CMS survey guidance on definition of hospital

Blurred figures of people with medical uniforms in hospital corridor

On September 6, CMS issued a Survey & Certification Memo to state survey agency directors to clarify guidance under Appendix A of the State Operations Manual (SOM) to address the following:

  • Definition of a hospital as “primarily engaged” in providing inpatient services (psychiatric and critical access hospitals (CAHs) excluded)
  • The number of inpatients required at the time of survey in order for surveyors to directly observe the actual provision of care and services to patients, and the effects of that care

For background, Section 1861(e) of the Social Security Act (SSA) requires hospitals (not CAHs) to be “primarily engaged” in providing services to inpatients. However, there has not been a fixed standard for what the term “primarily engaged” means. Instead, CMS has said it takes a case-by-case approach, evaluating hospitals broadly on a number of different factors, such as average daily census, scope/type of services, ability to meet the Conditions of Participation (CoPs) and much more. For most hospitals, the “primarily engaged” question has not been an issue, but it has been problematic for a few specialty and very small hospitals.

The new guidance provides clarity about CMS’s process and analysis going forward.  CMS will continue to take a multi-factorial approach to determine if a hospital is “primarily engaged” in providing inpatient services, examining such things as average daily census, average length of stay, the number of off-campus outpatient locations and provider-based EDs, and more. CMS will be requiring (as a starting point) that a hospital have at least two inpatients at the time of survey. If a hospital does not have two inpatients when surveyors arrive, the surveyors will review admission data to determine whether the hospital has had an average daily census of at least two and an average length of stay of at least two midnights over the past year. If the answer is yes, a second survey will be attempted later. If the answer is no, then the relevant CMS Regional Office (RO) will undertake a more robust analysis to determine if a second survey will be attempted, and CMS has indicated in these cases the hospital would likely not meet the “primarily engaged” standard.