Provider-Based Clinics: Where Are We?

Provider-based clinics and other provider-based operations have become very popular with hospitals and integrated delivery systems. One of the reasons for the popularity is the increased reimbursement from Medicare through split-billing; that is, filing both a professional claim and facility claim. The professional claim is paid at a site-of-service reduced level under the Medicare Physician Fee Schedule, while full payment is made on the facility side through the Outpatient Prospective Payment System (OPPS).

This increase in payment, along with the proliferation of provider-based clinics, has not gone unnoticed. Both the MedPAC (Medicare Payment Advisory Commission) and the U.S. Department of Health and Human Services (HHS) OIG (Office of the Inspector General) have recommended some sort of site-of-service payment equalization. The intent of the recommendations is to reduce payment to provider-based clinics to the level of payment for freestanding clinics. For some reason the Centers for Medicare & Medicaid Services (CMS) has started with off-campus provider-based clinics and operations.

Currently, there are two pieces of congressional legislation that must be interpreted and implemented.  They are:

• Section 603 of BiBA 2015
• Section 16001 of the 21^st Century Cures Act.

Both of these pieces of legislation are hard to read and comprehend. The latter attempts to modify and interpret some of what is in Section 603. CMS proposed a rather stringent set of rules for Section 603 in the July 14, 2016 Federal Register (i.e., the proposed update to APCs, or ambulatory payment classifications, for 2017). With a few exceptions, CMS implemented its proposed rules in the Federal Register dated Nov. 14, 2016. One area that was left open was how to pay new off-campus provider-based clinics starting Jan. 1, 2107. In theory, these new off-campus clinics should be paid through claims filed on the CMS-1500 and thus adjudicated by the Part B Medicare Administrative Contractors (MACs). CMS claims that this process is not possible and an alternative approach was suggested: using the UB-04, with payment at 50 percent of the applicable APCs.

In order to implement this process, a new modifier, the PN modifier, would be used. This modifier would drive 50-percent APC payment, which would serve as a proxy for the full Medicare Physician Fee Schedule (MPFS) payment. How accurately this proxy payment approximates the full MPFS payment is an interesting question. Note that the data used to statistically establish this proxy payment came from the use the PO modifier as required starting Jan. 1, 2016. This immediately calls into question: how accurate is this data that was collected using the PO modifier?

Also, how does Section 16001 fit into all of this? There are two refinements provided in this legislation. First, what does it mean to be new? According to CMS, being established means that a bill, or claim had been filed by Nov. 2, 2015. Thus, if a hospital was right in the middle of building or developing a provider-based clinic at the time of enactment, there was no opportunity to have filed a claim.

Relative to being “new,” there are two situations addressed. CMS wants to use filing of claims as the sole test for determining if a provider-based operation can be designated as new. Congress indicates that filing an attestation will also suffice, but certain requirements must be met:

“… a department of a provider (as so defined) not described in such clause is deemed to be billing under this subsection with respect to covered OPD services furnished prior to Nov. 2, 2015, if the Secretary received from the provider prior to Dec. 2, 2015, an attestation (pursuant to section 413.65(b)(3) of title 42 of the Code of Federal Regulations) that such department was a department of a provider (as so defined).” (Pages 783-784, Lines 25 and Lines 1-11)

This legislation requires only that an attestation be filed. There is no mention of a request for determination being approved. In the early years (i.e., early 2000s) of the provider-based rule, there was a distinction between an attestation and a request for determination. Over the years, this distinction has faded.

Note also the change in date to Dec. 2, 2015. This is one month after the enactment of BiBA in 2015, which took place Nov. 3, 2015. While this provides a mechanism to have a mid-build situation excepted from the payment reduction (i.e., grandfathered), hospitals would not have known this at the time they should have been filing an attestation. Apparently, this would apply to those hospitals that filed an attestation but had not yet had the opportunity to file a claim.

There is a second alternative approach to being deemed as apart from the payment reduction. This process involves attestations, enrollment, and certification from the chief executive officer or chief operating office of the provider. There are also audit requirements on the part of CMS. Note that this alternative approach starts with payments for 2018. What happens in 2017 if there is a mid-build situation and billing will commence sometime in 2017?

The simple fact is that there are unanswered questions that need resolution. What sort of subregulatory guidance will become available is unclear, and it is difficult to know how to interpret some of this legislation.

Hospitals, clinics, and integrated delivery systems will need to proceed with some caution relative to reimbursement and maintaining compliance.