The Centers for Medicare and Medicaid Services (CMS) issued requirements for provider-based departments and entities as part of the final rule that implemented the Prospective Payment System for Outpatient Hospital Services (OPPS). From the payment perspective, “provider-based” means the entity is considered part of the hospital and services furnished within that entity may be billed as “hospital services.” Historically, this meant the provider-based unit could appear on the hospital’s cost report and receive an allocation of the hospital’s overhead costs. Wound care and hyperbaric medicine are examples of the types of services that are commonly found in a provider-based setting.
The OPPS was established to fund a variety of outpatient services that were previously available only during an inpatient stay. The goal of the program was to allow patients who were not sick enough to warrant hospital admission the opportunity to receive complex services as hospital outpatients. Just like the inpatient setting, patients in the hospital-based outpatient department (HOPD) accrue charges for both the physician service and the “facility” (hospital). As a result, the cost of care for patients seen in an HOPD is typically higher than if they were seen in a private physician’s office. Although these additional costs normally exceed those of services provided in a doctor’s office, the goal of CMS was to reduce overall beneficiary costs by limiting or preventing an even more costly inpatient stay. To be covered in an HOPD, Medicare beneficiaries must pass the test of “medical necessity,” meaning they must require a higher level of care than can be delivered in a doctor’s office.
Defining “Hospital Provider-Based Outpatient Center”
Some wound centers are physically located within hospital walls and some are located in office settings. This topic is actually very complex, but we will discuss key points: Only licensed hospitals can provide services under the provider-based rules. CMS reimburses hospitals for outpatient therapeutic services only if those services are furnished in the hospital or a department of a hospital that has provider-based status in relation to the hospital. Wound centers eligible for payment under OPPS are those that bill for outpatient services using the CMS 1450 form (UB04). Thus, therapeutic services — as opposed to diagnostic services — may not be furnished under arrangements in a nonhospital setting and billed by the hospital as outpatient hospital services.
Wound centers can be either “on campus” or “off-campus” with regard to the hospital. “On-campus” is defined as 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 to be part of the provider’s campus on an individual basis by the CMS regional office. To meet provider-based criteria in an “off-campus” setting, the location of the facility or entity/clinic must be located within a 35-mile radius of the campus of the hospital or critical access hospital that is the potential main provider.
A formal process is available to providers who wish to attest to provider-based status and receive an official determination from Medicare that the outpatient clinic meets the necessary criteria to the bill as such. However, currently, attestation is optional and many hospitals have not submitted an attestation. If a provider does not submit an attestation and it is later determined by Medicare that the provider was not eligible for provider-based billing, recoupment of past payments may be required. CMS may allow a facility a period of time to come into compliance with any deficiencies, entirely at CMS discretion.
Qualified Healthcare Professionals (QHPs) often perform wound care services for patients in various sites of care. For example, a physician may spend the first 4 hours of the day in the hospital-based outpatient wound care department (place of service 22), then see patients for 2 hours in the hospital (place of service 21), and finally see patients for 2 more hours in his or her private office (place of service 11). Because the Medicare Physician Fee Schedule pays more for services provided in a QHP’s office than in facilities, the QHP must establish a process for informing billers exactly where each patient encounter occurred. Otherwise, the billers may assume that all the encounters occurred in the QHP’s office and will overbill the Medicare program.
When patients are seen by a QHP in a hospital-based outpatient wound care department (HOPD), the patients and Medicare receive two bills: one from the HOPD and one from the QHP. When patients are seen by a QHP in his or her office, the patients and Medicare only receive one bill. Patients should be informed whether they should expect one or two bills.