What you don't know about this HCFA change could hurt your reimbursement
What you don't know about this HCFA change could hurt your reimbursement
Regulations about provider-based outpatient centers are changing
A Wisconsin physician was licensed to work and sometimes did work in a hospital emergency department (ED). He thought that after a hospital purchased his practice, he could bill Medicare for ED visits when patients came to see him for an emergency.
"But you can't do that," says Katie Cianciolo, RRA, CCS, CCS-P, a Waukesha, WI, coding and reimbursement consultant who works with physicians' offices and hospitals. Cianciolo consulted with the physician and showed him why that would not be acceptable under rules put out by the Health Care Financing Administration (HCFA) in Baltimore. Cianciolo is the chair of the Society for Clinical Coding of the American Health Information Management Association (AHIMA) of Chicago.
"I can see how someone could be confused," Cianciolo says. "I had to search through the regulations and really think about it."
Because of this confusion and the federal government's concern that some providers are abusing the rules, HCFA is once again revising its policy about provider-based designation. The last clarification was published in August 1996. (See summary of provider-based designation, p. 27.)
Although few outpatient providers may be aware of the re-clarification, which is expected to be published next month, some experts say it could hurt hospitals and many outpatient facilities. The change potentially would affect any hospital-based outpatient clinics, skilled nursing facilities, home health care agencies, rural health clinics, and facilities for people who have end-stage renal disease.
HCFA officials declined to talk about the change, except to say that draft copies, which were not ready at press time, would be sent to various provider organizations for an informal 30-day comment period. And the final changes will come in May as part of new hospital outpatient regulations.
Providers worried about HCFA changes
Provider advocates, who have been watching HCFA's work in this area, say the draft may include these types of changes:
· Outpatient facilities that have manage- ment contracts instead of being managed by the hospital may not be eligible for provider-based designation.
· The policy change might require all provider-based facilities to be within a set number of miles from the hospital/provider.
· Physician clinics purchased by a hospital may not be eligible for designation as hospital-based outpatient clinics.
The reason some provider groups are concerned is that major reimbursement dollars are at stake. No one would speculate on how much a change in this designation could cost a typical outpatient clinic, but it could be enough to force hospitals to close certain rural health clinics, and some inner city hospitals could die, experts say.
"If hospitals can't have these huge outpatient facilities in the suburban areas, then they're dead in the water," says Deborah Williams, senior associate director for the American Hospital Association (AHA) in Washington, DC.
Currently, Medicare rules allow hospitals to increase Medicare payments by shifting overhead costs to an outpatient department and to increase payments for indirect medical education. Freestanding physicians clinics may offer the same services as an outpatient department, but they are reimbursed at a lower rate because they cannot make these cost shifts.
Rural areas could be affected most
Teaching health care facilities with satellites and some ambulatory care centers may be affected by any changes in the definition, says LaVonne Wieland, ART, health information manager of Fairview Clinics in Minneapolis. Fairview is part of Fairview Health Services, an integrated delivery network that provides ambulatory, inpatient, rehabilitation, nursing home, home care, and hospice care. Wieland is the chairwoman of the ambulatory care section of AHIMA.
"My guess is it would impact more of the rural areas than the urban," Wieland says.
The AHA is concerned that the change will penalize rural health clinics that are located in remote areas.
"I talked with a hospital in northern California on the coast that bought a physician practice located 30 miles away up a mountain and surrounded by a national forest," Williams says. The hospital bought the building in a small town, converted it into a clinic, and added radiology, a laboratory, and other services. They turned it into a rural health clinic, and HCFA approved the designation.
But if the rules are changed to require hospital-based facilities to be located within 10 or 20 miles of the hospital, then this facility and others like it could be disqualified.
"We want to make sure people can have some flexibility; otherwise, our city hospitals would die," Williams says. "We hope it allows hospitals to keep maintaining their ability to form integrated delivery systems and that it doesn't impair their ability to provide access to the inner city and rural areas."
The National Association for Home Care in Washington, DC, is especially concerned about a potential requirement that hospital-based facilities be managed internally, says James Murray, deputy counsel for the association.
"They're trying to attack hospitals that obtain a lot of services through management contracts for home health agencies," Murray says. "They will no longer be able to have those recognized as hospital-based."
Murray believes the entire issue is the result of pressure from Congress to close what some politicians feel are loopholes in how Medicare reimburses home health agencies. For example, Murray says, a freestanding agency may be reimbursed at $25 less per visit than a hospital-based agency. And some Congressman asked HCFA what greater value the government is receiving from this hospital-based agency to make it worth that extra $25.
"HCFA's answer was that the policy is set up that way for reimbursement," Murray says.
So if HCFA wanted to change that reimbursement difference, it would have to change the policy, and that's what it is doing by re-clarifying the provider-based designation.
"So HCFA has constantly been making it more and more difficult for hospitals to operate a true hospital-based home health agency," Murray says.
Murray and Williams say the entire issue may be moot in a year once HCFA changes its reimbursement system. HCFA currently is moving away from cost-based reimbursement by working on proposed regulations to implement an outpatient prospective payment system (PPS). So far, no time table has been set, but HCFA officials say they probably will publish the proposed regulation this spring for surgery centers. The hospital outpatient PPS is expected to become effective Jan. 1, 1999. HCFA is expected to issue a notice of proposed rule-making on the hospital PPS this summer and a final rule in November. In the meantime, hospitals and outpatient facilities may have to contend with the revised regulations.
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