Dear Chief Executive Officer Letter: Regulatory Revisions Observation Units, February 22, 2012

February 22, 2012


Dear Chief Executive Officer:

The purpose of this letter is to advise facilities of recent regulatory amendments to Section 405.19 Title 10NYCRR – Emergency Services that may impact facility operations. Specifically, Section 405.19(g) Observation Units, was added to allow for the assignment of emergency services patients to observation units and sets out the requirements for such units. The regulations became final on January 11, 2012.

Until the issuance of these regulatory changes, hospitals have been able to request a waiver in order to provide observation services. With the adoption of these regulations, hospitals can now obtain Medicaid reimbursement upon appropriate notification to the Department that they will open an observation unit and that it complies with the regulations. Hospitals which were operating an observation unit under a waiver must come into compliance with the new regulations by January 10, 2014.

For your convenience, the May 2011 Medicaid Update, a copy of the regulations, and an Architectural and Engineering Certification (A/E Cert) form are enclosed. At this time, notifications for units which do not require any construction can be made by sending the information required by regulation to the Division of Certification & Surveillance, along with a completed A/E Cert form. For units requiring construction, the appropriate Certificate of Need application must be filed through the New York State Electronic Certificate of Need (NYSECON) system. In the near future, notifications not requiring construction will also be submitted via NYSECON.

We encourage you to review and share this information with your staff to ensure compliance with Department requirements. Should you have any specific questions regarding the information provided or wish to discuss any of the provisions in detail, please contact Barbara DelCogliano in this office at (518) 402-1003 or


Mary Ellen Hennessy Director
Division of Certification & Surveillance