CMS Modifies Outpatient Supervision Requirements Effective July 1, 2012 – From Inscrutable Standard to Practical Guide: The Evolution of Outpatient Supervision Requirements

The Centers for Medicare and Medicaid Services (CMS) issued a final decision as part of its review of appropriate supervision levels required for hospital outpatient services. The new rule, effective July 1, 2012, simplifies what was a complex web of exceptions to the normal definition of direct supervision by adopting a “general supervision” requirement. The new rule applies to twenty-seven hospital outpatient therapeutic services covering individual, family and group mental health services, smoking cessation programs and immunizations. The rule is the latest step by CMS to gradually reduce the physician supervision requirements for outpatient therapeutic services.

Under the definition of general supervision, the procedure or service is furnished under the physician’s overall direction and control, but the physician’s presence is not required during the performance of the procedure.

CMS’ decision to reduce the supervision level required for outpatient mental health therapy services to general supervision continues CMS’ slow move away from requiring a strict interpretation of direct physician supervision for such services. Prior rules seemed to require direct physician supervision of outpatient mental health services with a physician’s presence “in suite.” However, in the 2000 OPPS Final Rule, CMS apologized for any confusion it caused and distinguished direct supervision in a physician’s office requiring the physician to be present “in the office suite and immediately available” from direct supervision in a hospital outpatient setting by stating,

“Our intention in the proposed rule was to define ‘direct supervision’ of hospital outpatient services incident to physician services when they are furnished at a department of a hospital to mean that a physician must be present on the premises of the entity accorded status as a department of the hospital and, therefore, immediately available to furnish assistance and direction for as long as patients are being treated at the site.” 68 FR 18525.

As a result of the clarification, the long standing rule was that “in-suite” physician presence was only required under the Medicare Physician Fee Schedule for physician offices. However, even the clarified rule still required on-the- premises “direct” supervision to be provided by a physician. Additionally, the “on the premises” requirement was particularly important to hospital outpatient departments located off the hospital’s campus, since CMS conceded “direct supervision” was “assumed” for outpatient departments located on a hospital’s campus.

“We assume the physician supervision requirement is met on hospital premises because staff physicians would always be nearby within the hospital. The effect of the regulations in this final rule is to extend this assumption to a department of a provider that is located on the campus of a hospital.” Id.

CMS further relaxed the supervision requirements when it allowed non-physician practitioners to provide the direct supervision starting January 1, 2010. According to CMS, nurse practitioners, physician assistants, licensed clinical social workers, etc. were allowed to provide the direct supervision of the outpatient therapeutic services in accordance with their state law and scope of practice and hospital privileges because “they are recognized in statute and regulation as providing services that are analogous to physician’s services.” 74 FR 60578.

The next year, CMS revised the regulations in the 2011 Final Rule to remove the physical boundary requirements for direct supervision of hospital outpatient therapeutic services, and instead allowed the supervisory practitioner to be “immediately available,” meaning physically present, interruptible, and able to furnish assistance and direction throughout the performance of the procedure, but without reference to any particular physical boundary.” 75 FR 72008. CMS stated its goal was to “allow for flexibility in providing for direct supervision from a location other than the hospital campus or [provider based department] that still allows the physician to be immediately available to furnish direction and assistance. We wish to give critical access hospitals (CAHs) and other hospitals more flexibility to meet the direct supervision requirement by allowing physicians or other practitioners in locations that are close to the hospital but not in actual hospital space to directly supervise services that are within their state scope of practice and hospital granted privileges, so long as these individuals remain immediately available.” 75 FR 72008. “We believe that removing specific boundaries provides reasonable flexibility but also holds the practitioner accountable for determining, in individual circumstances, how to be physically and immediately available when supervising services provided “incident to” a physician’s service in the outpatient setting.” Id.

CMS’ latest clarification of the outpatient supervision requirements strips away the semantics and recognizes that, at least for the last year, the required supervision levels have essentially already been “general supervision” and finally offers the clarity to the rule CMS has long sought while recognizing the practical realities hospital’s face when providing these hospital outpatient services. Hospitals will no longer have to jump through unnecessary hoops to provide “direct” supervision and allow the patient’s actual treating physician to provide “general” supervision starting July 1, 2012.

“CMS Modifies Outpatient Supervision Requirements Effective July 1, 2012 from Inscrutable Standard to practical Guide: The Evolution of Outpatient Supervision Requirements.”

Louisiana Hospital Association Impact Law brief, Vol. 26, (No.7). June 29, 2012

Michael R. Schulze