This post was also written by Zachary A. Portin

With the arrival of 2014, the Pennsylvania Department of Health (“DOH”) is now authorized to grant “deemed status” for licensure purposes to hospitals that have been accredited by national accreditation organizations, such as The Joint Commission. This past July, Governor Corbett signed Act 60 of 2013 (“Act 60”) into law, which amends the Health Care Facilities Act to require DOH to accept hospital surveys and inspections conducted by national accreditation organizations designated as acceptable to DOH in lieu of DOH’s regular licensure renewal surveys. In addition, Act 60 extends the term of licensure from two years to three years for all Pennsylvania hospitals.

Cutting red tape? Described by DOH as a “historic rewrite” of Pennsylvania hospital licensure requirements, Act 60 was championed to help eliminate the redundant nature of multiple and sometimes inconsistent licensing and accreditation surveys that Pennsylvania hospitals routinely undergo. In this regard, most Pennsylvania hospitals complete voluntary accreditation inspections conducted by national accreditation organizations, in addition to the required licensing inspections conducted by DOH. The Pennsylvania House Appropriations Committee predicted that Act 60 would eliminate approximately 55 percent of regular licensure renewal surveys that DOH conducts annually.

What is “deemed status”? “Deemed status” is a process under which a hospital may choose to be exempt from routine licensure renewal surveys conducted by DOH. Hospitals are exempted by securing accreditation from a national accreditation organization – an organization authorized by CMS to conduct hospital surveys to ensure compliance with the CMS conditions of participation.

Pursuant to Act 60, if a national accreditation organization’s final report finds a hospital to be in “substantial compliance” with the accreditation organization’s standards, DOH must accept the report as evidence that the hospital has met DOH’s licensure requirements. The hospital must furnish a copy of the report to DOH within 10 days of its receipt from the national accreditation organization, and then DOH will grant the hospital “deemed status.” If, however, a hospital receives “anything less than full accreditation” in the national accreditation organization’s final report, that hospital will be subject to a full licensure survey by DOH.

Even if a hospital is granted “deemed status,” DOH reserves the right to make unannounced visits for a number of reasons. For example, DOH may respond to complaints, follow up on concerns or events identified by the national accreditation organization, and validate that organization’s findings that the hospital is in compliance with the conditions of participation issued by CMS.

Accreditation organization standards. “Deemed” hospitals are required to comply with the standards established by the national accreditation organization that accredits the hospital. In order for an accreditation organization to be approved by DOH, DOH must determine that the accreditation organization’s standards are equal to or more stringent than DOH’s existing survey requirements, evaluate the integrity of the accreditation organization’s survey process, and require the accreditation organization to enter into a written agreement with DOH. DOH has thus far approved the following four national accreditation organizations: The Joint Commission, the AOA Healthcare Facility Accreditation Program, Det Norske Veritas and the Center for Improvement in Healthcare Quality. In practice, the national accreditation organization will be required to apply the more stringent standards during licensure surveys.

Facilities eligible for “deemed status.” In general, Act 60 provides that a “hospital” that has been licensed by DOH to operate for at least three years and has not been subject to a provisional or restricted license is permitted to request DOH to grant deemed status.

Accordingly, Act 60 applies to health care facilities licensed as a “hospital” under Pennsylvania law. DOH has clarified that general acute care hospitals, children’s hospitals, long-term acute care hospitals, rehabilitation hospitals, cancer hospitals and other specialty hospitals are eligible for “deemed status.” DOH has also opined that ambulatory surgical facilities, behavioral health hospitals, behavioral health units within hospitals, home health agencies and/or divisions, rural health clinics, and inpatient psychiatric hospitals licensed by the Department of Public Welfare are not eligible for “deemed status.”

“Deemed status” is voluntary. Pennsylvania law does not require hospitals to be accredited by a national accreditation organization. Even if a hospital has achieved such accreditation, it is not required to utilize “deemed status.” DOH has clarified that it will continue to perform regular licensure renewal surveys, as it currently does, for facilities that have not secured accreditation by a national accreditation organization or that do not choose to use “deemed status.” Hospitals that desire “deemed status” are required to notify DOH using a form posted on DOH’s website.

What aspects of licensure are not impacted by Act 60? All hospitals, including those obtaining “deemed status,” are still required to submit plans for new construction and renovation to DOH, and receive approval from DOH before providing services in the newly constructed or renovated areas. DOH will also continue to survey hospitals for compliance with occupancy requirements.

Conclusion. Act 60 enables hospitals to potentially streamline and simplify the survey process by conforming to a single set of requirements and avoiding DOH licensure renewal surveys. “Deemed status” will be particularly attractive to any Pennsylvania hospital that has already developed a productive relationship with an approved national accreditation organization and familiarity with its standards. At the same time, DOH has noted that hospitals that are concerned that the accreditation organizations’ reviews will be “more intense” may elect to forgo “deemed status.”