Meyer provider based status lha health law symposium 11-5-14

Physician Integration:
Provider Based Practices and the OIG
A PRIMER FOR NAVIGATING POTENTIAL ISSUES FOR BRINGING DOCS TO YOUR FACILITY.
Conrad Meyer JD MHA FACHE
Health Care Sections
Chehardy Sherman Law Firm
cm@chehardy.com
(504) 830-4141
11/6/2014 Conrad Meyer JD MHA FACHE 1

Issues for discussion
 Provider Based status? Why is it a big deal?
 OIG 2014 Work plan and provider based status (PBS)
 Issues dealing with compliance
 Operations for provider based
 Billing issues – Split v. Global
 42 CFR 413.65 – Definitions for PBS
 How to comply with PBS for integration?
 Obligations for providers/facilities relating to PBS
 Attestation?
 Review of increased PBS revenue
 Compliance, compliance, compliance

What’s all the fuss about PBS?
 Continued push for integration between physicians/facilities
 Hospitals can consider their physician practices “provider based” or
freestanding; however, payment implications for PBS compared to
freestanding are significant.
 Hospitals prefer PBS due to higher reimbursement
 Usually higher reimbursement than MPFS
 Compliance requires cost report to include PB cost
 CMS – concerned about failure of hospitals to meet PBS requirements
 OIG work plan focusing on PBS status – compliance 2014
 Use of audits to recoup overpayments will continue to increase

Provider Based Practices
 As a department of the hospital, the practice may be paid for services from
Medicare and Medicaid based upon this PBS
 The hospital will generate a charge on a UB-04 and the physician professional
charge on a separate CMS 1500 claim form. Because billing is under PBS –
professional fees are reduced.

PBS Issues
 TJC has provided some feedback regarding PBS issues from some of its
surveys including issues related to lack of medical record integration between
hospital and provider based clinics.
 Place of Service (POS) coding errors dealing with processing Part A and Part
B claims
 If hospital operates provider based clinic and CMS determines hospital/PB
Clinic is not in compliance – fines and repayment of claims will result.

PBS Requirements
 42 CFR 413.65 dictates the requirements that a facility or an organization
must meet to be considered PBS.
 Reg defines what operations are part of a Medicare certified provider
 Providers include: Hospital, Critical Access Hospital (CAH), SNF, Home
Health Agencies (HHA), ASCs, Comprehensive Outpatient Rehab Facilities
(CORF), Hospices, ESRD facilities, IDFTs with some limitations, Rural
Health Clinics (RHCs), FQHC, Certified Mental Health Center (CMHC).
 CMS defines the provider as the hospital and provider based to mean hospital
based.
 Provider based status means – the relationship between the main provider
(Hospital) and a PB entity or department of the provider (Hospital), remote
location of a hospital, or satellite facility – essentially a department of the
hospital providing outpatient services

42 CFR 413.65
 42 CFR 413.65 does not apply to determine PB status of the following
providers:
 ASCs, CORFs, Hospices, HHA, SNFs,
 Inpatient Rehab Units,
 ESRD facilities,
 IDFTs with some limitations (Labs paid only on fee schedule),
 PT, OT, ST – unless in CAH,
 Ambulance,
 Non-revenue producing depts.
 Reg only applies to HOPD and RHCs

42 CFR 413.65
 Definitions:
 Main provider: a provider that either creates, or acquires ownership of,
another entity to deliver additional health care services under its name,
ownership, and finical and administrative control.
 Campus: physical area immediately adjacent to a provider’s main buildings,
other areas and structures that are not strictly contiguous but located within
250 yards.
 Department of a provider: a facility or organization that is either created by,
or acquired by, a main provider for the purpose of furnishing health care
services of the same type as those furnished by the main provider under the
name, ownership, and financial and administrative control of the main
provider.
 The department is not licensed in its own right and by itself cant participate in Medicare;
COPS does not apply to department as an independent entity.
 Must be identified by signage and/or communication efforts as owned by the main provider
using marketing, websites, etc.

42 CFR 413.65
 Definitions:
 PB entity: separately certified provider created by, or acquired by, a main
provider for the purpose of furnishing health care services of a different type
from those of the main provider under the ownership and administrative and
financial control of the main provider.
 Remote location of Hospital: another site for inpatient services.
 Free Standing Facility: entity that is not integrated with a main provider, a
department of a provider, a remote location of a hospital, satellite facility, or a
provider based entity

CMS Requirements
 Universal Provider Based Department requirements that applies to all
facilities or organizations seeking PB Status:
 Common licensure for both main provider and dept – if allowed by State Law
 Financial integration:
 Operations are integrated between facility and main provider – shared income/expenses,
 Must be included in allowable cost centers on Cost Report – just as any other hospital dept,
and
 Must be included in main provider’s trial balance.
 Clinical integration:
 Same clinical oversight as any other hospital dept.
 Medical records should have a consistent retrieval system for charts to be readily available at
all locations – See TJC comments
 Medical Staff of hospital have clinical privileges at site/facility
 The medical director maintains a reporting relationship with the chief medical officer of the
main provider that is similar to any other hospital dept.

CMS Requirements
 Universal Provider Based Department requirements that applies to all
facilities or organizations seeking PB Status:
 Public Awareness: must be held out to public and other payers as part of the
main provider
 Obligations:
 Must comply with antidumping rules
 Must bill with correct site of service
 Must comply with the terms of the provider/hospital agreement
 Must comply with non-discrimination policies
 Must treat all Medicare patients as hospital outpatients
 Comply with issues related to co-insurance liability for beneficiary (for outpatient and
physician service)
 Notice to patients (Amount of liability, explanation of coinsurance liability for both outpatient and physician
services); estimate of charges, must be provided before delivery of services.

CMS Requirements
 Off Campus Sites:
 Required Management Contract (MSA/PSA) needs:
 Provider control is clear in Policies and Procedures
 The facility or organization is operated under the same organizational documents as the main
provider. For example, the facility or organization seeking provider-based status must be
subject to common bylaws and operating decisions of the governing body of the main
provider where it is based
 Provider must employ all non-management staff members who provide patient care
(excluding physicians and mid-levels)
 Management and Senior Management must follow provider policies
 Manager’s policies must be approved by provider
 Reports to provider must be contained in policies/procedures
 Employment of site staff members subject to provider approval process

CMS Requirements
 Off Campus Sites Cont.:
 Common Ownership – same legal entity and governing body
 Administrative and supervision as any other hospital dept. by main provider
 Facility is under direct supervision of the main provider
 Accountable to governing body of main provider
 Accounting functions done by same employees – billing, HR, Benefits, Salary, and
purchasing
 Location:
 Must be within 35 miles of main provider or meet market share test.
 Market share – 75% of patients served are same as 75% of patients in contiguous zip codes
of main provider
 Management contract rules apply

PB Clinics
 Requirements:
 Provider-Based Clinic may be on the hospital’s main campus or within 35 miles of the main
campus
 Must operate under the Main Provider’s (Hospital’s) license unless state law mandates
separate licensure
 PBC has ready access to the hospital’s and other provider-based clinics’ medical records
 Physicians and staff operating within the clinic are under the same reporting structure as all
other hospital departments
 PBC is incorporated into the hospital’s organizational chart

PB Clinics
 Requirements:
 Directors and managers are involved in the same meetings as their peers in other hospital
departments
 Professional staff must have hospital privileges
 Support staff receives the same in-service training as the clinical-support staff of the hospital
as applicable
 Hospital policies on infection control, safety, disaster plans, etc., apply at Provider-Based
Clinic
 Signage, name badges, business cards, letterhead, logos, billing invoices, voicemail, etc. are
identified as that of the hospital
 Provider-Based Clinic appears on the hospital’s trial balance as an identifiable cost center
 Must use the same Charge Description Master (CDM) as the hospital
 Medicare patients must be registered as hospital patients

Hospital Obligations
 Place of service (POS) indicator for professional component must be billed at
facility RVUs.
 Cannot use POS 11 – Office Based Physicians
 Must use POS 22 – Hospital Outpatient Services
 Ensure that COPS are adhered to by hospital and any PB site
 Remind PB site of compliance with non-discrimination rules.
 EMTALA –
 On campus – apply as part of the hospital (250 yards of main buildings)
 Off campus – only if held out as Urgent Care or at least great than 33% of patient visits are
unscheduled

Hospital Obligations
 Treat all Medicare patients as hospital patients – Bill facility/tech component
on UB-04
 Inpatients of hospital – 3 day payment window applies to all facility
components for services in PB entity, and all disgnostic and related
therapeutic professional components
 Off campus sites must provide dual co-insurance to each patient (see above).

Hospital Obligations - Claims
 In many organizations, billers are either knowledgeable about Part B
(physician) or Part A (hospital) claim submission requirements, but they
seldom know both.
 Part B billers are accustomed to identifying correct service provision on a
claim by using modifiers.
 But split-billing a physician office visit for a provider-based clinic is not really
similar to billing a procedure or diagnostic service with modifiers.
 There are no modifiers equivalent to 26 (professional component) and TC
(technical component) that would allow a provider to indicate to CMS
whether it is billing “globally” or “split-billing” the professional component
and the technical component.
 Billers must be knowledgeable about POS 22 for 1500 claim forms

Hospital Obligations – Split Billing
 Split Billing Reimbursement—A structure under which two separate bills, for
professional and technical reimbursements, are generated for a service.
Professional reimbursements go to the physician/physician practice and
technical reimbursements to the hospital.
 Professional—Billable services provided by physicians. These include
physician consultation, physician interpretation of an x-ray, CT Scan or MRI ,
or physician interpretation of a laboratory test, often in the form of a written
report. Reimbursement is directed to the physician/physician practice.

Hospital Obligations –
Split Billing – what is it?
 Definitions:
 Technical—Billable services provided in a hospital setting. Includes lab, x-rays
and any other non-professional services. Reimbursement is directed to the
hospital.
 Global Reimbursement—A structure under which one bill is generated for
each service. The service is billed and reimbursed at a global rate that includes
one global payment for the professional and technical components. All
reimbursements go to the physician practice.

Split Billing – what is it?
 The Hospital incurs cost associated with facilitating the physicians and in turn
receives technical component reimbursement for services conducted by the
physicians in the hospital facilities. The physicians receive fee schedule rates
for the professional component.
 The technical component and the professional component associated with
each service is billed separately.

Global or Non-Facility or Private Practice
 A service is billed and reimbursed at a global rate that includes one global
payment for both the professional and technical components. The
combined payment is designed to compensate physicians operating in a
private practice and covers overhead and technical expenses associated with
operating the practice.
 Applies to Medicare/Medicaid reimbursement as a hospital owned practice
wherein patient receives billing for both facility and professional charges.

Pros and Cons of Split Billing (PB Billing)
 Pros
 Ability to generate more total net revenue
 The total of the professional and technical components are usually more than the global
payment for the same service.(1)
 Split billing is commonly used by hospitals for surgery and radiology services.
 The combination of professional and technical should be greater than the
global reimbursement, as would be the split billing reimbursement greater
than the global reimbursement.
 The theory supporting this reimbursement is that if a service is performed in a
hospital (as opposed to a private practice setting), the technical component
should be greater because the hospital has more overhead costs than a private
practice.
 Might not necessarily by true with advent of G0463 HCPCS for 2014.

Pros and Cons of Split Billing (PB Billing)
 Cons
 More complex to manage and administer
 Not all payors participate in split billing
 The receipt of two bills are confusing and oftentimes a source of patient
dissatisfaction
 The need for allocation of revenue between hospital and physician
organization must be considered (could be a pro or a con)
 The site of service considerations as to costs are a factor; often this is a
positive to split billing in that greater margins result from billing in this
manner at the practice level as opposed to at the hospital
 The possibility of CMS moving toward bundled payments could create
challenges to split billing scenarios in the future; this can lead to
conflicting incentives that may affect decisions about the care to be
provided (G0463 HCPCS)

Hospital Obligations – G0463
 Effective January 1, 2014, all outpatient clinic visits furnished to Medicare
patients (regardless of on or off campus) require use of single HCPCS Level
II code, G0463, under OPPS.
 Physician component will not be affected.
 G0463 rate for 2014 is $92.53.
 Eliminates need for CPT E/M codes 99201-99205 (New patient) and 99211-
99215 (established patient).
 G0463 – removes acuity mix from payment methodology and could affect
future PB integration strategies.
 Emergency E/M codes are not affected by G0463 at this time – deferred for
further study.

Hospital Obligations – Impact of G0463

Private Payors
 Private pay: to bill or not to bill commercial / private payors as provider-based?
 All Medicare patients must be billed as hospital patients – 413.65(g)(5)
 Have obtained CMS regional office confirmation that this does not apply to:
 Medicare Advantage (HMO) patients and
 Medicare secondary
 Private pay point-of-care payment for provider-based services by patient may
be significantly higher than “free-standing” service!
 Educate staff for appropriate explanations to patients/payors

Example
Outpatient Visit (Office)
Medicare Medicare
CPT Level 3 – 99213 E/M Charge Allowable APC Payment Co-pay
Free-standing Clinic $ 300.00 $ 86.56 $ 69.25 $ 17.31
Total Reimbursement $86.56
Provider-Based Clinic
Professional Fee $ 200.00 $ 62.41 $ 49.93 $ 12.48
Facility Fee $ 100.00 $ 92.53$ 55.52 $ 37.01
$ 300.00 $ 105.45 $ 49.49
Total Reimbursement $ 154.94

Attestations
 Application for provider-based entity, or pre-approval by CMS is NOT
required!
 Eliminated by 2003 FY IPPS regulations and 42 CFR 413.65 now says may
submit “attestation”:
 Notify CMS of provider-based locations
 On Campus – just attestation
 Off Campus – supporting documentation
 Hospital states that applicable requirements have been met
 Attest to meeting obligations for provider-based operations – to MACs
 May notify CMS of material changes
 Attestation of provider-based status, and meeting the requirements for PB is
“voluntary.”
 Per CMS, provider-based operations depend on hospital’s self- monitoring
process
 Protects from overpayments in case requirements are not met for PB Status.

Attestations - Limitations
 If CMS accepts the attestation following review, it will limit recoupment if the
facility is later determined to be out of compliance.
 Without a reviewed attestation on file, CMS can recoup as far back as the
applicable statute of limitations allows.
 If subsequent review determines that the criteria were not met, the additional
money reimbursed due to billing as provider-based, rather than freestanding,
will be recouped.

PB Benefits
 Miscellaneous benefits or deterrences
 340-B benefits follow provider-based status – drugs used at PB departments are eligible for
340-B discounts.
 Residents in provider-based location (department) count for IME / DME
FTE count
 Direct payments (DME): These payments cover a portion of the direct costs of training
residents, including stipends, teaching physician and resident salaries and benefits, and
educational activity costs. DME is based on a prospectively determined per-resident amount,
weighted FTEs, and Medicare patient load.
 Indirect payments (IME): These payments compensate for the anticipated higher cost of care
in teaching hospitals based on the ratio of FTEs to hospital beds. A portion of these funds
are disproportionate care funding, which subsidizes uncompensated care.

PB Benefits
 Physicians in outpatient departments as POS 22, but not I/P or ER (POS 21
& 23) count for EHR incentives
 Cannot use Stark group practice compensation methodology for ancillary
bonus pools
 If docs employed by hospital, by definition not group practice
 Medical Group, Inc., is group practice; however, ancillaries will not be part of
its business; will be in hospital

PB for a new location
 Any time a provider (hospital) adds a new service location, the provider is
required to report it to the MAC within 90 days of the effective date of
change, regardless of whether the provider is filing a provider-based
attestation or not.
 Per 42 CFR 424.520(b), failure to report such changes within 90 days may
result in the deactivation or revocation of the provider’s Medicare billing
privileges. These changes must be reported by submitting a CMS form 855.
 File the 855 first so that it will have already been accepted by the MAC by the
time any provider-based attestation is filed.

Physician employment
 Not required for PB status
 Physicians must be compliant and bill POS 22 for Medicare/Medicaid
 If hospital is not billing, must have a billing agreement requiring physicians to
bill POS 22 and allow hospital to audit
 Hospital is ultimately responsible
 Could be a risk if physicians cherry pick patients as private v. hospital
outpatient
 All patients seen in PB locations must be admitted to hospital, processed
under hospital record system, and protected by hospital policies under COPS.

La. Admin Code. tit. 50, pt. V, § 5111
A. In order to receive Medicaid reimbursement as a hospital provider-based outpatient facility, an off-site
campus of a hospital which provides outpatient services shall meet the provider-based
requirements for Medicare as established in 42 CFR 413.65, except when the provisions in §5111.B
are applicable.
B. Closure of a State-Owned and/or Operated Hospital. If a state-owned and/or operated hospital
ceases to do business and surrenders its license, the off-site campus of that closed hospital may be
deemed to be “provider-based” for purposes of Medicaid reimbursement only when all of the
following criteria are met:
1. The off-site campus shall comply with the provider-based requirements in 42 CFR 413.65 except that:
a. the off-site campus shall be deemed in compliance with 42 CFR 413.65(d)(2)(vi) if the off-site
campus refers patients requiring inpatient hospital services to either its main hospital provider campus
or to the nearest available inpatient services; and
b. the off-site campus shall be deemed in compliance with 42 CFR 413.65(e)(3)(i) if they are licensed as
an off-site campus of another state-owned and/or operated hospital that is within 100 miles of the off-site
campus.
2. The off-site campus provides outpatient hospital services.

Provider Based – should you?
 Analysis of G0463 HCPCS is necessary to determine overall financial impact
to facility as G0463 removes case mix and depending if your facility case mix
could impact negatively if your have increased patient acquity
 Audit physicians to determine compliance
 Follow the money
 Compliance with cost reports

Questions Please contact:
CONRAD MEYER JD MHA FACHE
Health Care Section - Chehardy Sherman
One Galleria Blvd Suite 1100
Metairie, La. 70001
(504) 830-4141
cm@chehardy.com

Meyer provider based status lha health law symposium 11-5-14

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