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CMS Releases Guidance on Hospital Co-Location

Late last year, the Centers for Medicare & Medicaid Services (CMS) released new guidance for hospital co-location. Co-location occurs when two Medicare certified hospitals or a Medicare certified hospital and another healthcare entity are located on the same campus or in the same building and share space, staff, or services. Hospitals, especially in rural areas, may co-locate to achieve greater efficiencies and improve patient care.

All co-located hospitals must demonstrate independent compliance with the hospital Conditions of Participation. Specifically, each hospital’s space, contracted services, staffing and emergency services must independently comply with the hospital Conditions of Participation. Where hospitals share space, patient record confidentiality and infection prevention and control are particular areas of concern. Where hospitals contract for services, it is important to note that these services are provided under the oversight of the hospital’s governing body and would be treated as any other service provided directly by the hospital. Where hospitals share staff, each must independently meet the Conditions of Participation, including adequate staff training, education, and oversight. Lastly, a co-locating entity that does not provide emergency services may generally transfer emergency patients to the entity with which it co-locates, such as a rehab hospital that co-locates with an acute care hospital. However, in this scenario, the non-emergency provider must have policies and procedures in place to address potential emergency scenarios typical of the patient population for which it routinely cares and ensure staffing that would enable it to provide safe and adequate initial treatment of an emergency prior to transfer.

CMS also provided new guidance for survey procedures for co-located hospitals. In general, survey procedures for co-located hospitals are the same as for any other hospital, as each must independently comply with the Conditions of Participation. However, where a survey of one co-located entity identifies an alleged deficiency, it may be imputed to the other co-located entity and may lead to a survey of or complaint against the other co-located entity. For example, where two hospitals share a storage room and a leaky pipe drips water onto and damages the supplies of one hospital, CMS indicated that this may lead to a complaint against the other hospital because the deficiency was found in the shared space.

Note that this new guidance does not apply to Critical Access Hospitals, which have their own distance and location requirements, or to private physician practices. The guidance also does not address the specific location and separation requirements of any other Medicare participating entity, such as psychiatric hospitals, ambulatory surgical centers (ASCs), rural health clinics, Independent Diagnostic Testing Facilities (IDTFs), etc.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters. If you or your healthcare entity has any questions pertaining to hospital co-location or healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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