The CMS issued what is expected to be the first of a series of advisory opinions on specialty hospitals, ruling that an unidentified orthopedic hospital could go forward because the hospital had met key criteria of the Medicare Prescription Drug, Improvement and Modernization Act of 2003. In a six-page advisory opinion, the CMS said the hospital was under development as of Nov. 18, 2003, the deadline established by the Medicare law for new physician-owned specialty hospitals. A half-dozen or so specialty hospitals are said to have sought the CMS' opinion on their development status. The CMS is considering several factors in determining whether a facility was under development by the deadline, including whether it had met zoning requirements, was substantially funded and had completed architectural plans. "A specialty hospital's failure to satisfy all of these considerations does not necessarily preclude us from determining that the (facility) was under development," the advisory opinion said.
While the subject of the opinion was not identified by name or location, the CMS described it as a joint venture involving 20 to 30 orthopedic surgeons and neurosurgeons and an "established national operator of ambulatory surgery centers." The venture was formed in July 2001 and capitalized in 2002 through a confidential offering that raised more than $675,000. It now has equity funding in excess of $750,000, the CMS said. The four-story hospital will house 60 to 70 beds, 10 surgery suites and ancillary support departments. By the November deadline, demolition and grading of the site had been completed, and the joint venture had filed key papers with the state health department, including civil-engineering documents, preliminary architectural plans and completed architectural drawings, the CMS said. -- by Michael Romano