OIG recommends CMS eliminate provider-based designation

CMS’ efforts to determine whether facilities meet provider-based requirements are insufficient and the designation should be eliminated entirely, according to a report released last week by the Office of Inspector General (OIG).

Although CMS says it is taking steps to improve its monitoring of provider-based billing, the OIG believes that the agency’s policies allow hospitals to take advantage of the system. Half of hospitals own provider-based facilities but CMS does not determine whether all of these facilities meet its requirements, the report says. Attestation for provider-based departments is voluntary and, based on the report, many hospitals may own facilities they designate as provider-based but which do not meet CMS’ requirements. The lack of oversight may lead to increased costs to Medicare and patients with no clear proof that the provider-based designation offers any benefits, the OIG says. In addition, because attestation is voluntary, CMS has no reliable method to analyze the impact of the designation or enforce its own requirements.

For this study, the agency surveyed a random sample of 333 hospitals to determine how many provider-based facilities they owned. The OIG then analyzed documentation from 50 hospitals that reported owning off-campus provider-based facilities but did not attest them to CMS. The OIG also collected data from CMS to evaluate its system for overseeing provider-based billing, documentation on the benefits of the designation, and data on attestation reviews.

Of the 50 hospitals, three-quarters of them did not meet all of CMS’ requirements for off-campus provider-based departments, according to the OIG’s report. These facilities may be improperly billing Medicare and beneficiaries could be overcharged for their share of services provided at these facilities, since payments for provider-based department services are typically higher than regular facility payments.

However, the OIG believes CMS’ own system exacerbates the problem and limits its ability to check overpayments to facilities that use the provider-based designation. The OIG’s report identifies a number of weaknesses in CMS’ oversight, including an inability to identify all on- and off-campus provider-based billing in aggregate claims data. CMS also has no way to determine overpayments for a hospital’s on-campus provider-based facilities, or multiple off-campus facilities, if these facilities are in the same building and the physician does not specify the exact location at which services are provided. In addition, CMS reports it often has difficulty obtaining documentation from hospitals during attestation reviews.

Due to these findings, and CMS’ inability to provide OIG with proof of the benefits of the provider-based designation, the OIG stands by its previous recommendation that the designation be eliminated or payments for physician services be equalized across settings. However, the OIG also suggests methods to improve monitoring of provider-based billing if CMS chooses to continue the designation. The OIG recommends CMS:

• Create systems to monitor billing by all provider-based facilities
• Require attestations of all provider-based facilities
• Monitor MAC and regional office attestation reviews
• Take action against hospitals and off-campus provider-based facilities that do not meet requirements

CMS concurred with the third and fourth new recommendations, but did not concur with the second and only partially concurred with the first.

HCPro regulatory specialist Kimberly A. H. Baker will be presenting a session on provider-based billing at this year’s Revenue Integrity Symposium. For more details, visit the HCPro Healthcare Marketplace.