Complying with Licensing and Certification Requirements
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1 Complying with Licensing and Certification Requirements Hope R. Levy-Biehl Hooper, Lundy, & Bookman, PC Overview What s in store? Difference between licensing, certification and accreditation Licensing and certification basics Survey process and responding to deficiencies Penalties for noncompliance Case studies: co-located hospitals, Change of Hospital Ownership (CHOWs) 2 1
2 Licensing, Certification and Accreditation: What s the Difference Anyway? Licensing Certification Accreditation Licensing: state authority to operate (CDPH, Board of Pharmacy (BOP), Laboratory Field Services (LFS)) Certification: Federal/State right to payment (Medicare/Medicaid) Accreditation: voluntary, independent third party gold seal of approval 3 Hospital Licensing/Certification Basics Different agencies, different cultures, inter- and intra-agency dynamics Different Laws/Regs/Guidance, i.e., Health and Safety Code Title 22 All-Facility Letters Title 42 Medicare manuals, guidance, survey and certification memorandum 4 2
3 Hospital Licensing Regulations Regulations adopted June 14, 1975 Happy 40 th Anniversary View of a Licensed Facility Regulations adopted June 14, Happy 41 st Anniversary! 3
4 Licensing 101 Basic hospital services: medical, nursing, surgery, anesthesia, radiology, laboratory, pharmacy and dietary Supplemental services: things like nuclear medicine, ICU, outpatient services, pediatrics, PT/OT/rehab, skilled nursing Special services/special permit: radiation oncology, burn center, basic, comprehensive ED, chronic dialysis, psych, NICU, etc. 7 Licensing License: Lists all supplemental and special services including locations and number and category of beds Most changes trigger notices and/or filings, some which may require pre-approval Additional permits: all other permits/certifications/approvals necessary to support services the hospital provides, i.e., pharmacy, DEA, lab, CLIA, radiological health 8 4
5 Medicare Certification Basics: Getting Certified Paper process: apply, disclose, wait, revise, disclose, wait again Non-paper process Compliance with CoPs Accreditation? Initial certification survey likely conducted by private accreditation organization with deeming authority 9 Medicaid/Medi-Cal Certification Hospital Medi-Cal certification flows through CDPH DHCS 9098 Form Standards: meeting the Medicare requirements Non-facility Medi-Cal enrollments are different 10 5
6 We are Licensed and Certified! Now What? Ongoing surveys are a routine part of hospital operations So many different types State or Federal (could be CDPH either way) Licensure, certification, validation? Complaint? Is there an imminent danger of death or serious bodily harm? Adverse event/privacy breach/unusual occurrence Patient safety/life safety Medication error reduction plan/relicensure 11 Anatomy of a Survey Typically unannounced, may be fast (with in 48 hours of some events) Team of surveyors could include RNs, pharmacy consultants, nutrition consultants, medical consultants Importance of hospital devoting high-level resources Entrance conference/survey work (observations, interviews, information gathering)/exit conference 12 6
7 The Survey is Complete. But Wait Immediate Jeopardy (IJ) findings? Hospital develops Corrective Action Plan (CAP) based on information from survey/exit conference 2567 prepared by surveyors (public document) Condition- v. - standard-level deficiencies (federal surveys) Submission of Plan of Correction (PoC) What actions were taken immediately? Operational changes? Additional resources deployed? Training? Policy updates? Disciplinary action? Subsequent actions? Ongoing compliance/monitoring? Who is responsible? Possible re-survey 13 What s the big deal? State penalties for violating licensing requirements Revocation or suspension of the hospital license, closure of unit(s) or services, reduction in patients or new admissions, cease and desist orders Administrative penalties: for IJs and after 4/1/2014, for other violations factors include: Severity of the deficiency (from no harm to death) Scope (isolated, pattern, widespread) + Adjustments (harm to patient, intent, factors beyond the hospital s control, immediate correction, history of compliance/non-compliance) Bad press 14 7
8 Federal Penalties Removal of deemed status for condition: level deficiencies + resurvey by SA following acceptable credible allegation of compliance + termination date if hospital not brought back in to compliance (23 v. 90 days depending on whether IJ present) No financial penalties for violation of CoPs (but there can be penalties for violations of EMTALA, HIPAA) 15 Hospitals within Hospitals (HwH or HiH) 16 8
9 What is a HwH? For licensing? Maybe Health & Safety Code Sections 1250, For certification 42 C.F.R. Section (e) (if PPSexempt hospital involved) CMS informal guidance State Operations Manual, revisions coming soon 17 HwH Hot Topics For licensing Basic services (especially the kitchen!) Patch work quilt model Precedent good precedent For certification CoPs Hospital-certified space v. common paths of travel What about existing arrangements? 18 9
10 Hospital Changes of Ownership How to approach a CHOW: Where are you? Where are you going? What is the purpose/goal? What are the key regulatory and diligence issues? What is the form of the transaction and how does this implicate the regulatory framework? Develop a coordinated approach/process/realistic timeline 19 CHOW: Diligence Considerations Issues that Could Impact Deal Structure/Timing: Billing/reimbursement State licensing/certification Pending investigations and litigation HIPAA Stark/Kickback/FCA Non-healthcare diligence, i.e., labor, real estate 20 10
11 Form of the Transaction How the ownership is transferred will impact the CHOW process. Is this a Stock deal (direct or indirect) Asset transaction Merger (one entity survives) Consolidation (with new entity created) 21 Special Considerations Will buyer accept assignment of Medicare Provider Agreement? Accept: buyer retains all benefits and liabilities of agreement Deemed status Claims submission and reimbursement CMPs, overpayments, Plans of Correction False Claims Act liability Criminal liability Statuses: (GME/IME, PPS exclusion, DSH, swing bed approval, sole community, rural referral center, transplant center certification, provider based determination, HWH grandfathering, etc.) 22 11
12 Special Considerations (cont.) Reject: Buyer avoids all Medicare liabilities but loses deemed status and eligibility for Medicare reimbursement Must affirmatively reject assignment 45 days prior to close No Medicare payment for services rendered between close and date when new deemed status is awarded. GAP New unannounced survey required after close 23 Timing Considerations Regulatory constraints Multiple agencies, different timelines Exempt status changes Service or permit closures AG approval Warn Act notices Other pre-conditions to closing, i.e., settling litigation, resolution of self-disclosures 24 12
13 Questions? Thank you Hope Levy-Biehl Partner Hooper, Lundy & Bookman, PC (310)
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