Guest Column

CMS proposes new patient choice requirements

Hospital-specific rules to be extended to SNFs

By Elizabeth E. Hogue, Esq.
Burtonsville, MD

As many providers already know, the Balanced Budget Act of 1997 (BBA) requires hospitals to share with each patient as part of the discharge planning process a list of available home health agencies (HHAs) that:

  • are Medicare-certified;
  • serve the geographic area in which the patient resides;
  • request to be listed by the hospital as available.

In addition, the BBA prohibits hospitals from limiting or steering patients to any specific HHA or qualified provider that may provide post-hospital home health services.

In proposed rules published on May 18, 2004, the Centers for Medicare & Medicaid Services (CMS) proposes to incorporate these provisions of the BBA into Conditions of Participation (COPs) applicable to hospitals and to extend these requirements to skilled nursing facilities (SNFs). If these COPs are finalized, it is likely indicative of a trend of extending the BBA’s patient choice requirements to all providers, including home medical equipment companies and hospices.

CMS’ proposed requirements are as follows:

1. Hospitals must include in discharge plans a list of HHAs or SNFs that are available to patients. The facilities included on the list must participate in the Medicare program and must serve the geographic area in which the patient resides as defined by the HHA. In the case of SNFs, the facilities must be in the geographic area requested by the patient. HHAs must request to be listed by hospitals as available.

2. Lists must only be presented to patients for whom home health care or post-hospital extended care services are indicated and appropriate, as determined by discharge planning evaluations.

3. Hospitals must document in patients’ medical records that the list was presented to patients or to individuals acting on patients’ behalf.

4. As part of the discharge planning process, hospitals must inform patients or patients’ families of their freedom to choose among participating Medicare providers of HHA and post-hospital extended care services and must, when possible, respect patients’ and families’ preferences when they are expressed. Hospitals must not exclude qualified providers that are available to patients.

5. Of the HHAs or SNFs to which patients are referred, discharge plans must identify those facilities in which hospitals have a disclosable financial interest, as specified by the Secretary of Health and Human Services, as well as any HHA or SNF that has a disclosable financial interest in a hospital under Medicare.

Although commentary on the proposed regulations does not carry the force of law, it provides a window on the point of view of regulators and enforcers that providers are well advised to consider, as follows:

• Hospitals would not be required to duplicate lists in patients’ medical records. Hospitals would have the flexibility to determine exactly how and where required information would be documented in patients’ medical records.

• Hospitals would have the flexibility to implement the requirement to present lists in a manner that is most efficient and least burdensome. Commentary on the proposed COPs indicates that hospitals could simply print lists from the Home Health Compare or Nursing Home Compare sites on the CMS web site ( or develop and maintain their own lists. When patients require home health services, the CMS web site list could be printed based on the geographic area in which patients reside. When patients require SNF services, hospitals can provide a list of facilities in the geographic area requested by patients.

Lists cannot endorse quality of care

• When hospitals develop their own lists, they will have the flexibility to design the format of the lists. The lists, however, cannot be used as either a recommendation or endorsement by hospitals of the quality of care of any particular providers. Hospitals will not be required to include agencies and SNFs on lists that do not meet all of the criteria described above.

• Lists provided by hospitals must be legible and current. That is, lists should be updated at least annually.

• CMS further suggests that hospitals share lists with patients or individuals acting on their behalf at least once during the discharge planning process. But CMS points out that lists may need to be presented more than once during the discharge planning process to meet patients’ need for additional information or as patients’ needs change.

• No specific form or manner in which hospitals must disclose financial interests will be required. Hospitals could simply highlight or otherwise identify those entities in which a financial interest exists directly on lists of HHAs and SNFs. Hospitals also could choose to maintain separate lists of those entities in which they have financial interests.

• Lists provided to patients who are enrolled in managed care organizations (MCOs) should include available and accessible HHAs and SNFs in a network of the patient’s MCO. In the course of discussing discharge planning with patients, hospitals also will have the option to determine whether beneficiaries have agreed to excluded services or benefits or coverage limitations through enrollment in MCOs. If this is the case, hospitals may inform patients of the potential consequences of going outside the plan for services.

Compliance monitored via certification

• Compliance with the proposed COPs would be monitored as part of the hospital survey and certification process. Anyone aware of instances in which patients are inappropriately influenced or steered toward a particular agency or SNF in a way that violates the regulations could file a complaint with the state survey agency. State surveyors would then investigate and follow up with the complainant.

Stay tuned for more new developments in the continuing story of patients’ right to freedom of choice of providers.

[Editor’s note: More information about this topic is available in How to Form Alliances Without Violating the Law. Send a check for $55 (price includes shipping and handling) to the address that follows. A complete list of Elizabeth Hogue’s publications is available by contacting Elizabeth E. Hogue, Esq., 15118 Liberty Grove, Burtonsville, MD 20866. Phone: (301) 421-0143. Fax (301) 421-1699. E-mail:]