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Based on admission data review, website review, review of data provided by the Medicare Administrative Contractor (MAC), and staff interviews, it was determined that the facility was not in compliance with the regulations at 42 §CFR 482.1 (a)(1) because it is not "primarily engaged in providing, by or under the supervision of physicians, to inpatients (A) diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons," as required by Social Security Act 1861(e)(1). The facility operates like a surgical center that primarily provides services to outpatients and limits inpatient admissions to post-surgical patients, as necessary.

Findings include:

1. Review of the facility's website (https://www.bluevalleysurgical.com/) showed that it holds itself out to the public as a surgical hospital that offers "minimally invasive spine surgery" as well as "bariatric surgery" commonly referred to as weight loss surgery. The information on the website specifies that typically, weight loss surgery is a minimally-invasive surgical procedure performed laparoscopically. On the same website under "weight loss surgery" the facility specifies that "laparascopic surgical techniques mean that most patients are able to return to their home the day after their procedures."

2. In an August 11, 2016 letter, the MAC approved the facility's request to add 5 off-campus locations which were operating under the facility's Medicare provider number. The 5 locations of Blue Valley Hospital, per its website, provide an array of outpatient services such as pain management, a multi-specialty clinic and bariatric consultations, but no inpatient services. All surgeries are performed at Blue Valley Hospital's main campus.

3. Review of the "Hospital Database Worksheet" completed by the surveyor in collaboration with facility staff on 11/13/2017 showed that the facility had 2 operating rooms and reported it had an average daily census (ADC) of 0.48 inpatients.

4. Review of the Blue Valley Hospital Document titled "SH Schedule" showed the facility had zero inpatients at midnight on November 13, 2017.

In an interview on November 13, 2017 at 11:00 AM, the Director of Nursing (DON), Staff A stated, we have one observation status patient that came in last night and one patient that is having surgery now and will be admitted as an inpatient. We do not have any inpatients currently in-house. Most of our patients are coming in as an outpatient or observation status. She continued to explain an observation status patient would need an order, have a medical condition and "stays up to 2 days."

In an second interview on November 13, 2017 at 5:00 PM, the DON stated that an outpatient is a patient with a medical need to be seen or "may be in need of an outpatient surgery." An 'inpatient' would be a patient which requires a doctor's order who has a medical or surgical need and would depend on the extent of their surgical procedure, this may be known at time of admission. An inpatient would have 2 overnight stays in the hospital. The language has changed to "2 midnights in the hospital."

5. Review of the surgical schedule revealed the facility had 1 inpatient and 2 outpatient surgery procedures scheduled on November 13, 2017.

6. Review of the "Blue Valley Hospital Average Length of Stay by Month" data from November 4, 2016 through November 4, 2017 showed that nearly every patient was discharged prior to a weekend (Saturday and Sunday). Specifically, the data showed that there were only 9 Saturdays and 2 Sundays (out of a possible 101 Saturdays and Sundays from November 4, 2016 - November 4, 2017) in which there was an inpatient. The data showed the following:

a. No inpatients on any Saturday or Sunday in November 2016;

b. One inpatient on Saturday December 31, 2016;

c. Two inpatients on Saturday January 28, 2017;

d. No inpatients on any Saturdays or Sundays in February 2017;

e. No inpatients on any Saturdays or Sundays in March 2017;

f. No inpatients on any Saturdays or Sundays in April 2017;

g. No inpatients on any Saturdays or Sundays in May 2017;

h. One inpatient on Saturday June 10, 2017;

i. No inpatients on any Saturdays or Sundays in July 2017;

j. One inpatient on Saturday August 26, 2017;

k. One inpatient on Saturday September 16, 2017 and one inpatient on Saturday September 23, 2017;

l. One inpatient on Sunday October 1, 2017, three inpatients on Saturday October 14, 2017, three inpatients on Saturday October 21, 2017, two inpatients on Saturday October 28, 2017, and one inpatient on Sunday October 29, 2017.

7. Further review of the facility provided ALOS data from November 1, 2016 - October 31, 2017 showed:

a. The facility did not perform any inpatient surgical procedures for 22 consecutive days during the month of December 2016.

b. The facility performed only 4 inpatient surgical procedures during the month of July 2017.

c. The facility did not perform any inpatient surgical procedures for 11 consecutive days during the month of August 2017.

d. The facility reported it had an an average length of stay of 1.2 days.

8. Data provided by the MAC showed that from January 01, 2014 - November 30, 2017, the facility reported it had 4 Medicare certified hospital beds. The facility's average length of stay (ALOS) in 2014 was 1.5 days, in 2015 1.04 days, in 2016 1.08 days, and in 2017 (November 1 - 15th) the facility's ALOS was 1.1 days.

The average daily census (ADC) for the same time period was 0.09 in 2014, 0.21 in 2015, 0.25 in 2016, and 0.22 in November 2017.

The data showed that the facility had submitted in total (January 1, 2014 - November 30, 2017), 303 Medicare claims with surgical procedures for inpatients and 626 Medicare claims with surgical procedures for outpatients.

9. For the same time period as above, the MAC identified the facility's top inpatient Diagnosis Related Groups (DRGs), that is, the top 4 services (which were surgical procedures) provided at Blue Valley Hospital on inpatients as evidence by Medicare claims submission:

a. 194 inpatient claims submitted for DRG 621 - "Operating Room procedures for Weight Loss", without complication or co-morbidity;

b. 42 inpatient claims submitted for DRG 460 "Spinal Fusion Except Cervical", without major complication or co-morbidity;

c. 19 inpatient claims submitted for DRG 989 - "Non Extensive Operation Room Procedure unrelated to principle Diagnosis", without major complication or co-morbidity;

d. 11 inpatient claims submitted for DRG 620 - "Operating Room Procedures for Obesity with complication or co-morbidity", but not major complication or co-morbidity.

e. An additional 48 claims were submitted for all other DRGs.

10. According to data provided by the facility, Blue Valley Hospital performed approximately 309 outpatient surgical procedures in the last year (November 1, 2016 to October 31, 2017) and approximately 146 inpatient surgical procedures in the same timeframe.

11. The Medicare data provided by the MAC from January 01, 2014 - November 30, 2017 and the data provided by the facility from November 1, 2016 to October 31, 2017, showed that the facility performed more than two times the number of outpatient surgical procedures compared to inpatient surgical procedures, 68% versus 32%.