Mega Guidance: Provider-Based Strategies for 2016 & Beyond

Spring Conference May 2016

Jill Griffith, CPA, CPC Senior Manager - Health Care Services

Presented by:

Agenda

¨  Provider-Based Defined ¨  Provider-Based Criteria (413.65) ¨  Billing in a Provider-Based Setting ¨  Bipartisan Budget Act of 2015 ¨  340B Drug Discount Program ¨  Next Steps ¨  2016 & Beyond ¨  Questions

2

Provider-Based Defined

¨  A hospital may treat a subordinate facility for Medicare payment purposes either as part of the hospital, referred to as “provider-based,” or as freestanding. The Medicare certification, coverage, and payment implications of provider-based or freestanding status are significant.

3

Provider-Based Criteria (413.65)

¨  On-Campus Vs. Off-Campus ¨  Licensure ¨  Clinical & Service Integration ¨  Financial Integration ¨  Public Awareness ¨  Outpatient Department

Obligations ¨  Ownership and Control

¨  Administration and Supervision – Reporting Relationship

¨  Administration and Supervision – Administrative Functions

¨  Location ¨  Management Contracts ¨  Beneficial Co-Pay

Notification

4

Billing in a Provider-Based Setting Medicare Payment – Traditional Physician Office

¨  Provider-based status affects the manner in which services performed in a facility may be properly billed to Medicare and Medicaid programs.

¨  Facility (hospital) services are billed on a UB-04. ¨  Physician professional services will be billed

separately on the CMS 1500 claim form, but payments are reduced as a result of lower physician practice expense (site of service differential).

5

Bipartisan Budget Act of 2015

¨  On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015. Effective January 1, 2017, Section 603 of the Budget Act excludes from Medicare’s outpatient prospective payment system (OPPS) new hospital services furnished at an off-campus hospital outpatient department.

¨  The Act effectively adopts site-neutral payment principles recommended by MedPAC and more recently the GAO, whose December 2015 report concludes that given the trend toward hospital-physician consolidation, Congress should equalize payment rates for similar services provided in different settings to ensure Medicare is not paying too much for health care.

6

Bipartisan Budget Act of 2015 ¨  Section 603

¤  Applies site-neutral payment reductions for new off-campus provider-based outpatient departments. It excludes: n  On-campus departments n  Critical access hospitals n  Dedicated emergency departments n  Provider-based RHCs

¤  “New” is defined as an entity that began billing Medicare for outpatient services after the date of the enactment of the Act (11/2/15).

¤  No APC payment beginning on and after 1/1/2017. ¤  Paid from Medicare Physician Fee Schedule, Ambulatory Surgery Center

payment system or the Clinical Lab Fee Schedule as appropriate. ¤  Off-campus provider-based departments that were billing Medicare before the

date of enactment (11/2/15) of the bill are “grandfathered in” and will continue to receive payment.

¤  Stay tuned to 2017 OPPS Proposed rule expected June/July 2016 for CMS rulemaking regarding this Act.

7

BBA: Payment Implications Medicare Payment – Traditional Physician Office

¤ On-campus locations: Continue to receive an APC payment.

¤ Off-campus locations: n  If billing Medicare as a provider-based outpatient

department on the day of enactment of the Bipartisan Budget Act of 2015 (11/2/15), the facility will continue to receive an APC payment.

n  If not billing Medicare as a provider-based outpatient department on the day of enactment of the Bipartisan Budget Act of 2015 (11/2/15), the facility can receive APC payment only through 12/31/16, with no facility payments beginning 1/1/17.

n  Assumption is that site of service differential will remain in place after 1/1/17, since the location is operating as a provider-based outpatient department.

8

Provider-Based Billing

¨  Two bills: CMS 1500 and UB-04. ¨  Payment:

¤  Physician portion = fee schedule. Some procedures paid at less than 100% (known as “site of service” reduction).

¤  Technical portion = APC (based on “scorecard”). n  PO modifier for UB 04 services performed in off-campus provider-based

locations (effective 1/1/16). ¨  Patient co-pay and coinsurance: Two out-of-pocket bills to patient

(can be combined on one bill). ¤  Co-pay amount (physician portion) is less due to POS.

n  POS = 22 on-campus. n  POS = 19 off-campus (effective 1/1/16).

¤  Patient now has a hospital coinsurance on the back end. n  Amount depends on the APC. n  This amount will go away on 1/1/17 for off-campus locations not meeting the

“grandfathering” status.

9

CMS Clarification

¨  Does not apply to on-campus locations. ¨  Does not apply to remote locations of the hospital.

¤  “Remote location of a hospital means a facility or an organization that is either created by, or acquired by, a hospital that is a main provider for the purpose of furnishing inpatient hospital services under the name, ownership, and financial and administrative control of the main provider, in accordance with the provisions of this Section.”

¤  “A remote location of a hospital comprises both the specific physical facility that serves as the site of services for which separate payment could be claimed under the Medicare or Medicaid program, and the personnel and equipment needed to deliver the services at the facility. The Medicare CoPs do not apply to a remote location of a hospital as an independent entity. For purposes of this part, the term “remote location of a hospital” does not include a satellite facility as defined in 42 CFR Sections 412.22(h)(1) and 412.25(e)(1) of this chapter.”

10

CMS Clarification

¨  Does not apply to satellite facilities 42 CFR, Section 412.22(h)(1). ¤  “For purposes of paragraphs (h)(2) through (h)(5) of this Section, a satellite

facility is a part of a hospital that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital.”

¤  I.e., a hospital within a hospital that is not under the control of the governing body or CEO of the hospital in which it is located.

11

340B Discount Drug Program

¨  This program is a drug discount program with drug manufacturers, not a “reimbursement” program.

¨  Allows for both on-campus and “child sites” to qualify for the program.

¨  Child site status - not impacted by the Bipartisan Budget Act of 2015?

12

340B Discount Drug Program

¨  Some editorial comments by attorneys suggest that 340b may be implicated with BBA Section 603. ¤  Depends on how the statutory change is implemented by

CMS. n  Still permitted as an allowable cost on the Medicare cost report. n  If HRSA opts to exclude off-campus locations not

“grandfathered in.” ¨  AHA’s position – “extremely unlikely” to affect 340b

eligibility for new off-campus provider-based outpatient departments since these sites would still meet provider-based requirements and, therefore, be included on the hospital’s cost report on a reimbursable line.

13

340B

¨  Compliance issues with provider-based = compliance issues with 340B Drug Discount Program

¨  Ongoing compliance is a necessity

14

14

Next Steps

¨  Identify all off-campus provider-based locations and determine if billing to Medicare occurred prior to November 2, 2015.

¨  Validate that all off-campus provider-based locations are currently designated by including the PO Modifier on the claim.

¨  Validate that the appropriate place of service (11 vs. 19 vs. 22) for your freestanding vs. off-campus provider-based vs. on-campus provider-based locations are being utilized.

15

CMS Rulemaking ¨  Rulemaking for Section 603 will be contained in the 2017 Proposed

OPPS Rule. ¤  Early July 2016.

¨  Questions to ponder: ¤  Would the site-neutral payment reductions apply if a hospital acquires

another entity’s existing off-campus provider-based outpatient department? ¤  Would the site-neutral payment reductions apply if my hospital is building a

new off-campus building which will house provider-based outpatient departments?

¤  What rates will be paid after 1/1/17? ¤  Would the site-neutral payment reductions apply if my hospital moved a

current provider-based location’s physical address after November 2, 2015? ¤  Would the site neutral payment reductions apply if I added new services to

an existing provider-based location that was billing at the location prior to November 2, 2015, but not for the new services (i.e., add family medicine clinic to an already existing orthopedic clinic location).

16

Now What – Exception 1

CMS defines campus as: Campus means the physical area immediately adjacent to the provider’s main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by CMS regional office, to be part of the provider’s campus.

17

Now What – Exception 2

¨  Critical Access Hospitals ¤  Effective January 1, 2008, Critical Access Hospitals may operate

an off-campus provider-based location only if it is at least a 35-mile drive to the nearest hospital or CAH (or 15 miles in the case of mountainous terrain or secondary roads).

¤  This is in addition to the 35-mile distance requirement to be considered a provider-based location. n  This rule was put in place due to 850 CAHs being deemed “necessary

providers” by their states, meaning they do not meet the distance requirement to be CAH as stated in the CAH CoPs.

¤  This 1/1/08 provision excludes Rural Health Clinics.

18

Now What – Exception 3

¨  Dedicated Emergency Departments ¤  The bill references an existing Medicare definition. Therefore, a

“dedicated emergency department” means “any department or facility of the hospital, regardless of whether it is located on or off the main hospital campus, that meets at least one of the following requirements: n  It is licensed by the State in which it is located under applicable State law as

an emergency room or emergency department; n  It is held out to the public (by name, posted signs, advertising, or other means)

as a place that provides care for emergency medical conditions on an urgent basis without requiring a previously scheduled appointment; or

n  During the calendar year immediately preceding the calendar year in which a determination under this Section is being made, based on a representative sample of patient visits that occurred during that calendar year, it 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.”

19

Now What – Exception 3 Cont.

¨  Can a location be designated as on-campus provider-based to a “dedicated emergency department or a remote location (IP facility)”? ¤  A dedicated ED is operating under the hospital’s license,

provider number and provider agreement. ¤  Per 8/1/2002 Federal Register Vol 67. No. 148, if a hospital

comprises several sites at which both inpatient and outpatient care are furnished, it will normally be necessary for the hospital to designate one site as its “main” campus for purposes of the provider-based rules. n  Each of the other sites(referred to in our regulations as “remote locations”) would then be

expected to meet the provider-based requirements with respect to that main campus. n  Thus any facility not located on a hospital’s main campus would be considered to be an

“off-campus” facility.”

20

Now What – Exception 4 ¨  Rural Health Clinics:

¤  BBA Section 603 does not apply. ¤  If CAH, 35 (15) driving miles from a hospital or CAH does not apply. ¤  Provider-based RHC qualifies as a child site for the 340b Drug

Discount Program. ¤  Cost reimbursed. ¤  RHCs:

n  < 50 beds and/or CAH, meets provider-based rules. n  Include on cost report. n  Not subject to cap.

n  > 50 beds, meets provider-based rules. n  Include on cost report. n  Subject to cost cap.

¤  Free-standing RHCs – not on cost report. n  Subject to cost cap.

21

RHC

¨  Rural Health Clinics: ¤  Is location rural?

n  Areas considered “urban clusters” still qualify for rural for RHC rule. n  http://factfinder.census.gov/faces/nav/jsf/pages/index.xhtml

n  “find census date by entering a street”

¤  Is the location in Health Professional Shortage Area (HPSA), or

¤  Is the area in a Medical Underserved Area (MUA)? ¤  Must have been certified as HPSA or MUA in preceding

four years. n  http://www.hrsa.gov/shortage/find.html n  MUP does not qualify.

n  If HRSA states MUA/MUP – call State primary care office to be sure MUA.

22

RHC - Requirements ¨  Staffing – must have a mid-level working at least 50% of RHC open hours. ¨  Services:

¤  Services and supplies commonly furnished in a physician’s office (i.e., history, exam, assessment of health status, treatment for a variety of medical conditions).

¤  Lab tests: n  Chemical examinations of urine n  Hemoglobin or hematocrit n  Blood glucose n  Occult blood n  Pregnancy n  Primary culturing for transmittal to a certified lab

¤  RHC must have available drugs & biologicals commonly used in life-saving procedures. ¤  RHC must be able to represent that at least 51% of the clinic’s total operating schedule

be devoted to primary care. n  Does not preclude RHCs from offering specialty services.

¤  Productivity standards: n  Physicians = 4,200 annually. n  Mid-levels = 2,100 annually.

23

RHC – Why Now?

¤ Provider-based = reimbursable on Medicare cost report = 340b Drug Discount Program.

¤ Provider-based < 50 beds and/or CAH = Medicare cost reimbursed with no cap.

¤ Provider-based > 50 beds = Medicare cost reimbursed. n Subject to cap which is $81.32 for 2016.

24

RHC – Cost Cap Comparative

Medicare cost cap $81.32

25

CPT Code MPFS – POS - 11 99201 40.43 99202 69.60 99203 101.73 99204 156.67 99205 197.45 99211 17.98 99212 39.97 99213 68.17 99214 100.80 99215 136.61

RHC – Billing Change

¨  Effective 4/1/16, RHC’s HCPCS code required for each line of service (MLN Matter MM9269, CR 9269).

¤  RHC visit line item with rev code. n  052x – Prof component of qualifying health service & approved

preventive services. n  0900 – Qualifying mental health services. n  0780 – Telehealth originating site facility fees.

¤  Total charges for the encounter less any charge for approved preventive service.

n  Payment and coinsurance is based on this line item. ¤  HCPCS and charges for all other RHC services furnished is

reported. ¤  Example:

n  052X 99213 4/1/16 1 76.40 n  0300 36415 4/1/16 1 3.00

26

RHC – Is It Right for You?

¤ Are you planning a new provider-based location off-campus?

¤ Do you meet location requirements? ¤ Can you meet staffing? ¤  Is productivity an issue? ¤ Do you dispense drugs at the location or are there a

number of non-generic prescriptions written? If the answer to the majority of questions above is yes, perform a financial feasibility to determine if RHC is the right choice for your hospital.

27

QUESTIONS?

28

Jill Griffith, CPA, CPC

Senior Manager - Health Care Services voice: 800.642.3601 x3334 e-mail: jill.griffith@actcpas.com