The dispute between Ozarks Community Hospital Inc. and the Centers for Medicare and Medicaid Services seems to have ended – but it’s too late to reverse the effects.
OCH dropped its appeal of a mid-2016 CMS ruling that triggered several hospital department closures, after CMS issued a revision of its operations manual. CMS on Sept. 6 issued new legal interpretations to its rules, and OCH CEO Paul Taylor six days later filed a motion dismissing his appeal.
“It’s a good thing for the industry,” he said this week of the rule changes, noting OCH never sued CMS for losses or punitive damages.
OCH lost its federal hospital status, when CMS officials determined the facility at 2828 N. National Ave. no longer met the requirements to bill Medicare as a hospital. OCH in late July 2016 stopped offering inpatient, emergency room and operating room services at its north-side center and laid off 200 of its 520 employees.
The dispute centered on the interpretation of Social Security Act Section 1861(e) which requires that entities receiving Medicare payments under the more lucrative hospital pricing structure are “primarily engaged in providing ... inpatients diagnostic services and therapeutic services for medical diagnosis, treatment and care of injured, disabled or sick persons, or rehabilitation services for the rehabilitation of injured, disabled or sick persons.”
But Taylor said the definition of “primarily” was open to interpretation by CMS inspectors who told OCH it had too few overnight patients, compared with its outpatient numbers. Taylor said he tried to adjust policies to satisfy the inspectors, but the expectations were unclear.
“I was doing the appeal primarily because CMS’ approach with us was wrong,” he said. “They wouldn’t define the rule. They wouldn’t say how much inpatient volume we needed to have given the volume of outpatient that we were doing.”
CMS officials did not respond to Springfield Business Journal’s messages by deadline.
According to the CMS memorandum released this month, the agency now details the specifications considered when determining if a hospital is primarily engaged in inpatient care. Most notably is the minimum number of patients that stay the night, on average, which now is clarified as two. It also compares the number of inpatient beds to the number of operating rooms, emergency department bays, surgery outpatient beds and overnight nurses.
Even with rule adjustments, OCH likely will not get back into the hospital business, Taylor said.
He said the space that once helped OCH’s inpatient, emergency and operating room services could be repurposed within six months as a 20-bed psychiatric hospital – which is not subject to the same survey regulations.
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