CMS SOM App. A, Tag A-0043

There must be an effective governing body that is legally responsible for the conduct of the

hospital. If a hospital does not have an organized governing body, the persons legally responsible

for the conduct of the hospital must carry out the functions specified in this part that pertain to

the governing body.

Interpretive Guidelines §482.12

The hospital must have a governing body which is effective in carrying out its responsibilities for the

conduct of the hospital. In the absence of an organized governing body, there must be written

documentation that identifies the individual or individuals that are legally responsible for the conduct of

the hospital operations.

If the hospital is part of a healthcare system that includes several separately certified hospitals, each with

its own Medicare provider agreement and CMS Certification Number, the governing body of the

healthcare system has the option to act as the governing body of each separately certified hospital,

unless doing so would conflict with State law. A hospital system also has the option to form several

governing bodies, each of which is responsible for several separately certified hospitals. For example, a

health system operating hospitals in many States might choose to form regional sub-boards each

responsible for the hospitals in its region, or a health system that has a mixture of types of hospitals may

choose to form one sub-board responsible for its short-term acute care hospitals and another for its long

term care hospitals.

When deciding whether or not to exercise the option to have a single governing body for multiple

hospitals in the system, another factor for systems to consider might be Medicare payment requirements

at §§412.22(e) - (h) applicable to certain types of hospitals, i.e., non-grandfathered Hospitals-within-Hospitals and Hospital Satellites. In such cases where the hospital system owns both the tenant and the

host hospital, using a single governing body for both hospitals would jeopardize the payment status of a

hospital that is being paid by Medicare under a payment system excluded from the Hospital Inpatient

Prospective Payment System (IPPS). However, surveyors do not assess compliance with or enforce the

Medicare payment regulations that govern Hospitals-within-Hospitals or Hospital Satellites.

The Medicare program offers hospital facilities considerable flexibility regarding how they choose to

participate. Based on the geographic and other institutional limitations set out in the “provider-based”

regulation at §413.65, which addresses provider-based status for hospital facilities in multiple locations,

hospital governing bodies make business decisions about how they want to participate in Medicare, and

they indicate on their Medicare enrollment application the choices they have made. It is not uncommon

to find multiple hospital campuses with one owner located in the same geographic area enrolled in

Medicare as one hospital. It is also not uncommon to see a hospital system choosing to enroll its various

facilities as separately certified hospitals. Various factors enter into consideration when the governing

body of a system makes these decisions.

For example, some governing bodies prefer to enroll various campuses as separate hospitals, out of a

concern that problems at one hospital’s campus might jeopardize the Medicare participation of the other

campuses if they were a multi-campus hospital covered under one Medicare provider agreement. In

other cases a governing body may see the benefits of integrating clinical services on multiple campuses

into one integrated hospital. In still other cases, the deciding factor might be the implications for

Medicare reimbursement of graduate medical education, the ease of adding satellite locations, etc.

CMS defers to the governing bodies of hospitals to weigh the pertinent factors and permissible options,

and to make business decisions in their best interest when applying to participate in Medicare. CMS’s

hospital certification decisions and issuance of a provider agreement and associated CCN follow from

these business decisions by a hospital’s governing body. But once the “hospital,” with whatever

component parts, has been certified, that hospital must independently demonstrate its compliance with

the CoPs, independent of any other facility. (77 FR 29040, May 16, 2012)

If a hospital system has chosen to have a one body act as the governing body for multiple separately

certified hospitals (i.e., a system governing body), this does not alter the fact that each hospital must

independently demonstrate compliance with the CoPs. Examples of what this means include, but are not

limited to, the following:

• Each separately certified hospital must be separately and independently assessed for its

compliance with the CoPs, through either State Survey Agency or approved Medicare

hospital accreditation program surveys. There is no survey of a hospital “system,” since the

Medicare provider agreement and its terms are specific to each certified hospital.

• A system governing body may wish to adopt identical policies and procedures for many

aspects of a hospital’s operations across all of its hospitals within the system. It has the

flexibility to do so, but the documentation of such policies and procedures must be clear that

the governing body has chosen to apply them to specifically named hospitals. Also, each

hospital must be able to present for inspection the system governing body policies and

procedures that clearly apply to that hospital. For example:

A document that says “XX Healthsystem has adopted the following policy” is not acceptable.

Instead, the document must be more specific, such as, “XX Healthsystem adopts the following

policy and procedure for Hospital A, Hospital B, and Hospital C.” Furthermore, the names of

each hospital (Hospitals A, B, and C in this example) must correspond to the names used for

their provider agreements. For example, if Hospital C is one Medicare-certified hospital with

two inpatient campuses, one called “East” and one called “West,” it is not acceptable for the

policy document to state, “XX Healthsystem adopts the following policy and procedure for

Hospital A, Hospital B, and Hospital East and Hospital West.” It would be acceptable to state,

“XX Healthsystem adopts the following policy and procedure for Hospital A, Hospital B, and

Hospital C.”

It also is not acceptable for the policy document to state, “XX Healthsystem adopts the following

policy and procedure for Hospital A, Hospital B, and Hospital East, but not Hospital West.”

Since “Hospitals” East and West refer to separate campuses of Hospital C, which participates in

Medicare as one multi-campus hospital, it is not appropriate to refer to these separate campuses

of C as “hospitals,” since the XX Healthsystem made a business decision to enroll them as parts

of one multi-campus hospital in Medicare. CMS recognizes that, depending on the particular

policy topic, it may be acceptable to have policies that vary by type of unit/department within a

hospital. The system governing body could achieve this as follows: “XX Healthsystem adopts

the following policy and procedure requiring that a physician be on-site 24 hours per day, seven

days per week on the inpatient campuses of Hospital A and Hospital B, but within Hospital C,

only for the East inpatient campus.”

• Likewise, the minutes of the governing body must be written in such a manner so that it is

clear when the governing body has taken actions that apply to a specific certified hospital.

• Departments of separately certified hospitals with one system governing body cannot be

operationally integrated. For example, if a system has chosen to operate three separately

certified hospitals in relatively close proximity to each other rather than to have them

certified as one multi-campus hospital, then each hospital must have its own nursing service.

It may not have one integrated nursing service with one Director of Nursing who manages

one nursing staff for all three hospitals. The system cannot maintain one integrated schedule

that assigns nursing staff among the different hospitals. The system also cannot move them

back and forth between hospitals on an ad hoc, as needed basis, as if they were one hospital.

On the other hand, the policies and procedures the governing body has adopted for the nursing

service in each hospital may be identical, so long as the services operate separately. It is also

permissible for the same individual to be the Director of Nursing for each hospital, provided that he

or she is able to carry out all of the duties of the position in each hospital, such as managing each

hospital's separate nursing staff. It is also permissible for one nurse to work at multiple hospitals

within the system, in the same way that a nurse may work for multiple hospitals that do not share

ownership, but the nurse must have separate work schedules for each hospital. Such schedules

cannot overlap.

• Likewise, although the system may choose to operate a quality assessment/performance

improvement (QAPI) program at the system level which standardizes indicators measured

across system hospitals, each separately-certified hospital in the system must have a QAPI

program that is specific to that hospital. This is required not only to demonstrate compliance,

but also for the governing body to function effectively, since reviewing QAPI program

results only at the system level would make it difficult for the governing body to identify and

act upon problems that are localized to one hospital.

For example, the system may choose to use the same quality indicators or the same methodology to

track adverse events across all system hospitals. But each certified hospital must have its own QAPI

data with respect to these indicators and adverse events. If a system is tracking readmission rates

across all of its hospitals, it must be able to separate out the hospital-specific results for the

governing body’s review and possible action.

The governing body must be functioning effectively and holds the ultimate responsibility for the

hospital’s compliance not only with the specific standards of the governing body CoP, but also with all

of the CoPs. This is the case regardless of whether the regulatory text for a particular condition or

standard within a condition specifically mentions responsibilities of the governing body. Substantial,

i.e., condition-level, non-compliance with one of the other hospital CoPs may be an indicator that the

governing body is not functioning effectively. However, it is not the policy of CMS that condition-level

noncompliance with any other CoP automatically results in a condition-level citation of the governing

body CoP. Surveyors must consider whether the manner and degree of the other deficiencies provide

sufficient evidence to conclude that the governing body is not functioning effectively.

Survey Procedures §482.12

• Verify that the hospital has an organized governing body or has written documentation

that identifies the individual or individuals that are responsible for the conduct of the

hospital operations.

• If the hospital is part of a hospital system which uses one governing body for several of

the hospital’s separately certified within the system:

• Review the governing body minutes to determine if it is clear which actions pertain to which

hospitals.

• Select for review several policy and procedure documents adopted by the system governing body

to determine if it is clear that they apply to the hospital being surveyed.