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CMS's second COVID-19 interim final rule further relaxes Medicare regulations

Blog | Coronavirus

CMS's second COVID-19 interim final rule further relaxes Medicare regulations

  • CMS’s anticipated interim final rule further relaxes Medicare regulations to allow providers to better respond to the COVID-19 pandemic.
  • During the COVID-19 Public Health Emergency, temporary expansion locations, including beneficiaries’ homes, can become provider-based departments.
  • For now, at least during the pandemic, CMS is going to allow for the home to be considered a provider-based department so that hospitals can be paid a facility fee when a hospital-based physician or clinician delivers care there.

CMS released an anticipated interim final rule further relaxing Medicare regulations to allow providers to better respond to the COVID-19 pandemic. Here is a summary of the rule on HFMA’s Regulatory & Accounting Resources page.  Key provisions of the final rule include:

Furnishing outpatient services in temporary expansion locations of a hospital or a community mental health center (including the patient’s home): During the COVID-19 Public Health Emergency (PHE), temporary expansion locations, including beneficiaries’ homes, can become provider-based departments (PBDs). Hospitals and therapeutic outpatient hospital services furnished to beneficiaries in these HOPD locations can meet the requirement that these services be furnished in the hospital so long as all other requirements are met, including the hospital conditions of participation, to the extent not waived, during the COVID-19 PHE and the beneficiary is registered as an outpatient of the hospital during care delivery. The services allowed in temporary locations include:

  • Partial hospitalization services
  • Hospital in-person clinical staff services in a temporary expansion location, including the home
  • Hospital services accompanying a professional service furnished via telehealth


1. CMS is now (at least during the pandemic) going to allow for the home to be considered a provider-based department so that hospitals can be paid a facility fee when a hospital-based physician or clinician delivers care there. And care can be delivered in-person or virtually. CMS has been asked questions during its COVID-19 Office Hours session about Medicare paying for home hospitalizations under the section 1135 waivers to further the “Hospitals Without Walls” response to COVID-19. Agency staff have hinted it is something they’re exploring. Could this mean we might see movement on this in an upcoming proposed rule?

2. Like many, I’m assuming that Congress will pass legislation in the near future removing the Medicare barriers (originating site requirement, geographic restrictions) to expanded telehealth on a permanent basis. And it occurred to me that shifting to telehealth would be a convenient way for CMS and Congress to do away with facility fees for low-acuity, low-risk outpatient services. If you’re well enough to be treated in the home, the odds of you needing the standby capacity/capabilities that the facility fee covers are probably low. However, CMS may have just made this harder. Once the agency starts paying for something, it’s hard to stop. Additionally, CMS acknowledges hospitals’ shaky finances as justification for why it is paying facility fees for virtual services provided in the patient home. 

Treatment of certain relocating provider-based departments during the COVID-19 PHE:
The IFC temporarily implements an expanded version of the extraordinary circumstances relocation policy during the COVID-19 PHE to include on-campus PBDs that relocate off-campus during the COVID-19 PHE for the purposes of addressing the COVID-19 pandemic. CMS’s policy has historically applied only to excepted off-campus departments that relocate to a different off-campus location for extraordinary circumstances outside of the hospital’s control that submit an extraordinary relocation exception request to their CMS Regional Office. The CMS Regional Office also evaluates and approves the request. However, on-campus departments that relocate on or after March 1, 2020, through the remainder of the PHE for the purposes of addressing the COVID-19 pandemic may also seek an extraordinary circumstances relocation exception so that they may bill at the OPPS rate, as long as their relocation is not inconsistent with the state’s emergency preparedness or pandemic plan.

Indirect medical education payments to teaching hospitals
To accommodate the increase in COVID-19-related patients, many hospitals are increasing their number of inpatient beds. CMS clarifies that it will not count beds added during the PHE in the calculation of Indirect Medical Education payments. CMS also believes it is appropriate to freeze the Inpatient Rehabilitation Facility’s (IPRs) or Inpatient Psychiatric Facility’s (IPFs) teaching status adjustment payments at their values prior to the COVID-19 PHE. Therefore, for the duration of the COVID-19 PHE, an IRPs or an IPFs teaching status adjustment payment amount will be the same as it was on the day before the COVID-19 PHE was declared.

Medicare Shared Savings Program
The IFC modifies Shared Savings Program policies to:

  • Allow ACOs whose current agreement periods expire on December 31, 2020, the option to extend their existing agreement period by one-year, and allow ACOs in the BASIC track’s glide path the option to elect to maintain their current level of participation for PY 2021
  • Clarify the applicability of the program’s extreme and uncontrollable circumstances policy to mitigate shared losses for the period of the COVID-19 PHE
  • Adjust program calculations to mitigate the impact of COVID-19 on ACOs
  • Expand the definition of primary care services for purposes of determining beneficiary assignment to include telehealth codes for virtual check-ins, e-visits and telephonic communication. CMS also address how these adjustments to program policies will apply to ACOs participating in the Track 1+ Model


According to CMS, 160 ACOs have agreements ending Dec. 31, 2020 and must renew under the BASIC track or ENHANCED track to continue in the Shared Savings Program, including 20 ACOs participating in the Medicare ACO Track 1+ Model (Track 1+ Model). Based on findings from a NAACOs survey, an estimated 60% of these ACOs would exit the program if CMS did not take additional steps to insulate them from the impacts of the pandemic, which are beyond the ACOs control, on the total cost of care. CMS realizes that COVID-19 presents an existential crisis for the transition to value and is trying to keep providers on the journey. 

About the Author

Chad Mulvany, FHFMA,

is director, healthcare finance policy, strategy and development, HFMA’s Washington, D.C., office.


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