CMS SOM App. W, Tag C-0834

(1) If a CAH with a necessary provider designation is co-located (that is, it

shares a campus, as defined in §413.65(a)(2) of this chapter, with another

hospital or CAH), the necessary provider CAH can continue to meet the

location requirement of paragraph (c) of this section only if the co-location arrangement was in effect before January 1, 2008, and the type

and scope of services offered by the facility co-located with the necessary

provider CAH do not change. A change of ownership of any of the

facilities with a co-location arrangement that was in effect before January

1, 2008, will not be considered to be a new co-location arrangement.

(3) If either a CAH or a CAH that has been designated as a necessary

provider by the State does not meet the requirements in paragraph (e)(1)

of this section, by co-locating with another hospital or CAH on or after

January 1, 2008, [or creates or acquires an off-campus provider-based

location or off-campus distinct part unit on or after January 1, 2008, that

does not meet the requirements in paragraph (e)(2) of this section,] the

Standard: Off-campus and co-location requirements for CAHs. A CAH may

continue to meet the location requirement of paragraph(c) of this section based only

if the CAH meets the following:

CAH’s provider agreement will be subject to termination in accordance

with the provisions of §489.53(a)(3) of this subchapter, unless the CAH

terminates the off-campus arrangement or the co-location arrangement,

or both.

Interpretive Guidelines §485.610(e)(1) & (3)

A CAH may not be co-located with another hospital or CAH, because this would violate

the minimum distance requirement found at §485.610(c). However, some CAHs that

were designated as necessary providers prior to January 1, 2006, and therefore exempted

from this distance requirement, also chose to co-locate with another hospital. Co-location

occurs when a necessary provider CAH shares the same campus and/or building in which

the CAH is currently located with another hospital or necessary provider CAH. For

example, a necessary provider CAH shares the same campus with an unrelated

psychiatric or rehabilitation hospital.

Effective January 1, 2008, grandfathered necessary provider CAHs may no longer enter

into co-location arrangements with another CAH or hospital (72 FR 66878). However,

necessary provider CAHs that had co-location arrangements in effect prior to January 1,

2008, are permitted to continue these arrangements as long as the type and scope of

services offered by the facility co-located with the CAHs do not change. An example of

a change in type of services would be when a hospital that provides only rehabilitation

services chooses to provide general hospital acute care services. An example of a change

in scope of services would be when a grandfathered necessary provider CAH is currently

co-located with a 20 bed psychiatric hospital and the psychiatric hospital now decides to

increase the number of beds to 30.

The determination of whether or not CAHs with a grandfathered necessary provider

designation have met the requirements at §485.610(e)(1) is made by the RO. If the SA or

accreditation organization (AO) becomes aware of a co-location arrangement, the SA or

AO must notify the RO. The RO will utilize the co-location guidance in §2256G of the

SOM to determine if such CAHs satisfy the co-location requirements at §485.610(e)(1).

The RO will notify the CAH as well as the SA (and the AO, if applicable) of its

determination.

A CAH found out of compliance with the requirements is subject to termination of its

Medicare provider agreement under §489.53(a)(3). In such cases the CAH is placed on a

90-day termination track, as outlined in §3012 of the SOM. If the CAH corrects the

situation, by terminating the co-location arrangement that led to the non-compliance

during this 90 day period, then the provider agreement is not terminated.

A facility facing termination of its CAH designation as a result of non-compliance with

§485.610(e)(1) could also continue to participate in Medicare by converting to a hospital,

assuming that the facility satisfies all requirements for participation as a hospital in the

Medicare program under the provisions at 42 CFR Part 482. Under this scenario, the

CAH would apply to convert back to a hospital, with the effective date coinciding with

the date of termination of CAH status. A new CMS Certification Number (CCN) would

be assigned accordingly.