Operating in the Dark: CMS Ramps Up Enforcement of “Operator” Rule for Nursing and Allied Health Programs as Hospitals Struggle to Understand What the Rule Requires

• December 01, 2021

• Daniel J. Hettich , King & Spalding LLP
• Alek Pivec , King & Spalding LLP

ABSTRACT: Many hospitals operate educational programs in nursing and various allied health disciplines. Congress has recognized that these programs are part of the cost of patient care and has directed the Medicare program to reimburse hospitals for Medicare’s share of those costs. The Centers for Medicare and Medicaid Services (CMS) has adopted regulations that specify the conditions of reimbursement for hospital-based nursing and allied health programs. Those regulations specify that a program must be “operated” by the hospital to qualify for reimbursement from Medicare and contain “provider-operated criteria” that are used to determine whether a program is operated by the hospital. In recent years, there has been a significant increase in the number of hospitals reporting that Medicare payment for their nursing and allied health programs has been denied. Many hospitals have reported that these disallowances are predicated on previously unannounced interpretations of the operator requirement and the provider-operated criteria. The affected hospitals often must repay millions of dollars to the Medicare program. This article will (1) explore the history and rationale of CMS’s operator requirement, its evolution over the years, and the guidance that CMS has provided to date, (2) examine whether the operator requirement is a legitimate exercise of agency authority and whether previously unannounced interpretations of the rule and its criteria are enforceable, and (3) discuss the legal grey areas of the operator requirement that have been plaguing hospitals.

ARTICLE TAGS

• Government Reimbursement