Shared Space and Shared Services – Some Much Needed Flexibility from CMS

At long last, on May 3, 2019, the Centers for Medicare and Medicaid Services (“CMS”) issued draft Guidance that provides more flexibility when it comes to shared waiting rooms, registration areas, hallways, corridors and shared services between co-located hospitals and other health care providers. In connection with this Guidance, CMS indicated that it wants providers to have flexibility in providing care, as long as the shared space and services will not adversely affect the health and safety of patients.


Over the past number of years, CMS developed an informal policy position that the Medicare Conditions of Participation (CoPs) and the definitions of a “hospital” and a “department of a provider” strictly prohibit a hospital from sharing space with another hospital, certified provider/supplier, or freestanding physician office. While this strict prohibition on shared space is not explicitly stated in any statute, regulation or sub-regulatory guidance, CMS imposed its position through enforcement actions and informal guidance. CMS’s informal policy position created much uncertainty in the hospital community, causing many hospitals to perform internal assessments of possible shared space arrangements. Some hospitals spent millions of dollars to renovate and reconfigure space by adding walls and doors and changing means of ingress/egress to meet this strict interpretation of shared space, despite no indication that these renovations would improve patient care and/or patient experience. In fact, many hospitals felt these renovations created inefficiencies and caused patient confusion.

Draft Guidance[1]

Shared Space

In the draft Guidance, CMS recognizes that a hospital can be co-located on the same campus or in the same building with another hospital or other healthcare entity. However, CMS emphasizes that the co-located hospital is responsible for demonstrating separate and independent compliance with the hospital CoPs, including having “defined and distinct” spaces of operation over which it maintains control at all times. The Guidance clarifies, however, that this “defined and distinct” space only applies to clinical space designated for patient care and necessary for the protection of patients, including but not limited to their right to personal privacy and to receive care in a safe environment, and their right to confidentiality of patient records. CMS defines “clinical space” as any non-public space in which patient care occurs. Accordingly, any non-clinical space, namely public spaces and public paths of travel, can be shared. CMS provides the following examples of public spaces and public paths of travel that can be shared:

  • Public lobbies;
  • Waiting rooms;
  • Reception areas (with separate “check-in” areas and clear signage);
  • Public restrooms;
  • Staff lounges;
  • Elevators;
  • Main corridors through non-clinical areas;
  • Main entrances to a building; and
  • Main hospital corridor with distinct entrances to departments (such as outpatient medical clinics, laboratory, pharmacy, radiology).

CMS provides the following examples of clinical space that cannot be shared:

  • Space where patients are receiving care, including any space within nursing units (including hallways, nursing stations, and exam and procedure rooms located within nursing units), outpatient clinics, emergency departments, operating rooms, post-anesthesia care units, etc.; and
  • A hallway, corridor, or path of travel through a clinical hospital department (e.g., outpatient medical clinic, laboratory, pharmacy, imaging services, operating room, post anesthesia care unit, emergency department, etc.).

Signage is key. CMS makes clear that it is necessary to identify, for the public, which healthcare entity is performing the services in which department.

When surveying a hospital that is co-located with another hospital or health care entity, CMS explains that the hospital being surveyed must provide a floor plan that distinguishes the spaces used by the hospital being surveyed and the spaces used by the other co-located entity. The surveyors will assess the hospital with compliance with the CoPs, including confirming that: (1) spaces within the co-located hospital are defined and identified as belonging to the hospital being surveyed; (2) spaces that belong to another entity can only be accessed by traveling through public paths of travel from within the hospital; and (3) public spaces that are shared by the surveyed hospital and the other entity are identified with appropriate signage as belonging to both. Any issues of non-compliance found in the shared areas would be considered non-compliance for both entities.

Shared Services

In the draft Guidance, CMS confirms that services may be provided under contract with a co-located hospital or health care entity, including laboratory, dietary, pharmacy, maintenance, housekeeping, security services, food preparation and utilities. CMS states that surveyors must ask hospital leadership to provide a list of all services that the hospital has contracted to use from the co-located entity.

Staffing Contracts

CMS clarifies that when staff is obtained under arrangement from another entity, staff members must be assigned to work solely for one health care provider during a specific shift. Staff members cannot: (1) “float” between the two providers during the same shift; (2) work at one hospital while concurrently being “on-call” at another; or (3) provide services at both providers simultaneously. However, medical staff members may be shared, or “float,” between the co-located hospitals if they are privileged and credentialed at each hospital.

To ensure the quality of care and services being provided, CMS emphasizes that all individuals providing services under contract should receive the same education and training in all relevant hospital policies and procedures that direct hospital employees receive. CMS explains that surveyors will review staffing contracts and a sample of personnel files to ensure adequate staffing levels and proper training, education, oversight and evaluation of contracted staff. In addition, surveyors will review the staffing schedules to ensure that individuals providing contracted services are only scheduled to work at one facility per shift, and that staff are immediately available at all times to perform services required by the hospital. The surveyors will confirm the foregoing by requesting verification from the governing body.

Contracted Clinical Services

CMS clarifies that hospitals that obtain clinical services from the co-located hospital or entity are not required to notify their patients that the services are obtained under contract. CMS notes that surveyors will survey any on-site contracted-for-services (e.g., kitchen, laboratory), but not off-site locations where services are provided (e.g., laundry services). In addition, CMS explains that surveyors will ask to see documentation of how the contracted services are incorporated into the hospital’s Quality Assurance and Performance Improvement (“QAPI”) program, and assess how the governing body ensures compliance with the CoPs through its QAPI activities.

Emergency Services

CMS explains that a hospital without an emergency department must develop policies and procedures and ensure staffing that would enable it to provide safe and adequate initial emergency care (e.g. CPR and use of an AED) to respond to emergency scenarios typical of the patient population it routinely cares for. CMS states that hospitals can contract with a co-located hospital for the appraisal and initial treatment of patients experiencing an emergency if the contracted staff is not working/on duty simultaneously at the co-located hospital. After the appraisal and initial treatment, CMS acknowledges that the patient can be appropriately transferred to the co-located facility for care beyond initial emergency treatment, but notes that “[h]ospitals without emergency departments that contract for emergency services with another hospital’s emergency department are then considered to provide emergency services and must meet the requirements of EMTALA.”

Identification of Deficiency

If a surveyor identifies a deficiency in a contracted service, CMS states that the CoP for that service will be cited along with the governing body CoP, and possibly the QAPI CoP.  In addition to citing the surveyed hospital for the contracted service, the surveyor will file a complaint with the State Agency or Regional Office against the co-located entity providing the contracted service, resulting in two separate surveys with two separate survey reports.

[1] The draft guidance can be found here: Please note that the draft Guidance only applies to general hospitals, and does not address the specific location and separateness requirements of any other Medicare-participating entity, such as psychiatric hospitals, ASCs, rural health clinics, Independent Diagnostic Testing Facilities (IDTFs), etc.