3. Compliance with State Licensure Law

(Rev. 56, Issued: 12-30-09, Effective/Implementation: 12-30-09)
§416.40 Condition for Coverage: Compliance With State Licensure Law
The ASC must comply with State licensure requirements.
Interpretive Guidelines: §416.40
State licensure requirements generally exist for both healthcare facilities and healthcare professionals. States vary considerably in their licensure requirements for entities that meet the Medicare definition of an ASC. Some States may not require separate licensure
of these facilities, although all States require licensure of healthcare professionals providing services within the ASC. Some States may require separate licensure for some, but not all ASCs within their State; for example, in some States, ASCs that are operated as part of a physician single or group private practice may not require separate licensure as a healthcare facility. This condition requires that an ASC comply with whatever State licensure requirements are applicable to it.
In States where a separate facility license is required for a facility providing ambulatory surgical services, the ASC must have a current license that has not expired or been suspended or revoked. The ASC must also be in compliance with the State licensure requirements.
Failure of the ASC to meet State licensure law may be cited when the State has made a determination of noncompliance and has also taken a final enforcement action as a result. Citation of licensure deficiencies may represent an initial step rather than a final action or determination by the State licensure authority. Additionally, the Federal survey of the ASC focuses on current compliance or non-compliance, not past noncompliance. Thus, for example, evidence that an ASC had been assessed a civil monetary penalty by the State licensure authority in the previous year would not be grounds for citing the ASC for noncompliance with State licensure law, unless the State licensure authority indicates the ASC remains noncompliant.
If as a result of a State citation of an ASC for deficiencies in its compliance with licensure requirements the ASC has ceased operations and no longer furnishes services, it would be considered to have voluntarily terminated its Medicare supplier agreement as of the last date on which it provided services to Medicare beneficiaries, in accordance with§416.35(a)(3). The SA must advise the RO of the ASC’s cessation of business, and the RO will process a voluntary termination.
If at the time of the survey the ASC’s State license has been revoked, suspended, or otherwise formally limited (e.g., admissions have been curtailed by the State), then the ASC is not in compliance with this condition and must be cited for a condition-level deficiency. Furthermore, survey of the rest of the CfCs cannot be completed, since the ASC is not providing surgical services to patients. The SA must advise the RO of such formal licensure enforcement actions and the RO will proceed with action to terminate the ASC supplier agreement, in accordance with standard termination procedures.
If the surveyor identifies a situation that suggests the ASC may not be in compliance with State licensure law, the information may be referred to the State licensure authority for follow-up.
While States vary as to the types of healthcare professionals that require licensure, all ASCs have physicians and nursing staff that require State licensure. It is the ASC’s responsibility to verify that all ASC personnel who require a State license have a current license that has not expired or been suspended or revoked.
Survey Procedures: §416.40
• Determine prior to the survey whether a facility license is required for the ASC. If there is access to State licensure files, review the ASC’s State licensure status. Otherwise, ask to see the ASC’s license.
• Review the ASC’s documentation of all personnel required to be licensed under State or local laws or regulations. Check that the ASC has evidence that all personnel requiring licensure have current licenses in good standing.
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