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HCFA Plans to Tighten Rules for Provider-Based Status

HCFA Plans to Tighten Rules for Provider-Based Status

ALEXANDRIA, Va—Whether a cancer practice is designated as provider-based or free-standing can significantly affect the amounts it receives in Medicare reimbursements. Provider-based entities, such as departments in hospitals, are often entitled to higher payments for a given service than are free-standing entities such as physicians’ offices.

As more and more practices and clinics become part of integrated health care delivery systems, petitions for provider-based status have increased. The Health Care Financing Administration (HCFA), however, is trying to tighten up on provider-based designations by strictly applying current regulations and proposing new, even more stringent, regulations.

Obtaining and keeping provider-based status, therefore, requires careful attention to all current and future requirements, said Robert N. Falk, JD, of Powell, Goldstein, Frazier & Murphy, LLP, Washington, DC.

“Currently, you have to work hard to get a provider-based designation,” Mr. Falk said at the Annual Meeting of the Association of Community Cancer Centers (ACCC). “HCFA is very interested in getting money back that has been paid out to practices or clinics inappropriately claiming provider-based status,” he said.

At present, a provider-based entity must be located close to the provider (eg, a hospital), serve the same patient population, and be an integral and subordinate part of the larger institution, except where the State separately licenses the provider-based entity (such as a clinic), Mr. Falk said.

Some states have no procedure for licensing off-site clinics as part of a hospital, and, in these cases, HCFA will follow the State practice. The HCFA requirements’ terms are not defined exactly, he said, and guidance on what they mean varies in different parts of the country. Although there is now “no explicit on-campus requirement, HCFA makes it very difficult to maintain off-campus clinics, and meeting the regulations for provider-based status may impose additional costs,” he added.

The provider-based entity must, furthermore, come under the provider’s accreditation and be under a common ownership and control, he said. This means that the entity must essentially function as a department of the provider, thus disqualifying joint ventures and forbidding separate personnel offices for the provider and the provider-based entity.

The department must be treated like all others belonging to the provider. A clinic’s chair, for example, should attend the department chair meetings attended by the heads of the hospital’s other departments.

The entity’s director must be directly supervised and report directly to the provider. The clinical services offered by the entity must be integrated with those of the provider. The clinic’s medical director, for example, should be in daily contact with the provider’s chief medical officer. The entity must be financially integrated with the provider and hold itself out to the public in all its advertising and other communications as an integral part of the provider.

The Proposed Regulations

HCFA has proposed new regulations, which, if implemented as written, could complicate the ability to obtain or maintain provider-based standing.

“The proposed regulations, which are open for public comment until June 30, 1999, shift the burden of proof to the entity to demonstrate that it is indeed provider-based,” Mr. Falk said. He cautioned that, when the proposed regulations go into effect, no practice can assume that it is provider-based until so designated by HCFA, nor can it bill as a provider-based entity until it has obtained that designation.

Changed Burden of Proof

Under this changed burden of proof, Mr. Falk said, any physician services that are located away from the hospital campus and capable of being performed in a physician’s office are presumed to be free-standing unless the entity can demonstrate that it is provider-based. The responsibility of furnishing and updating the information to support any claim of provider-based status falls on the entity.

All the other requirements of integrated status already in existence will remain in force, he noted, adding that claims of integrated medical services will come under especially close scrutiny. The entity’s professional staff, for example, must have privileges at the main provider. The entity must come under the same monitoring and oversight as other provider departments. Presenting itself to the public as part of the main provider will be especially important.

“A particularly vexing issue for cancer centers is complying with the ban on patient dumping that applies to hospitals,” Mr. Falk said. “Will a cancer center, for example, have to fulfill the requirement to stabilize emergency patients, such as a gunshot victim, before transferring them to the main provider?” Provider-based facilities will need to develop procedures for emergency transfer of such patients.

In addition, provider-based entities will have to treat all patients as hospital outpatients, not some as outpatients and others as office patients. They will also have to comply with the same 72-hour billing requirements that apply to hospitals. Mr. Falk noted that as a result of industry objections to key points in the proposed rules, there may be significant revision prior to implementation. Nonetheless, he does not anticipate a weakening of any current regulatory standards.

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