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[Federal Register Volume 90, Number 27 (Tuesday, February 11, 2025)]
[Notices]
[Pages 9343-9345]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02441]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

[CMS-1838-PN]

Medicare Program; Announcement of Request for an Exception From 
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: Notice with request for comment.

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SUMMARY: The Social Security Act prohibits a hospital with physician 
ownership that relies on the exception to the physician self-referral 
law for hospitals outside of Puerto Rico or for rural providers from 
expanding its facility capacity unless the Secretary of the Department 
of Health and Human Services grants the hospital's request for an 
exception from that prohibition after considering input on the request 
from individuals and entities in the community where the hospital is 
located. The Centers for Medicare & Medicaid Services has received a 
request from a hospital with physician ownership for an exception from 
the prohibition on expansion of facility capacity. This notice solicits 
comments on the request from individuals and entities in the community 
in which the hospital is located. Community input may inform our 
decision to approve or deny the hospital's request for an exception 
from the prohibition on expansion of facility capacity.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below by April 14, 2025.

ADDRESSES: In commenting, refer to file code CMS-1838-PN.
    Comments, including mass comment submissions, must be submitted in 
one of the following three ways (please choose only one of the ways 
listed):
    1. Electronically. You may submit electronic comments on this 
notice to https://www.regulations.gov. Follow the ``Submit a comment'' 
instructions.
    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-1838-PN, 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: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-1838-PN, 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: [email protected]. Joi 
Hosley, (410) 786-2194.

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 
website as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that website to 
view public comments. CMS will not post on https://www.regulations.gov 
public comments that make threats to individuals or institutions or 
suggest that the commenter will take actions to harm an individual. CMS 
encourages commenters not to submit duplicative comments. We will post 
acceptable comments from multiple unique commenters even if the content 
is identical or nearly identical to other comments.

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 payable by Medicare to 
an entity with which he or she (or an immediate family member) has a 
financial relationship

[[Page 9344]]

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 any improperly 
referred designated health services. A financial relationship may be an 
ownership or investment interest in the entity or a compensation 
arrangement with the entity. The statute establishes a number of 
specific exceptions and grants the Secretary of the Department of 
Health and Human Services (the Secretary) the authority to create 
regulatory exceptions for financial relationships that do not pose a 
risk of program or patient abuse.
    Section 1877(d) of the Act sets forth exceptions related to 
ownership or investment interests held by a physician (or an immediate 
family member of a physician) in an entity that furnishes designated 
health services. Section 1877(d)(2) of the Act provides an exception 
for ownership or investment interests in rural providers (the ``rural 
provider exception''). To satisfy the requirements of the rural 
provider exception, the designated health services must be furnished in 
a rural area (as defined in section 1886(d)(2) of the Act) and 
substantially all of the designated health services furnished by the 
entity must be furnished to individuals residing in a rural area, and, 
in the case where the entity is a hospital, the hospital must meet the 
requirements of section 1877(i)(1) of the Act no later than September 
23, 2011. Section 1877(d)(3) of the Act provides an exception for 
ownership or investment interests in a hospital located outside of 
Puerto Rico (the ``whole hospital exception''). To satisfy the 
requirements of the whole hospital exception, the referring physician 
must be authorized to perform services at the hospital, the ownership 
or investment interest must be in the hospital itself (and not merely 
in a subdivision of the hospital), and the hospital must meet the 
requirements of section 1877(i)(1) of the Act no later than September 
23, 2011.

II. Prohibition on Expansion of Facility Capacity

    Section 6001(a)(3) of the Patient Protection and Affordable Care 
Act (Affordable Care Act) (Pub. L. 111-148) amended section 1877 of the 
Act, by adding the requirements in section 1877(i) of the Act for a 
hospital to qualify for the rural provider and whole hospital 
exceptions, including that the hospital may not increase the number of 
operating rooms, procedure rooms, and beds beyond that for which the 
hospital was licensed on March 23, 2010 (or, in the case of a hospital 
that did not have a provider agreement in effect as of this date, but 
did have a provider agreement in effect on December 31, 2010, the 
effective date of such provider agreement) unless the Secretary grants 
an exception from the prohibition on facility expansion. We refer to 
this prohibition herein as the ``prohibition on facility expansion.'' 
Section 1877(i)(3)(A)(i) of the Act requires the Secretary to establish 
and implement a process under which a hospital that is an ``applicable 
hospital'' (as defined at section 1877(i)(3)(E) of the Act) or a ``high 
Medicaid facility'' (as defined at section 1877(i)(3)(F) of the Act) 
may apply for an exception from the prohibition on facility expansion. 
The process for requesting an exception from the prohibition on 
facility expansion is discussed in section III. below.
    The criteria that a hospital must meet to be an applicable hospital 
are set forth at Sec.  411.363(c). An applicable hospital: (1) is 
located in a county that has a percentage increase in the 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, as estimated by the Bureau of the Census; 
(2) 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 (including the requesting hospital) 
that have Medicare participation agreements with CMS and are 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; (3) does not discriminate against 
beneficiaries of Federal health care programs and does not permit 
physicians practicing at the hospital to discriminate against such 
beneficiaries; (4) 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 the Healthcare Cost Report 
Information System (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; and (5) 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. The regulation at Sec.  411.363(c)(2) and (c)(5)(i) 
specify acceptable data sources for determining whether a hospital 
meets the criteria for an applicable hospital.
    The criteria that a hospital must meet to be a high Medicaid 
facility are set forth at Sec.  411.363(d). A high Medicaid facility: 
(1) is not the sole hospital in the county in which the hospital is 
located; (2) with respect to each of the three most recent 12-month 
periods for which data are available as of the date the hospital 
submits its request, has an annual percent of total inpatient 
admissions under Medicaid that is estimated to be greater than such 
percent with respect to such admissions for each other hospital that 
has a Medicare participation agreement with CMS and is located in the 
county in which the hospital is located; and (3) 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 regulation at Sec.  411.363(d)(2) specifies the 
acceptable data source for determining whether a hospital meets the 
criteria for a high Medicaid facility.

III. Expansion Exception Process

    The process for requesting an exception from the prohibition on 
facility expansion (also referred to as ``expansion exception request'' 
or ``request'' for purposes of this notice) is set forth at Sec.  
411.363 and addresses the procedure for submitting a request, community 
input, the timing of a complete request, the determination that a 
hospital is an applicable hospital or a high Medicaid facility, and 
CMS' decision to approve or deny a request. CMS takes a two-step 
approach to considering expansion exception requests. First, CMS will 
determine whether the requesting hospital meets the criteria for an 
applicable hospital or a high Medicaid facility using the information 
provided by the hospital in its expansion exception request and 
rebuttal statement, if any, and the community input, if any. Second, 
using data and information provided from these sources, as well as any 
other data and information that is relevant to its decision, CMS will 
decide whether to approve or deny the expansion exception request.
    Individuals and entities in the hospital's community may provide 
input with respect to the hospital's request for an exception from the 
prohibition on facility expansion,

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including, but not limited to, input regarding whether the hospital 
meets the criteria for an applicable hospital or a high Medicaid 
facility and the factors that CMS will consider in deciding whether to 
approve or deny the hospital's expansion exception request. Community 
input must be in the form of written comments, submitted according to 
the instructions in this Federal Register notice, and be received no 
later than 60 days after the publication date of this notice in the 
Federal Register. If CMS receives written comments from the community, 
the hospital will have 60 days after CMS notifies the hospital of the 
written comments to submit a rebuttal statement.
    The hospital's community includes the geographic area served by the 
hospital (as defined at Sec.  411.357(e)(2)) and all of the following:
     The county in which the hospital's main campus is located.
     The counties in which the hospital provides inpatient or 
outpatient hospital services as of the date the hospital submits the 
request.
    The factors that CMS will consider in deciding whether to approve 
or deny a hospital's request for an exception from the prohibition on 
facility expansion are set forth at Sec.  411.363(i)(2) and include, 
but are not limited to, the following:
     The specialty (for example, maternity, psychiatric, or 
substance use disorder care) of the hospital or the services furnished 
by or to be furnished by the hospital if CMS approves the request.
     Program integrity or quality of care concerns related to 
the hospital.
     Whether the hospital has a need for additional operating 
rooms, procedure rooms, or beds.
     Whether there is a need for additional operating rooms, 
procedure rooms, or beds in the county in which the main campus of the 
hospital is located or in any county in which the hospital provides 
inpatient or outpatient hospital services as of the date the hospital 
submits the request.
    If CMS determines that the requesting hospital does not meet the 
criteria for an applicable hospital or a high Medicaid facility, CMS 
will publish in the Federal Register notice of such determination. If 
CMS determines that the hospital meets the criteria for an applicable 
hospital or a high Medicaid facility, CMS will publish in the Federal 
Register notice of such determination and its decision regarding the 
hospital's request for an exception from the prohibition on facility 
expansion.

IV. Hospital's Expansion Exception Request

    As permitted by section 1877(i)(3) of the Act and our regulations 
at Sec.  411.363, the following hospital with physician ownership has 
requested an exception from the prohibition on facility expansion:
    Name of Facility: Mountain View Hospital.
    Location: 2325 Coronado Street, Idaho Falls, Idaho 83404.
    Basis for this Expansion Exception Request: High Medicaid Facility.
    We seek comments on this request from individuals and entities in 
the community in which the hospital is located. We encourage parties 
that wish to have their input considered to address how they are part 
of the requesting hospital's community in their submissions. We also 
encourage interested parties review the hospital's request, which is 
posted on the CMS website at https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Physician_Owned_Hospitals.html. We 
especially welcome comments regarding whether the hospital meets the 
criteria for a high Medicaid facility and the factors that CMS will 
consider in deciding whether to approve or deny the hospital's request 
for an exception from the prohibition on facility expansion.
    We suggest that parties review the DATES and ADDRESSES sections of 
this notice to ensure timely submission of their comments.

V. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

VI. Response to Comments

    We will consider all comments we receive by the date and time 
specified in the DATES section of this preamble.
    The Acting Administrator of the Centers for Medicare & Medicaid 
Services (CMS), Stephanie Carlton, having reviewed and approved this 
document, authorizes Vanessa Garcia, who is the Federal Register 
Liaison, to electronically sign this document for purposes of 
publication in the Federal Register.

Vanessa Garcia,
Federal Register Liaison, Centers for Medicare & Medicaid Services.
[FR Doc. 2025-02441 Filed 2-10-25; 8:45 am]
BILLING CODE 4120-01-P
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