On May 16, 2012, the Centers for Medicare and Medicaid Services of the Department of Health and Human Services (“CMS”) published regulations announcing various changes to the Medicare Conditions of Participation (“CoP”) applicable to hospitals. According to the regulatory preamble, these revisions responded directly to the President’s “Executive Order 13563, by reducing outmoded or unnecessarily burdensome rules, and thereby increasing the ability of hospitals and [critical access hospitals] to devote resources to providing high quality patient care.” 77 Fed. Reg. 29034, May 16, 2012.
CMS’ SURPRISE RULE
Among the changes are provisions addressing hospital governance, including a new provision allowing a single governing body to oversee multiple hospitals in a multi-hospital system. Although not contained in the proposed rule, included within this change to the Governing Body CoP is the requirement that a hospital’s board include at least one member of its medical staff, and a statement in the preamble to the effect that each hospital within a multi-hospital system is required to have a separate, independent medical staff. This reflects CMS’s view that “strong coordination between a hospital’s governing body and medical staff is paramount to the delivery of quality care.” 77 Fed. Reg. 29034, at 29038. CMS noted that as far back as 1986 it had discontinued a requirement for a joint committee to formalize the connection between the medical staff and hospital administration, concluding at that time that decisions about such liaison activities were best left to internal hospital management. 51 Fed. Reg. 22010, 22017, June 7, 1986. While CMS recognized that a formalized link between the medical staff and administration is in place at many institutions, it stated that this is not the norm, and so made it a requirement, thus addressing what it called a “widely voiced concern” regarding hospital-medical staff communications. 77 Fed. Reg. 29034, at 29038.
THE AHA REACTS
CMS perhaps did not anticipate the firestorm it was about to unleash. The American Hospital Association (“AHA”) immediately called upon CMS to rescind both of these rules. The AHA said in a letter to the agency that neither of these extremely significant changes were included in the proposed rule, depriving stakeholders of the opportunity to comment on them. The AHA further advised that many public, university affiliated, and investor owned hospitals have selection mechanisms that may not result in a physician being elected or appointed to the governing body. In Iowa, members of the medical staff or their spouses are prohibited by law from serving on the board of a public hospital. The AHA also commented that although it agrees that the communication promoted by the rule is a critical element of hospital organization, there are many other effective strategies to accomplish the goal. Conflicts of interest that arise from employment by the hospital and membership on the medical staffs of competing hospitals deserve careful consideration as well. The AHA also addressed CMS’s “about face” on the single medical staff issue, indicating that unified medical staffs can “effectively and efficiently review, credential and privilege” their medical staffs, and “more reliably and completely standardiz[e] high-quality, safe care across their systems . . .”
THE AMA RESPONDS
The American Medical Association (“AMA”), representing physicians and medical students, quickly replied, and strongly urged CMS to resist such calls to eliminate the governing body and medical staff provisions in the final rule. The AMA agreed with CMS that the inclusion of a medical staff member on the governing body is “absolutely essential to the delivery of quality care” and reflects the entity”s “mutual responsibility for the provision of quality care and a safe environment .. .” As CMS has concluded, requiring medical staff membership will bring relevant expertise to the management of the hospital, promote greater coordination between the board and medical staff, and further inform patient care and safety initiatives. Concerning the separate medical staff issue, the AMA pointed to the medical staff’s role in leading innovation in patient-centered and coordinated care, and the importance of real-time clinical feedback from the medical staff, all of which are facilitated by a locally organized medical staff.
CMS decided that it could not easily resolve these strongly held, and diametrically opposed, views of the standards, and on June 15 it issued an instruction to State Survey Agency Directors that the requirement to include members of the medical staff on the hospital’s governing body should not be applied until CMS has addressed the issue “completely.” Due to the concerns that had been raised, the complexity of the issues involved, and the rule’s interaction with other laws, CMS advised that the requirement would be reconsidered in future rulemaking. Interestingly, the June 15 memo is silent on the unified medical staff issue. However, CMS did signal in the June 15 memo that detailed interpretive guidelines under development for the May 16 changes may not be fully complete by the July 16 effective date of the regulations. Indeed, the guidelines have not been issued as yet, and there is no projected date for that to occur. We have been advised that in the interim neither aspect of the amended CoP will be implemented. We suspect that it will be quite some time before these issues will resurface.
 This Blog post will address only the substantive issues raised, and will not touch on the procedural arguments made under the Administrative Procedure Act during this debate.