Articles on Compliance Strategies

Featured Health Business Daily Story March 28, 2008

Transmittal Poses Threat to Provider-Based Clinics; Supervision Issue Is Muddied

Reprinted from REPORT ON MEDICARE COMPLIANCE, the nation's leading source of news and strategic information on false claims, overpayments, compliance programs, billing errors and other Medicare compliance issues.

Hospitals may be in a tight spot because CMS unexpectedly has changed the physician supervision requirement for certain outpatient therapeutic services provided "incident to" a physician's services. Some experts believe the change may have been inadvertent, but it's there in black and white all the same.

In Transmittal 82 (Change Request 5946), issued Feb. 8, CMS appears to impose a new requirement on services furnished in hospital outpatient departments with provider-based status. CMS says for the first time that "the services must be rendered under the direct supervision of a physician who is treating the patient."

That's a significant departure from current practice and from Medicare regulations, says Washington, D.C., attorney Andy Ruskin. "There is no way this is going to work," especially for provider-based infusion clinics, says Ruskin, who is with the law firm Morgan, Lewis & Bockius LLP.

It's unrealistic for a patient's treating physician (e.g., oncologist, primary care physician) to also serve as the physician providing direct supervision at the infusion clinic (or diabetes management or Coumadin clinic). Provider-based clinics are frequently located off the main hospital campus — they can be as far away as 35 miles — and the treating physician's office may not be anywhere near the infusion center, Ruskin and others say.

"This is going to be a big problem for hospitals," maintains Valerie Rinkle, director of the revenue integrity department at Asante Health System in Oregon.

Physician Treating Patient Must Supervise

Until the transmittal, which updates the outpatient prospective payment system (OPPS), incident-to services furnished at a hospital outpatient department with provider-based status needed to have only some physician — not necessarily the treating physician — furnish the supervisory services required in regulation 42 C.F.R. § 410.27(f). The goal is to make sure that there is a physician available if something goes wrong. From a quality standpoint, some argue that it should make no difference to the patient whether it is the treating physician or some other competent physician who is available to render assistance in an emergency, Ruskin says.

But the transmittal appears to change the rules of the game for incident-to services at provider-based entities. Under the section in the transmittal titled "Coverage of Outpatient Therapeutic Services Incident to a Physician's Service Furnished on or After August 1, 2000," CMS has massaged the language. "Policies for hospital services incident to physicians' services rendered to outpatients differ in some respects from policies that pertain to incident-to services furnished in office and physician-directed clinic settings.…The hospital medical staff that supervises the services need not be in the same department as the ordering physician. However, if the services are furnished at a department of the hospital which has provider-based status in relation to the hospital under 42 CFR 413.65 of the Code of Federal Regulations, the services must be rendered under the direct supervision of a physician who is treating the patient."

One compliance officer, who asked not to be identified, says that "many hospital-based clinics that are located off-site of the main hospital campus will not meet this requirement," especially "many, many outpatient hospital infusion departments across the country." The reason: Physicians providing the supervision do not have a treatment relationship with the patient. Typically, primary care physicians order the services and have the treatment relationship with the patient. Then the clinics provide information on the visits back to the ordering physicians, the compliance officer says. "But the ordering physicians are not the ones on-site and available; it is another physician who the hospital employs to oversee the program, but it's not a physician who has a treatment relationship with the patient. All these are paid under OPPS and would be subject to these rules."

Language Changed in Transmittal, Not Reg

The one upside to this situation for hospitals is that CMS "messed with" the direct supervision language only in the transmittal, but not in the incident-to coverage regulation (42 CFR Sect. 410.27), and "the regulation will always trump a transmittal," Ruskin contends. "In all likelihood, CMS took standards that are only supposed to apply to services when furnished in the patient's home and has now inadvertently morphed them into standards that apply to off-campus provider-based sites as well." He therefore suggests that providers contact CMS and seek clarification and, if appropriate, retraction of the revisions to the transmittal.

In the meantime, he says, "hospitals may want to undertake a close legal analysis of the regulation and decide if they can satisfy themselves that the regulation is completely at odds with the transmittal and then document why they believe they would be compliant, even if they continue to submit claims that appear to conflict with the transmittal."

CMS did not respond to RMC's request for comment by press time.

Visit AIS's Government Resources; click on "CMS Program Transmittals/Change Requests."

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