3/17/2015
Jessica LaManna, Esq.
Senior Counsel, Universal Health Services
Kirsten McAuliffe Raleigh, Esq.
Shareholder, Stevens & Lee, P.C.
March 12, 2015
1347003v1
•
Principles of Provider Based Status
•
Provider-Based Attestations
•
Provider-Based Requirements
•
Other Provider-Based Determination Considerations
•
Future of Provider-Based Status
– Provider-Based/”Under Arrangement” Services
– On-Campus and Off-Campus Distinction
– Implications of Provider-Based Status
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–
–
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On-Campus and Off-Campus Locations
Joint Ventures
Management Contracts
Additional Provider-Based Obligations
– Shared Space
– Remote Location Hospital Acquisitions
– “Primarily Engaged”
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• Provider-based status generally refers to the
relationship between a main provider and a
provider-based entity or a department of a provider,
remote location of a hospital, or satellite facility, that
complies with the provider-based regulatory
requirements codified at 42 C.F.R. § 413.65 (See also
Program Memorandum A-03-030 (April 18, 2003)
• The provider-based rules are site specific, not service
specific
• Provider-based status for facilities is effective on the
earliest date when the facility meets all relevant
requirements 42 C.F.R. § 413.65(o)
• Applies for Medicare and Medicaid payment purposes
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• Billed at the hospital outpatient rate
• Hospital contracts with 3rd party to provide services to
hospital patients
• Limited use – based on cost-effectiveness and clinical
considerations
• Hospital must exercise professional responsibility over
the arranged-for-services
• Service not site specific
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Must “exercise professional responsibility over the
arranged-for-services”
• Not “merely serve as a billing mechanism” (Medicare General
Information, Eligibility and Entitlement Manual, CMS.
Pub. 100-01, Chapter 5, § 10.3)
– Applying quality controls over arranged-for services that are
similar to those provided for salaried employees;
– Accepting patients for treatment in accordance with the hospital’s
admission policies;
– Maintaining a complete and timely clinical record on the patient;
– Maintaining a liaison with the patient’s attending physician; and
– Ensuring the medical necessity of “under arrangement” services
are reviewed on a sample basis by the utilization review
committee, the hospital’s health professional staff, or an outside
utilization review group
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• A hospital (main provider) can treat a subordinate
facility as:
– A provider-based facility – integrated
– A free-standing facility – not integrated
42 C.F.R. § 413.65(a)(2)
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• A provider-based facility may be located on the
hospital’s main campus (i.e., within 250 yards of the
main hospital buildings) or at an off-campus location.
42 C.F.R. § 413.65(a)(2)
• On-Campus
– Encompasses “not only institutions that are located in selfcontained, well-defined settings, but other locations, such
as in central city areas, where there may be a group of
buildings that function as a campus but are not strictly
contiguous and may even be crossed by public streets.”
65 Fed. Reg. 18,434, 18,511 (April 7, 2000)
– ROs have discretion to make case-by-case determinations
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• Reimbursement
– Higher Medicare reimbursement rate for diagnostic and
therapeutic services provided in a HOPD than a freestanding setting
 Physician fees are lower for professional services furnished in
provider-based departments than free-standing settings
• Medical residents who train in HOPDs can be counted
for purposes of GME/IME payments
• 340B Drug Discount Program Eligibility
• PT/OT/ST – payment limits
– Historically therapy caps only applied to services in nonprovider based departments
 Current extension of therapy caps to HOPD expires on March 31, 2015
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• Third Party Payer Contracts
 HOPDs generally included within scope of hospital’s contracts
 Hospital-owned physician clinics require separate contracts
• Coverage
– Medicare only covers/pays for certain services if performed
in a hospital or other Medicare-certified setting
 Partial hospitalization services
 “Inpatient only” list specifies services that will not be covered if
furnished in any setting other than a hospital outpatient setting.
– Certain surgical services are only covered in a hospital or an
ASC, not a physician’s office
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• Supervision Implications
– Provider-based departments are subject to the same
supervision requirements as HOPDs
 Outpatient Therapeutic Services Incident to Physician/certain NPPs
– Services are furnished under the direct supervision (or other level
specified by CMS) of a physician or appropriate NPP
 Outpatient Diagnostic Services
– Diagnostic tests must be performed under the physician level of
supervision specified in the MPFSRVF
 Direct = “immediate availability”
– On Campus = not so physically distant on campus that can’t
intervene right away
– Off Campus = in or near off-campus PBD if immediately available
– More than responding to emergency – ability to take over
performance of procedure or provide additional orders
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• A facility or organization may not qualify for
provider-based status if all patient care services
furnished at the facility or organization are furnished
“under arrangement.” 42 C.F.R. § 413.65(i)
• Hospitals may not contract out entire departments
“under arrangement” and claim the departments as
provider-based. 65 Fed. Reg. 18434, 18518-19
(April 7, 2000)
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• Under 42 C.F.R. § 413.65(b)(3), providers may choose
to obtain a determination of provider-based status by
submitting, to their MAC, an attestation stating that
their facility meets the relevant provider-based
requirements
• Off-campus facility in which physician services are
performed, of the kind typically furnished in a physician
office – are presumed to be freestanding unless CMS
determines its provider-based 42 C.F.R. §413.65(b)(4)
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•
Ambulatory Surgical Centers
•
•
Comprehensive Outpatient
Rehabilitation Facilities
Independent Diagnostic Testing
Facilities
•
ESRD Facilities
•
Home Health Agencies
•
•
Skilled Nursing Facilities
•
Hospices
•
Inpatient Rehabilitation Units that
are excluded from inpatient PPS
for acute hospital service
•
Departments of providers that
perform functions necessary for
the successful operation of the
providers but do not furnish
services of a type for which
separate payment could be
claimed under Medicare or
Medicaid
Facilities, other than those
operating as parts of Critical
Access Hospitals (“CAHs”),
furnishing only physical,
occupational, or speech therapy to
ambulatory patients, throughout
any period during which the
annual financial cap amount on
payment for coverage of physical,
occupational, or speech therapy
•
Ambulances
•
Rural Health Clinics affiliated with
hospitals having 50 or more beds
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• Radiology and Imaging Center
• Cancer Center
• Wound Care Center
• Surgical Center
• Cardiology Specialists
• Sleep Center
• Pain Management Clinic
• Off-Campus Emergency Department
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• All attestations, whether for on-campus facilities or
off-campus facilities, must discuss the following:
– Identity of the main provider and the PBD
– Exact location of the PBD
– Supporting documentation for off-campus facilities
– Effective date the PBD became part of the main provider
– Contact person for questions about the PBD
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• Compliance Measure
– November, 2014 Self Disclosure - Our Lady of
Lourdes Memorial Hospital, 242-bed hospital in
Binghamton, NY paid $3,373,898.28 to resolve FCA
liability for improperly billing HOPD services
• Overpayment amounts on a prospective basis can
be limited (until “material change”)
• Overpayment amounts on a retrospective basis can
be limited
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• Medicare Enrollment/Certification
– Submit a Form 855A
– Acceptance of Form 855A by MAC ≠ assurance of
compliance with provider-based requirements
– PBD is an integral part of the provider, covered by the
provider’s Medicare agreement, subject to the same
Medicare COPs as any other part of that provider
• Medical Assistance Enrollment
– Medical Assistance follows Medicare for provider-based
payment purposes
– PA - Specialty 01/183 - Medical Assistance Application for
Hospital Based Medical Clinic/Outpatient Department
Reimbursement Rate
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• To be determined by CMS to have provider-based
status, any facility or organization for which
provider-based status is sought, whether located on or
off the campus of a potential main provider, must meet
requirements from 42 C.F.R. § 413.65(d) that pertain to
the following:
– Licensure
– Clinical Service Integration
– Financial Integration
– Public Awareness
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• Generally, the department of the provider, the remote
location of a hospital, or the satellite facility and the
main provider must be operated under the same,
current license
• Recommended Attestation Documentation
– DOH license
– Correspondence with DOH
– Survey documentation
– Separate license for PBD?
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
• The Physicians’ Hospital in Andarko, No. 2101 (July 20, 2007)
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• The clinical services of the facility or organization
seeking provider-based status and the main provider
are integrated as evidenced by the following:
– Professional staff clinical privileges
– Main provider monitoring and oversight
– Reporting relationships between medical directors and their
superiors at the main provider
– Committee oversight by main provider committees
– Unified retrieval system for medical records
– Integration of inpatient and outpatient services
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• Recommended Attestation Documentation
– A list of all personnel working at the facility
 Employees of main provider?
– A description of the responsibilities and relationships
between the medical director of the facility, the chief
medical officer of the main provider, and the medical staff
committees at the main provider
 Executive Organizational Charts
– Copies of policies used for medical records
– Demonstrate outpatient and inpatient services integration
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
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• Financial operations of the facility or organization must be
fully integrated within the financial system of the main
provider, as evidenced by shared income and expenses
between the main provider and the facility or organization
• Recommended Attestation Documentation
– Cost Center
– Trial Balance
– Medicare Cost Report
• Not Acceptable Documentation
– Budgets
– Profit & Loss Statements
– Expense Reports
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
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• When patients enter the provider-based facility or
organization, they must be aware that they are entering
the main provider and are billed accordingly
• Recommended Attestation Documentation
– Signage – Health System Branding?
– Patient registration forms
– Letterhead
– Advertisements
– Web pages
• Mercy Hospital Lebanon v. CMS, No. CR 3320 (August 7,
2014)
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
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• Operation under the ownership and control of the main
provider
• Under the administration and supervision of the main
provider
• Location
42 C.F.R. § 413.65(e)
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• Requirements per 42 C.F.R. § 413.65(e)(1):
– The facility or organization is 100 percent owned by the
main provider
– The main provider and the facility or organization has the
same governing body as the main provider
– The facility or organization is operated under the same
organizational documents as the main provider
– The main provider has final responsibility for key
operational and personnel decisions
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• Recommended Attestation Documentation
– Articles of Incorporation for main provider and PBD
– Bylaws for main provider and PBD
– Description of final approval process for administrative
decisions, contracts with outside parties, personnel
policies, and medical staff appointments for the PBD
• Mercy Hospital Lebanon v. CMS, No. CR 3320 (August 7,
2014)
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
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• Requirements per 42 C.F.R. § 413.65(e)(2):
– The facility or organization is under the direct supervision
of the main provider
– The facility or organization is operated under the same
monitoring and oversight by the provider as any other
department of the provider, and is operated just as any
other department of the provider with respect to
supervision and accountability
– Administrative functions (e.g., billing, HR, records, payroll,
etc.) of the facility or organization are integrated with those
of the main provider
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• Possible attestation documentation includes:
– A list of key administrative staff at the main provider and the
facility that reflects a reporting relationship
– Organizational charts that include both the main provider and
the facility
– A written description of the facility director’s reporting
requirements and accountability procedures for day-to-day
operations
– A list of the various administrative functions (e.g., billing,
services, laundry, payroll) at the facility that are integrated with
the main provider and copies of any contracts for
administrative functions that are completed “under
arrangements” for the main provider and/or facility
• Union Hospital, Inc. v. CMS – No. 2463, (June 11, 2012)
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• A facility or organization may qualify for provider-based
•
•
•
•
status only if the facility or organization and the main
provider are located in the same state or, when
consistent with the laws of both states, in adjacent
states
General Rule - PBD located within a 35-mile radius of
the campus of the hospital or CAH that is the potential
main provider
75/75 Alternative – Must demonstrate that the PBD
serves the same patient population as the main provider
Disproportionate Share Alternative
Children’s hospital neonatal intensive care unit
exception
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• Pursuant to 42 § C.F.R. 413.65(f), for a facility or
organization operated as a joint venture to be
considered provider-based, the facility or organization
must:
– Be partially owned by at least one provider
– Be located on the main campus of a provider who is a
partial owner
– Be provider-based to that one provider whose campus on
which the facility or organization is located
– Meet all the requirements applicable to all provider-based
facilities and organizations
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• Under 42 C.F.R. § 413.65(h), PBDs operating under
management contracts must also meet the following criteria:
– The main provider employs the staff of the facility or organization
who are directly involved in the delivery of patient care, except for
management staff and staff who furnish patient care services of a
type that would be paid for by Medicare under a fee schedule
established by regulations under 42 C.F.R. § 414
– No “leased” employees are involved in the delivery of patient care
– There is integration of administrative functions between the main
provider and the facility or organization
– The main provider has control over the operations of the facility or
organization
– The management contract is held by the main provider itself
• Attestation documentation should include a copy of any
relevant management contracts for the facility
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• Compliance with EMTALA
• Physician services furnished in HOPDs are billed with
the correct site-of-service (POS 22)
• HOPDs comply with the hospital’s provider agreement
• Physicians who work in HOPDs are obligated to comply
with the non-discrimination provisions in 42 C.F.R.
§ 489.10(b)
42 C.F.R. § 413.65(g)
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• All Medicare patients, for billing purposes, are treated
as hospital outpatients and not as physician office
patients
• Compliance with the 3 Day Payment Window provisions
• The hospital outpatient department meets applicable
Medicare hospital health and safety rules
42 C.F.R. § 413.65(g)
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Beneficiary Co- Insurance Liability Notices
• Off-Campus Only
• Written Notice – prior to service (EMTALA exception)
– Amount of beneficiary's potential financial liability, or if the
extent of care is not known, an explanation that the
beneficiary will incur a coinsurance liability to the hospital that
he/she would not incur if the facility were not provider-based
– An estimate based on typical or average charges for visits
– A statement that the patient’s actual liability will depend on
the actual services furnished by the hospital
– Notice must be one beneficiary can read and understand
• Not an ABN!
• Not a Consent to Treatment!
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•
CMS will issue notice to the provider
•
Adjust the amount of future payments
•
Recover the difference between the amount that actually
was made and the amount of payments CMS estimates
should have been made.
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• CMS permits some, but not all, shared space
arrangements between hospital outpatient departments
and non-hospital providers/suppliers
• Types of shared space arrangements
– Shared reception/waiting area
– Suites within a MOB
– Time block arrangement
– Time share arrangement
• July 2011 CMS Chicago RO denied PB request based in
part on shared space with freestanding facility (Union
Hospital v. CMS – No. 2463, June 11, 2012)
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• Shared space arrangements that CMS would likely
prohibit:
– “Time-sharing” arrangements in which, for example, a clinic
is a provider-based clinic during certain weekdays and is a
freestanding clinic during the remaining weekdays
(time-blocks)
– “Time-sharing” arrangements based on utilization (sharing
expenses of space/personnel based on the percentage of
patients seen to the total number of patients)
• Attestation documentation could consist of floor plans
of a site to illustrate the extent to which services are
shared and to show any separate entrances for the
providers sharing space
41
• Remote locations established as provider-based are
subject to the same Medicare conditions of participation
(“CoP”) as any other part of the provider, and a
certification of noncompliance at the CoP level affects
the certification of the hospital as a whole
• In a change of ownership or control of a participating
provider or supplier, there will be an automatic
assignment of the Medicare Agreement unless the new
owner rejects the assignment
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• Implications of rejecting the automatic assignment:
– Preclusion from successor liability for Medicare
overpayments and underpayments
– No Medicare payments for services to beneficiaries under
the terminated provider agreement
– On reapplication to the Medicare program, the acquired
provider/supplier will be treated as initial applicant and
must undergo an unannounced full survey
– The acquired provider/supplier must obtain a new
accreditation
43
• Owner of Hospital A, an existing Medicare-participating
hospital, will acquire Hospital B, another Medicareparticipating hospital
• Owner of Hospital A plans to make the acquired
Hospital B a remote location or second campus of
Hospital A (Hospital A-Campus 2), covered by Hospital A’s
Medicare provider agreement and PTAN number
• Owner of Hospital A does not want to assume Hospital B’s
provider agreement, but wants to start billing under
Hospital A’s provider agreement upon the effective date
of the acquisition.
Can Hospital A start billing in this manner?
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NO!
• Hospital B’s existing provider agreement is
automatically assigned to Hospital A
• Hospital B’s provider agreement is not terminated - it
is subsumed under Hospital A’s provider agreement
• Hospital B’s PTAN is “retired” and no longer used
• Hospital A may begin to bill Medicare for services
provided at Hospital A-Campus 2 as soon as the
acquisition is completed (no interruption in the
participation of Hospital A-Campus 2 in Medicare)
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• If Hospital A rejects assignment of Hospital B’s existing
Medicare provider agreement:
– Hospital B’s provider agreement is terminated
– Hospital A not eligible for Medicare payment for services at
the new Hospital A-Campus 2 until it has completed an
“initial enrollment process.”
– Doesn’t matter that Hospital A-Campus 2 will not be
separately enrolled in Medicare
• Hospital A can’t just treat Hospital A-Campus 2 as a
provider-based department of Hospital A by submitting
an 855 CHOI adding a new practice location
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• Hospital A must notify CMS that it is rejecting
assignment of the Hospital B provider agreement, and
that it is creating a provider-based Hospital A-Campus 2
• Hospital A-Campus 2 must have a full certification
survey of all applicable Medicare Hospital Conditions of
Participation in the same way as would a prospective
hospital applying for initial enrollment in Medicare
• If Hospital A is deemed to meet the requirements
through accreditation, its AO may not extend the
accreditation of Hospital A to its new Hospital ACampus 2, but must instead conduct a full accreditation
survey of that campus
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• Timing of the Initial Survey after a Rejection of
Assignment
– The survey by the SA or AO may not be scheduled and
conducted until the acquisition is complete, the MAC has
completed its review of the Form 855A and made a
recommendation for approval to the RO, and the campus is
fully operational and providing services to patients
• Effective Date of Medicare Participation
– The effective date for participation of the new Hospital
A–Campus 2 and payment for any Medicare services which
are provided there is calculated under the same procedure
that would have been used if the new owner had not
combined Hospital B into Hospital A
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• Section 1861(e) defines a hospital as being
“primarily engaged” in providing services to
inpatients
• “Primarily engaged” not defined in the Statute/Regs
• A 51% standard has been used, although decisions
are made on a case-by-case basis
• CMS will look at the billing and revenue
• Must devote 51% to inpatient care
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• MedPAC concerns regarding reimbursement differential
• OIG’s Work Plan
• FY 2016 – HHS Proposed Budget – “Encourage efficient care by
improving incentives to provide care in the most appropriate
ambulatory setting.”
– “[L]owering payment for services provided in off-campus hospital
departments under the [OPPS] to either the Medicare Physician Fee
Schedule-based rate or the rate for surgical procedures covered under the
Ambulatory Surgical Center payment system.”
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• CMS released new data collection requirements to analyze the
frequency, type, and payment of physicians’ and outpatient
hospital services furnished in off-campus PBDs
• Hospital Claims – new HCPCS modifier “PO”
– Not needed for remote locations, satellite locations or ED
– Voluntary during CY 2015
– Mandatory January 1, 2016
• Professional Claims – deleting POS 22 (HOPD) and establishing two
new POS codes:
–
–
–
–
Outpatient services furnished on-campus, remote or satellite locations
Off-campus HOPDs
Mandatory immediately upon release of the new POS codes by CMS
POS 23 (ED) will remain
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• Provider-based status still significant
– Medicare coverage
 Outpatient Therapeutic Services
 Outpatient Diagnostic Services
 PHP Services
– 340B Eligibility
– Counting Residents
– Certain payments (DSH, IME)
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Questions?
Thank You
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Contact Information
Jessica (Jacey) LaManna, Esq.
Kirsten McAuliffe Raleigh, Esq.
Senior Counsel, UHS of Delaware, Inc.
[email protected]
Shareholder, Stevens & Lee, P.C.
[email protected]
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