A Guide to Supervisory Requirements Following the 2020 OPPS Final Rule

A new year comes with new Centers for Medicare & Medicaid (CMS) policies regarding requirements for therapeutic outpatient services at all hospitals and critical access hospitals (CAH). These authors explain the final Outpatient Prospective Payment System (OPPS) rule and provide insight on the potential impact of the recently legislated amendments. 

A recent rule by CMS has altered the longstanding supervision requirements applicable to therapeutic outpatient services. This rule increases the number of services covered by Medicare Part B, but it does little to alter acceptable standards of practice. One significant change is in relation to regulation requirements concerning the necessity of direct supervision when providing services. Health care practitioners should understand these rule changes and the impact they have on billing and treatment services. 

What’s in the New Rule?

On November 1, 2019, CMS published a final rule effectuating changes to multiple sections of the Code of Federal Regulations (CFR), which took effect on January 1, 2020. The final rule, known as CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS-1717-FC), includes a permanent alteration to the supervision requirements of 42 CFR §410.27.¹ The specific change is to §410.27(a)(1)(iv), which previously required that covered services be performed under the direct supervision of a physician or non-physician practitioner (NPP) and now requires only general supervision by a physician or NPP.^2–4 

This section defines the therapeutic outpatient services paid for by Medicare Part B, which are all services and supplies furnished to hospital or CAH outpatients.^2,4 Of note, these are not diagnostic services. These services must aid the physician or NPP (e.g., nurse practitioners, clinical nurse specialists, and physician assistants) in the treatment of the patient, including drugs and biologicals, which are usually not self-administered. 

A Closer Look at the Levels of Supervision

Direct supervision, the previous standard under §410.27(a)(1)(iv), requires a physician or NPP be immediately available to furnish assistance and direction throughout the performance of a service.⁵ The new standard, general supervision, requires a service be furnished under a physician’s or NPP’s overall direction and control, but a physician’s presence is not required during the performance of the actual service. 

General supervision is a less strenuous standard than direct supervision and, by extension, allows for more services to be covered by Medicare Part B. There is a third level of supervision, personal supervision, which is the most strenuous and requires a physician or NPP be in the room when a service is actually performed.

What Was the Catalyst for Change?

The reason for the change stems from the fact that some rural and critical access hospitals could not meet the staffing requirements necessary to maintain direct supervision over all services covered by §410.27.⁶

Previously, the CMS dealt with these complaints by issuing nonenforcement instructions, which barred enforcement of the direct supervision requirement against small rural hospitals with 100 or fewer beds.¹ These enforcement instructions created a two-tiered system, with larger hospitals being held to the more strict “direct supervision” standard, and CAHs being held to the less strict “general supervision” standard. To resolve this issue, CMS crafted the current rule, which eliminates the two-tiered system and instead makes all outpatient therapeutic services subject to general supervision.

How the CMS Addressed Concerns About the Rule

When the proposed rule change was announced, CMS asked the public to comment on the new rule and provide any concerns and/or feedback regarding the change.   

Potential issues were raised regarding general supervision, suggesting it may be inappropriate for complex services, such as radiation therapy, hyperbaric oxygen treatment, and wound care.⁷ CMS believes lowering the level of supervision will not impact the care provided to patients during these complex services. While general supervision is the new standard, providers may choose to implement increased levels of supervision—as they see fit—for more complex services.⁸

Additionally, physicians are still subject to Medicare Part B’s conditions of participation (CoP), which require patients be under the care of a physician and for that care to be of an adequate quality.⁹ Physicians cannot let the actual care standards lapse simply because supervision requirements have been lowered from direct to general.¹⁰

Furthermore, the new supervision standard does not alter Medicare payment policies based on the length and nature of a physician’s services or other associated requirements. Those requirements are independent of the supervision standard.¹¹

Most importantly, physicians are still required to follow state laws regarding patient care.⁸

Essentially, CMS has set its supervision requirements as the proverbial floor and is deferring to the individual states on whether they wish to increase the level of supervision. Therefore, this rule change does little to alter the obligations of health care providers who are still held to state standards. Section 410.27 simply changes what Medicare Part B will pay for, not the standard of care (SOC) applicable to physicians. Thus, if the state in which a physician practices requires direct supervision, then the physician must comply with that state standard to avoid potential legal and administrative penalties. 

Insights on the Rule’s Liability Concerns

Physicians should be cautious when following the new supervision standards; the change does not reduce the physician’s liability if SOC is breached. Physicians, especially physicians operating as employers, must keep the legal theory of respondeat superior in mind when instructing their staff to perform services under general supervision. Under respondeat superior, employers are liable for the negligent actions of their employee if the employee was working within the scope of their employment when the negligent act occurred. In a medical context, this means a physician is responsible for the actions or omissions of their employees and anyone else operating under their supervision or instruction. 

Occasionally, physicians will attempt to disclaim liability for the actions of employees working under them, claiming they were not aware of the actions of their subordinate, or they were not involved in the specific service at issue. This is a poor defense. Physicians can potentially be held responsible for those working under them, including NPPs such as nurse practitioners, and should diligently supervise their subordinates’ work. 

Many states require physicians to direct and supervise the work of nurse practitioners. The physician is responsible for the care of the patient, even if a particular service is administered by a nurse practitioner. Medicare’s supervision standard has no effect on these state requirements. Physicians should not relax their supervision standards based on the new CMS rule, as that is not the rule’s purpose. The rule will not provide a defense if a malpractice action, based on the actions of an employee, is brought against a physician.   

Future Rulemaking

Physicians should watch for future rule changes by CMS regarding levels of supervision for certain services. Section 410.27(a)(1)(iv) allows CMS to apply higher standards of supervision to services rather than applying a blanket rule of “general supervision.”¹² The CMS maintains the Medicare Advisory Panel on Hospital Outpatient Payment (HOP Panel), which evaluates outpatient services and makes recommendations to CMS regarding appropriate levels of supervision for specific services.^13,14 If the panel recommends a higher level of supervision for a service, CMS can codify this recommendation and raise the minimum level of supervision required. 

Wound care has previously been brought to the attention of CMS as a service potentially necessitating a higher standard of supervision, and as such is a likely candidate for additional rulemaking.¹⁵ Any change to the supervision requirements for wound care, or any other service, is done on a case-by-case basis. These changes are subject to notice and comment rulemaking, meaning CMS must publish the proposed rule change and solicit comments on the change from the public. This allows health care providers the opportunity to have input on any proposed changes to a specific service’s minimum level of supervision. These comments are then considered by CMS and addressed in the final rule. Thus, it is helpful for physicians to become active participants in rulemaking to provide a practical medical balance to this administrative process.  

Summary

The changes made to 42 CFR §410.27 are beneficial to health care providers. Medicare Part B now covers a greater variety of therapeutic outpatient services, and the provider has more flexibility in how to assign personnel now that direct physician supervision is not required. However, the rule does not change SOC applicable to outpatient services. CMS chooses to leave SOC determinations to individual states. A change from direct supervision to general supervision is not a defense if a malpractice suit is brought against a provider. n

Don Stephens is an attorney at Stephens & Associates in Pearland, Texas. He has a broad base of legal experience and has represented hundreds of physicians and other healthcare providers across the state of Texas. He primarily focuses on defense of medical malpractice allegations but also handles a variety of health care issues. He may be reached at dss@dstephenslaw.com.

Justin Rightmer is an associate attorney at Stephens & Associates. He has an interest in health care law and has experience in general commercial litigation and transactional law, including contract enforcement, trade secret disputes, and estate planning. 

1. Centers for Medicare and Medicaid Services. CY 2020 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS-1717-FC). Available at https://www.cms.gov/newsroom/fact-sheets/cy-2020-medicare-hospital-outpatient-prospective-payment-system-and-ambulatory-surgical-center-0 . Published Nov. 1, 2019. 

2. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-amd-4 . Published Nov. 12, 2019. 

3. Pan J. CMS lowers physician supervision requirement for outpatient therapeutic services in 2020 OPPS final rule. Available at https://www.bradley.com/-/media/files/insights/publications/2019/11/cms-lowers-physician-supervision-requirement-for-outpatient-therapeutic-services-in-2020-opps-final-rule.pdf . Published Nov. 19, 2019. 

4. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1750 . Published Nov. 12, 2019. 

5. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1742 . Published Nov. 12, 2019. 

6. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1743 . Published Nov. 12, 2019.

7. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1763 . Published Nov. 12, 2019. 

8. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1759 . Published Nov. 12, 2019. 

9. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1747 . Published Nov. 12, 2019. 

10. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1749 . Published Nov. 12, 2019. 

11. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1756 . Published Nov. 12, 2019. 

12. Code of Federal Regulations. Title 42- Public Health. Available at https://www.govinfo.gov/content/pkg/CFR-2018-title42-vol2/xml/CFR-2018-title42-vol2-sec410-27.xml . Published Oct. 1, 2018.

13. Centers for Medicare and Medicaid Services. Advisory Panel on Hospital Outpatient Payment. Available at https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/AdvisoryPanelonAmbulatoryPaymentClassificationGroups .

14. Federal Register. Medicare Program; the Announcement of the Annual Advisory Panel on Hospital Outpatient Payment (HOP Panel) Meeting in August 2019 and New Panel Members. Available at https://www.federalregister.gov/documents/2019/06/05/2019-11756/medicare-program-the-announcement-of-the-annual-advisory-panel-on-hospital-outpatient-payment-hop . Published June 5, 2019. 

15. Federal Register. Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs. Available at https://www.federalregister.gov/d/2019-24138/p-1761 . Published Nov. 12, 2019.