CMS Issues Space Sharing Guidance to Critical Access Hospitals

On November 20, 2024, CMS published guidance on CAH space sharing arrangements. The guidance acknowledged the importance of providing communities served by CAHs with additional access to health care. Accordingly, CMS expressly permits CAHs to enter into space sharing arrangements, including leases and time-shares, with unrelated non-hospital individuals and entities. 

The compliance obligations for a CAH which enters into space sharing arrangements will vary depending on the type of arrangement. For time-sharing arrangements, where a third party temporarily rents space, the CAH remains responsible for compliance with the Conditions of Participation (CoP) for the space at all times. On the other hand, for lease arrangements, where the health care provider leases a space on a full-time basis and the CAH acts like a landlord, the CAH is not responsible for the CoP compliance (other than the physical structure/environment requirements that apply to the entire structure). Additionally, CMS reminds CAHs that the CAH is responsible for health care compliance obligations outlined in the CoPs at all times, including compliance with the physician self-referral law (also known as the Stark Law).

This guidance is distinct from CMS’s guidance on acute care hospitals and colocation. Use of acute hospital space is far more restrictive, as described in guidance from 2019 and 2021.

To be clear, CMS does not permit such space sharing arrangements between a CAH and other CAHs or acute care hospitals.