CMS Guidance May Require New Strategies for Short-stay Hospitals

Written by Kevin McDonough and Kyle Rizos

Current quality and cost-cutting trends are taking patient care away from large, inpatient focused hospitals towards lower acuity settings. Subsequently, there has been an increase in the construction and operation of short-stay hospitals.

Micro-hospitals for example, have become increasingly common as a way to serve markets with convenient care offerings that have inadequate demand for full service hospitals. Plus, there are hundreds of specialty and surgical-focused hospitals, many of which have considerably more outpatient care than traditional hospitals.

As a result, CMS is beginning to pay closer attention to what it means to be a licensed, acute care hospital and eligible to receive the reimbursement premiums that accompany hospital licensure when compared to lower acuity, outpatient facilities. Specifically, CMS has taken a more active role in introducing policy and guidance aimed at reducing the cost of patient care by clarifying the characteristics that should be exhibited by an acute care hospital. While most general acute care hospitals would easily exceed the stated inpatient threshold to be considered “primarily engaged” and eligible for hospital reimbursement, non-traditional hospital providers should understand CMS’ current guidance related to this standard.

It is critical for these short-stay hospitals in particular to be aware of changing CMS policy and guidance. These new standards could impact their financial performance, organization structure or licensure requirements. In fact, it may be that some short-stay hospitals around the country will need to rethink strategy in order to ensure compliance and a sustainable business.

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