NEW REGULATIONS AFFECTING HOSPITALS

A Promise of Relief to Come? Proposed Revisions to EMTALA and Provider-Based Regulations

By Cami Gearhart and Steve Lipton
[May 2002]

Federal Register, May 9, 2002

The U.S. Department of Health & Human Services ("DHHS") has proposed major changes to the Emergency Medical Treatment and Labor Act ("EMTALA") and provider-based regulations. The proposed rules were issued on May 9, 2002, and DHHS is accepting comments on the proposed changes until July 8, 2002. Since the draft rules were published as part of the FY 2003 PPS update, it is expected that the final rules will be adopted around October 1, 2002.

The proposed revisions to the EMTALA regulations would reduce the existing burden on hospitals and their off-campus facilities and clarify the obligations owed to inpatients and outpatients. In addition, the EMTALA revisions would clarify hospitals' obligations regarding on-call physicians, ambulance transports and interactions with managed care plans.

The proposed changes to the provider-based rules also offer welcome relief to hospitals. The proposed regulations would postpone the current October 2002 deadline beyond July 2003 for "grandfathered" facilities and organizations, simplify the application process and allow on-campus facilities to be operated under joint ventures and management services agreements.

A. EMTALA

1. Clarification of "Comes to the Emergency Department."

Under the current regulations, the EMTALA obligations begin when an individual comes to a hospital emergency department and makes a request for examination or treatment for a medical condition. The draft rules propose to clarify under what circumstances a hospital is obligated under EMTALA to provide emergency services to an individual who comes to a hospital seeking medical services either at a dedicated emergency department (see below) or elsewhere on hospital property.

The draft rules propose to define the term "dedicated emergency department." as a specially equipped and staffed area of the hospital that is used a significant portion of the time for the initial evaluation and treatment of outpatients for emergency medical conditions. A dedicated emergency department may be located on the main hospital campus or at a provider-based off-campus department. The Centers for Medicare and Medicaid Services ("CMS") notes that the proposed definition would include not only what is generally thought of as a hospital's "emergency room," but would also include other departments of hospitals, such as labor and delivery and psychiatric units of hospitals, that provide emergency or labor and delivery services, or both, or other departments that are held out to the public as an appropriate place to come for medical services on an urgent, unscheduled basis.

2. Application of EMTALA to an Individual who Comes to the Dedicated Emergency Department for Non-Emergency Services.

The draft rules propose to distinguish between individuals who present to a dedicated emergency department (see 1 above) for emergency services and individuals who present to the department for non-emergency services. In the preamble to the rules, CMS reaffirms its view that a hospital has an EMTALA obligation with respect to any individual who comes to a dedicated emergency department, if a request is made on the individual's behalf for examination or treatment for a medical condition, whether or not the treatment requested is explicitly for an emergency condition. The obligation will apply not only to a request for examination or treatment, but also if a prudent layperson observer would believe, based on the individual's appearance or behavior, that the individual needs examination or treatment for a medical condition.

The draft rules, however, propose a distinction between individuals presenting to a dedicated emergency department for emergency services as opposed to non-emergency services. In the preamble, CMS notes that EMTALA does not require that all medical screenings must be "equally extensive." CMS therefore proposes to modify the EMTALA regulations to address a request for medical care that clearly is unlikely to involve an emergency condition; in that case, an individual's statement that he/she is not seeking emergency care, together with brief questioning by qualified medical personnel, would be sufficient to establish that there is no emergency condition and that the hospital's EMTALA obligation would thereby be satisfied. The draft rules therefore state that if an individual who comes to a hospital's dedicated emergency department requests examination or treatment for a medical condition that is not of an emergency nature, the hospital is required only to perform a screening that would be appropriate for any individual presenting in that manner to determine that the individual does not have an emergency medical condition.

As an example, the preamble includes a hypothetical case of an individual seeking removal of sutures. The analysis of the hypothetical indicates that the hospital may have an emergency nurse, who has been designated by the hospital as a qualified medical person to perform a medical screening, perform the screening examination by obtaining the patient's history, conducting an examination of the sutures and determining that the wound is healing appropriately. If the nurse concludes that the patient does not have an emergency medical condition, the EMTALA obligations are satisfied, and the removal of the sutures may be performed in the emergency department or in an outpatient clinic.

3. Application of EMTALA to an Individual who Presents at an Area of the Hospital on the Hospital's Main Campus Other Than the Dedicated Emergency Department.

In the preamble, CMS reaffirms its view that a hospital would incur an EMTALA obligation if an individual presents at an on-campus area seeking examination or treatment for what may be an emergency medical condition. As explained by CMS, EMTALA is triggered in on-campus areas of the hospital other than a dedicated emergency department where, in an attempt to gain access to the hospital for emergency care, an individual comes to a hospital and requests an examination or treatment for a medical condition that may be an emergency or a prudent layperson observer would believe, based upon the individual's appearance or behavior, that the individual needs emergency examination or treatment.

The draft rules also revise the definition of "hospital property" for the purposes of determining when the EMTALA obligations are triggered for an individual who is on hospital property. The revised definition continues to apply the 250-yard test for describing the hospital-campus (including parking lots, sidewalks and driveways). However, the draft rules propose to exclude from "hospital property" the following: physician offices, rural health clinics, skilled nursing facilities, other entities that participate in Medicare separately from the hospital, and businesses such as restaurants, shops and other non-medical activities.

The preamble to the draft rules notes the continuing confusion with respect to the application of EMTALA to individuals seeking scheduled non-emergency services at an on-campus area of the hospital other than a dedicated emergency department. In these cases, CMS states EMTALA should not apply in most circumstances. The draft rules propose that EMTALA would not apply to an outpatient with a scheduled appointment, even if the individual experiences what may be an emergency medical condition during his/her stay as an outpatient. In the event the patient develops an emergency condition during the outpatient encounter, the hospital's response will be governed under the Medicare conditions of participation, not EMTALA (even if the patient is moved to the emergency department for follow-up examination and stabilizing treatment).

4. Application of EMTALA to Off-Campus Outpatient Departments of a Hospital.

Under the current EMTALA regulations, the EMTALA obligations apply to an off-campus provider-based outpatient department of a hospital. Under the draft rules, EMTALA will no longer apply to an off-campus provider-based outpatient department of a hospital unless the department is a dedicated emergency department (see 1). As explained by CMS, the proposed definition of dedicated emergency department would include off-campus hospital departments that are perceived by a prudent layperson as an appropriate place to go for emergency care. However, the revised rules will eliminate the application of EMTALA to off-campus outpatient clinics that do not routinely provide or hold out the provision of emergency services.

Since the draft rules will eliminate the EMTALA obligations for most off-campus departments, CMS proposes instead to require that emergency services provided at an off-campus department must be in accordance with written policies and procedures adopted by the hospital governing body for appraisal of emergencies and referral when appropriate. This new requirement will be enforced under the Medicare conditions of participation, not EMTALA.

5. Application of EMTALA to Hospital Inpatients.

The current EMTALA regulations do not address whether the EMTALA obligations apply to inpatients. Some federal courts have applied EMTALA to inpatient transfers and discharges, while some federal courts have interpreted EMTALA as not applying to inpatient services. In many part of the country, the CMS regional offices do not apply EMTALA to inpatients, even if they were first seen in the emergency department.

The draft EMTALA regulations will apply EMTALA to the admission of a patient who has been determined to have an emergency medical condition and is not stabilized at the time of his/her inpatient admission to the hospital. Although it is unclear how certain obligations of EMTALA will apply to an emergency patient admitted in an unstable condition, any subsequent transfer of the patient (if still unstable) to another hospital must comply with the standards for an appropriate EMTALA transfer (however, the draft rules do not address whether a receiving hospital must accept an EMTALA inpatient).

If the patient's condition is later stabilized (which is documented in the medical chart), the EMTALA obligations will terminate, and the rules under the hospital conditions of participation will apply to further treatment of the inpatient, even if the patient's condition later becomes unstable or the patient is subsequently transferred to another hospital.

The draft regulations also clarify that EMTALA will not apply to elective admissions, regardless of the stability of the patient's condition prior to or after admission. In these cases, the Medicare conditions of participation will apply to treatment provided to the inpatient.

6. On-Call Obligations.

Although the existing EMTALA regulations require hospitals to have on-call rosters, they do not describe specific obligations for on-call coverage. Instead, the basic rules for on-call coverage have been set forth in the EMTALA Interpretive Guidelines published by CMS. The draft rules reaffirm the existing Guidelines by proposing simply that a hospital is responsible for maintaining an on-call list in a manner that best meets the needs of its patients.

The draft rules also clarify that there is no requirement under EMTALA for full-time on-call coverage by a specialty (although state law may be different) or any predetermined "ratio" that is used to identify how many days that a hospital must provide on-call coverage based on the number of physicians on staff for that particular specialty. Rather, CMS states it will consider all relevant factors, including the number of physicians on staff, other demands on these physicians, the frequency with which the hospital's patients typically require services of on-call physicians, and the provisions the hospital has made for situations in which a physician in the specialty is not available or the on-call physician is unable to respond. The draft rules also reaffirm existing EMTALA guidance that hospitals must have policies and procedures for responding to emergency situations when a physician is not on call or the coverage physician cannot respond to due to circumstances beyond his/her control.

7. Application of EMTALA to Ambulances.

Under the existing regulations, EMTALA applies to an emergency patient in a hospital-owned ambulance, but generally does not apply to a patient in a non-hospital owned ambulance unless the ambulance has arrived on hospital property. The draft revised regulations clarify the responsibilities of hospital-owned ambulances by providing that EMTALA will not apply to hospital-owned ambulances that are integrated with citywide and local community EMS networks for responding to medical emergencies.

8. Relationships with Managed Care Plans.

The draft revised regulations proposed to incorporate guidance published by CMS in the 1999 Special Advisory Bulletin on EMTALA and Managed Care. In particular, the draft rules prohibit a hospital from seeking prior authorization, (or requiring a patient to seek prior authorization) for emergency services until a patient has received a medical screening examination and treatment has been initiated to stabilize an emergency medical condition. The prior authorization prohibition would not apply to communication between the treating physician and the patient's physician for advice on the patient's medical history and clinical needs, so long as the consultation does not inappropriately delay required emergency services.

In addition, the draft regulations require a hospital to contact a Medicare+Choice plan after a patient is stabilized if the patient will require an inpatient admission for follow-up care. The preamble to the draft rules states that, in some instances, hospitals have failed to contact Medicare+Choice organizations on a timely basis to seek authorization for post-stabilization services.

B. PROVIDER-BASED

1. Postponement of Application Deadline to July 2003 and Afterwards.

The current provider-based regulations require hospitals to apply for determinations of provider-based status under the existing rules by October 1, 2002. The existing rules dictate that a hospital must obtain a determination for each on-campus and off-campus outpatient facility or organization before the hospital includes the facility or organization on its cost report or bills Medicare for facility fees. Hospitals also must obtain provider-based determinations for certain inpatient units.

The proposed regulations would postpone the application deadline for "grandfathered" facilities to the first cost reporting period that begins after July 1, 2003. "Grandfathered" facilities include facilities that received formal determinations of provider-based status as of October 1, 2000 as well as facilities that were billing and being paid as if provider-based as of October 1, 2000.

2. Simplification of the Application Process and Removal of the Advance Approval Requirement.

The proposed regulations also would simplify the application process by proposing different requirements for on and off-campus services:

• Off-Campus. A facility located off-site of a hospital's main campus would need to submit an "attestation" that the provider-based entity complies with the requirements of the provider-based regulations. The off-campus facility also would have to submit documentation to support its attestation of compliance.
• On-Campus. In contrast, a facility located on a hospital's main campus would have to submit only an attestation in order to obtain an advance determination of provider-based status. Even though the on-campus facility would be expected to maintain on file the documentation to support its attestation, the documentation would not have to be submitted with the attestation.

Notably, as CMS explains in the preamble, "a hospital would not be explicitly required to submit an application and receive a provider-based determination for a facility before the time at which the hospital may bill for services at that facility as provider-based." However, CMS appears somewhat ambivalent about this proposal and solicits comments on this proposed application procedure. The regulations also continue to authorize the government to recover overpayments in certain situations when a facility or organization fails to obtain an advance determination and fails to comply with provider-based status requirements.

3. IDTFs and Ambulance Services Exempted from the Provider-Based Rule.

In past months, CMS has exempted a number of types of facilities from the application requirements of the provider-based rule. With this proposed rule, CMS also would exempt independent diagnostic testing facilities (IDTFs) and ambulance services from the scope of the rule.

4. Joint Ventures and Management Agreements Acceptable for On-Campus Facilities.

The existing regulations prohibit provider-based status for any facility or organization owned by a joint venture, and impose strict requirements on entities subject to management services agreements. The proposed regulations would eliminate these prohibitions entirely for all on-campus facilities.

Off-campus facilities remain subject to the prohibition of joint ventures and to the limitations imposed on management services agreements. The existing regulations prohibit a management company from employing the staff that work in a provider-based facility. The proposed regulations soften this prohibition by applying it only to staff who are involved in patient care and by permitting the management company to employ managers and support staff, as well as patient care staff who are paid under certain fee schedules. However, the proposed regulations also specify that employees who are "leased" by the management company to the hospital will not be considered as employees of the hospital for purposes of complying with the provider-based rules.

5. Reduced Risk of Overpayment Recovery.

In the proposed regulations, CMS continues to authorize the recovery of overpayments from entities that bill as if provider-based if they fail to comply with the provider-based regulations. Under the proposed rules, CMS further describes the procedure for the recovery of overpayments. CMS also specifies that for "grandfathered" facilities and organizations (i.e., services treated as provider-based on or before October 1, 2000), CMS will not recoup payments for any period before the provider's cost reporting period beginning on or after July 1, 2003.

6. Elimination of EMTALA Compliance for Off-Campus Facilities.

Finally, as noted above, the proposed regulations would eliminate the requirement that off-campus provider-based departments comply with EMTALA requirements (unless the off-campus department is a dedicated emergency room).

FOR FURTHER INFORMATION, PLEASE CONTACT THE AUTHORS:

Steve Lipton (EMTALA)
stevelipton@dwt.com
(415) 276-6550

Cami Gearhart (Provider-Based)
camigearhart@dwt.com
(206) 628-7664

This Health Law Advisory is a publication of the Health Law Group of Davis Wright Tremaine LLP. Our purpose in publishing this Advisory is to inform our clients and friends of developments in health care law. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

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