QUESTION: I’ve been on vacation and just got back. What’s all this I hear about new Provider-based Billing Rules?
ANSWER: Section 603 of the Bipartisan Budget Act of 2015 ended “provider-based” Medicare reimbursement for off-campus outpatient departments of hospitals starting January 1, 2017, unless the department in question was billing Medicare for those services as of November 2, 2015, the date the President signed the Act into law. While existing provider-based departments will not be affected, the law will have considerable impact on future activities, including facilities that are currently planned or under construction which were counting on provider-based treatment.
Provider-based billing refers to the long-standing Medicare practice of treating facilities away from the “main campus” of a hospital as part of the hospital for reimbursement purposes. This enabled a hospital to get paid a “facility fee” or technical component reimbursement for services furnished at such locations, in addition to any other reimbursement that might be paid in connection with those services, such as physician professional fees. Many hospitals took advantage of this to get paid both a technical and professional fee from Medicare for what otherwise would be physician office visits. While the physician fee under such circumstances would be lower than what the physician would be paid in a free-standing office, the combined technical and professional fee would be greater, making provider-based treatment financially attractive in many situations. Hospitals also could benefit by having outpatient surgery and diagnostic services treated as provider-based, since payments under the Medicare hospital outpatient fee schedule rather than what Medicare paid to ambulatory surgery centers (“ASCs”) or independent diagnostic testing facilities (“IDTFs”).
This eventually got on the radar screen of Congress and the Administration due to the amount of money involved. The Congressional Budget Office estimated that the new rule would save Medicare approximately $3.6 billion over the next four years. Given the scope of the proposed savings, it is surprising that the bill didn’t go further and end provider-based reimbursement for existing arrangements.
The new law only affects “off-campus” outpatient departments, which are located more than 250 yards from the campus of a provider such as a hospital, that is, the physical area immediately adjacent to the hospital’s main buildings. Such facilities cannot be reimbursed under the hospital fee schedule but can be reimbursed under the physician, ASC or IDTF payment systems, as applicable. The law does NOT affect reimbursement of off?campus facilities that provide inpatient services, such as remote locations of the hospital (another hospital operating under the same provider number) or satellite facilities (an off?campus location that shares a facility with another hospital). And, of course, the new law does not affect “on-campus” facilities, i.e., those within 250 yards of the hospital’s main buildings.
There is an exception that allows off-campus outpatient departments that are “dedicated emergency departments” as that term is defined in the EMTALA regulations to continue provider?based billing. A dedicated emergency department is a facility that is either (1) licensed by the state as a free-standing emergency department; (2) holds itself out to the public as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; or (3) provides at least one-third of all of its outpatient visits for the treatment of emergency medical conditions on an urgent basis without requiring a previously scheduled appointment. Such facilities can apparently have any services they provide treated as provider?based services. An earlier version of the bill had limited the services that could be treated as provider?based to only emergency department visits for the evaluation and management of patients (HCPCS codes 99281?99285) but this was changed at the 11th hour. However, any off-campus facility which qualifies as a dedicated emergency department would be subject to the same EMTALA rules as a hospital emergency department located on campus, including the requirement to provide for a medical screening examination and stabilizing treatment and/or appropriate transfer for any patient who presents at the facility.
There will be rules that implement the new law forthcoming from CMS. Those rules could place even more limits on provider-based billing. But for the time being, subject to the exceptions discussed above, unless an off-campus outpatient department was billing Medicare as provider?based as of November 2, 2015, it won’t be able to do so after January 1, 2017.