Responding to healthcare providers’ concerns about the need for more flexibility in the direct supervision of hospital outpatient services, the Centers for Medicare & Medicaid Services (CMS) issued a final rule to update policies concerning physician supervision requirements for hospital outpatient services.  The 2011 Outpatient Prospective Payment System (OPPS) Final Rule became effective January 1, 2011. 

Significant changes to the CMS physician supervision policy include the following:

  • Revising the definition of direct supervision;
  • Delaying enforcement of supervision requirements for outpatient therapeutic services for CMS-certified Critical Access Hospitals (CAHs) and small rural hospitals;
  • Finalizing a new category of services requiring direct supervision only for “initiation of the service”; and
  • Announcing the creation of an independent committee to determine required supervision levels for various individual outpatient therapeutic services.

Redefining Direct Supervision

Prior OPPS rules had established, as a condition of payment, certain requirements for physician supervision of hospital and outpatient diagnostic and therapeutic services.  CMS defined supervision in the hospital outpatient setting by drawing on three primary levels of supervision:  general, direct, and personal. 

A hospital or outpatient diagnostic or therapeutic service requiring direct supervision meant that a supervising physician or non-physician practitioner (NPP) must be present on the same campus or in the office-campus department of the hospital to provide the required supervision.  The 2011 Final Rule modifies this definition to require only that the supervising physician be “immediately available,” meaning “physically present, interruptible, and able to furnish assistance and direct throughout the performance of the procedure but without reference to any particular physical boundary.”  This is a positive change that recognizes that hospitals need additional flexibility in providing services.  Nevertheless, hospitals should proceed with caution as they must still show that supervising physicians are immediately available and interruptible.

Delaying Enforcement of Supervision Requirements

CMS had announced on March 15, 2010, that it would not enforce supervision requirements for therapeutic services provided to outpatients in CAHs from January 1, 2010, to December 31, 2010.  The 2011 OPPS Final Rule extends this policy through calendar year 2011 and applies the non-enforcement policy to small rural hospitals.  CMS defines small rural hospitals as those with 100 beds or fewer and either are geographically located in a rural area or paid under the hospital outpatient prospective payment system with a rural wage index.

With this policy extension to rural hospitals, CMS may be acknowledging the challenges rural hospitals face, particularly as to the practitioners shortage, that make it difficult for rural hospitals to meet physician supervision requirements.

New Categories of Services Requiring Direct Supervision

The 2011 Final Rule identifies a new limited category of 16 outpatient “non-surgical and extended duration therapeutic services,” including observation services for which direct supervision is required for initiation of the service.  After initiation of service, only general supervision will be required.  CMS defines initiation of the service as “the beginning portion of a service ending when the patient is stable and the physician . . . believes the remainder of the service can be delivered safely under general supervision.”    

New Committee to Evaluate Supervision Requirements

The 2011 Final Rule announces that a new independent committee will be formed to review supervision requirements for all outpatient services.  CMS also indicated that it will establish through future rulemaking a process to consider industry requests for supervision levels other than direct supervision for specific outpatient services. 

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Photo of Ana C. Shields Ana C. Shields

Ana Shields is a Principal in the Long Island, New York, office of Jackson Lewis P.C. Since joining Jackson Lewis in June 2005, she has practiced exclusively in employment law and has been involved in proceedings before federal and state courts, the American…

Ana Shields is a Principal in the Long Island, New York, office of Jackson Lewis P.C. Since joining Jackson Lewis in June 2005, she has practiced exclusively in employment law and has been involved in proceedings before federal and state courts, the American Arbitration Association and administrative agencies.

Ms. Shields has successfully prepared pleadings, motions, memoranda of law, position statements and legal opinions related to employment law issues such as employment discrimination, harassment, retaliation, whistle-blowing claims and restrictive covenants. Ms. Shields has advised clients on compliance with various state and federal laws affecting the workplace, including Title VII, the Equal Pay Act, Fair Labor Standards Act, Family and Medical Leave Act, Americans with Disabilities Act, Age Discrimination in Employment Act and New York State and City laws. In addition, she is a firm resource for Electronic Discovery. She has worked closely with clients through all phases of litigation including investigations, preparations for depositions, attending depositions and trials.

While attending law school, Ms. Shields was a published member of the New York International Law Review. She was the recipient of the 2003 American Bar Association/Bureau of National Affairs Award for Excellence in Labor and Employment Law. She was also awarded the CALI Award for Excellence in Employment Law, Advanced Labor Law, and Jurisprudence.

Prior to joining the firm, Ms. Shields was a commercial litigation associate at a firm in Long Island, New York.