The Bipartisan Budget Act of 2015, which was enacted on Nov. 2, 2015, prohibits new off-campus, hospital-based outpatient departments from receiving Outpatient Prospective Payment System (OPPS) Medicare reimbursement for non-emergency services beginning on Jan. 1, 2017.

The Act revises the OPPS to prohibit reimbursement for the overhead departmental services furnished in off-campus facilities. These off-campus facilities will have to depend predominantly on the Medicare physician fee schedule or other third-party reimbursement methodologies to meet their operating costs and continue providing quality services to Medicare beneficiaries. 

The current rules for off-campus facilities likely will remain relevant after Dec. 31, 2016 for the two categories of such facilities that will continue to receive provider-based reimbursement: a) emergency departments and b) “grandfathered” off-campus departments. The cutoff date of Nov. 2, 2015 likely will create some controversy, depending on how the Centers for Medicare & Medicaid Services (CMS) interprets the billing date or the date the services were rendered as the official date for the off-campus designation to be grandfathered while the enrollment application is going through the long review process.

The U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG) Work Plan for the 2016 fiscal year will increase Medicare oversight of provider-based status, and as a result, it will receive significant scrutiny. The OIG will determine the number of provider-based facilities that hospitals own and the extent to which CMS has methods to oversee the accuracy of provider-based billing. Focus will be on the requirements described in 42 CFR Section 413.65 and CMS Transmittal A-03-030, and whether the attestation review process is carried out effectively and reliably. The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the financial incentives associated with provider-based status and has recommended that freestanding and provider-based entities receive similar reimbursement for the same services. CMS likely will require recoupments of Medicare payments of non-compliant providers, to be instituted by the Medicare Administrative Contractors (MACs).  The amount of overpayment likely will be the difference between the amount of payment that was actually made from the effective date of the attestation and the amount that CMS or the MAC estimates should have been made, in the absence of compliance.

The significant components of the provider-based packages submitted by hospitals that have received major auditing attention in the past are the attestation documents and public awareness information. All attestations, whether for on-campus or off-campus facilities, must discuss the following: the identity of the main provider and the provider-based department (PBD), the exact location of the PBD, supporting documentation for off-campus facilities, the effective date the PBD became part of the main provider, and finally, a contact person at the hospital who could answer detailed questions concerning the components of this document. Due to the increase in coinsurance cost sharing for Medicare beneficiaries, public awareness of the PBD is extremely important, and clear visibility is the name of the game.  When patients enter the PBD, they must be aware that they are entering the main provider facility and are being billed accordingly for the two components (professional and technical). Signage, patient registration forms, letterhead, marketing advertisements, and Web pages must be easily understood, since there could be non-covered services or out-of-network Part D prescription drug costs in conjunction with the primary services.

The MACs are required to review appropriately filed PBD enrollment applications and submit work paper packages to the appropriate CMS regional office that has oversight for the hospital within 60 days of receipt of a provider-based application. A recommendation for either approval or denial will be included. The CMS regional office shall make the final determination. Missing documentation can be requested and an additional 60 days granted to review it. Due to the expected increased scrutiny as described in the 2016 OIG Work Plan, more denials should be anticipated by the hospital community in the future.  Since an enrollment denial and anticipated improper billing recoupment should be considered a “CMS final determination,” appropriate appeal rights should be granted with the Provider Reimbursement Review Board (PRRB) if the amount in controversy is $10,000 or more.

In order to insure PRRB jurisdiction over this denial, hospitals must provide the date of determination, the controlling authority in dispute, the authority granting the Board’s jurisdiction over the dispute, and finally, an explanation regarding why the MAC or CMS determination was improper. As a previous administrative law judge (ALJ) with the PRRB, I recommend that providers utilize the “five fingers” approach as so expertly stated by one of my previous colleagues on the PRRB: statutes, regulations, CMS rulings, CMS transmittals, and evidence, in that order. 

Expert witness testimony can be extremely important as well, and likely will help a provider achieve a favorable outcome should its enrollment application be denied inappropriately. 

About the Author 

Stanley J Sokolove, CPA, is a former CFO technical compliance monitor for CMS. In that role, Mr. Sokolove provided oversight of the banking, finance and internal controls for CMS relating to NHIC, Corp., the DME MAC for Jurisdiction A. Prior to this position, Mr. Sokolove was an Administrative Law Judge, serving as a member of the Provider Reimbursement Review Board in Baltimore, Md. Mr. Sokolove is a member of the RACmonitor editorial board and makes appearances on Monitor Mondays. 

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