraudand-Abuse/PhysicianSelfReferral/

Physician_Owned_Hospitals.html. We 

especially welcome comments regarding 

whether the hospital qualifies as an 

applicable hospital. Under 

§ 411.362(c)(2), an applicable hospital is 

a hospital that satisfies all of the 

following criteria: 

• The hospital is located in a county 

that has a percentage increase in 

population that is at least 150 percent of 

the percentage increase in population of 

the State in which the hospital is 

located during the most recent 5-year 

period for which data are available as of 

the date that the hospital submits its 

request. 

• The hospital has an annual percent 

of total inpatient admissions under 

Medicaid that is equal to or greater than 

the average percent with respect to such 

admissions for all hospitals located in 

the county in which the hospital is 

located during the most recent 12- 

month period for which data are 

available as of the date that the hospital 

submits its request. The most recent 12- 

month period for which data are 

available means the most recent 12- 

month period for which the data source 

used contains all data from the 

requesting hospital and each hospital 

located in the same county as the 

requesting hospital. 

• The hospital does not discriminate 

against beneficiaries of Federal health 

care programs and does not permit 

physicians practicing at the hospital to 

discriminate against such beneficiaries. 

• The hospital is located in a State in 

which the average bed capacity in the 

State is less than the national average 

bed capacity during the most recent 

fiscal year for which HCRIS, as of the 

date that the hospital submits its 

request, contains data from a sufficient 

number of hospitals to determine a 

State’s average bed capacity and the 

national average bed capacity. 

• The hospital has an average bed 

occupancy rate that is greater than the 

average bed occupancy rate in the State 

in which the hospital is located during 

the most recent fiscal year for which 

HCRIS, as of the date that the hospital 

submits its request, contains data from 

a sufficient number of hospitals to 

determine the requesting hospital’s 

average bed occupancy rate and the 

relevant State’s average bed occupancy 

rate. 

Individuals and entities wishing to 

submit comments on the hospital’s 

request should review the DATES and 

ADDRESSES sections above and state 

whether or not they are in the 

community in which the hospital is 

located. 

IV. Collection of Information 

Requirements 

This document does not impose 

information collection, recordkeeping, 

or third-party disclosure requirements. 

Consequently, it need not be reviewed 

by the Office of Management and 

Budget under the authority of the 

Paperwork Reduction Act of 1995 (44 

U.S.C. chapter 35). 

V. Response to Public Comments 

We will consider all comments we 

receive by the date and time specified 

in the DATES section of this preamble. 

Dated: April 27, 2015. 

Andrew M. Slavitt, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

[FR Doc. 2015–11138 Filed 5–7–15; 8:45 am] 

BILLING CODE 4120–01–P 


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