OIG: Provider-Based Status Leads to Improper Medical Billing
The OIG has advised CMS to eliminate provider-based status, which reimburses some care sites at a higher rate, to help reduce improper medical billing.
By - The Centers for Medicare and Medicaid Services (CMS) could reduce improper medical billing by eliminating provider-based designations or equalizing payments for the same services provided at different care sites, according to a recent report from the Office of the Inspector General.
“We reviewed the Centers for Medicare & Medicaid Services’ oversight of provider-based billing to ensure that only facilities that met provider-based requirements were receiving higher payments allowed by the provider-based designation,” stated the report.
“CMS is taking steps to improve its oversight of provider-based facilities; however, vulnerabilities identified in this review continue to limit its ability to ensure that all provider-based facilities bill appropriately.”
Under the Social Security Act, provider-based facilities, which are sites that are integrated with a hospital, can receive Medicare reimbursements as a hospital outpatient department. With the designation, these facilities are paid up to 50 percent more for medical services compared to freestanding facilities.
Unlike other care sites, provider-based facilities submit two claims for services. The hospital submits a claim for the operating costs, which Medicare pays through the Outpatient Prospective Program. Then, the physician completes another claim for the professional aspect of the service and Medicare reimburses it using a reduced Medicare Physician Fee Schedule.
CMS intended for provider-based designation to increase beneficiary access, advance care coordination, and improve quality of care.
However, the OIG uncovered several vulnerabilities in the program that have caused some provider-based facilities to improperly bill Medicare and beneficiaries.
The report explained that CMS does not require hospitals to demonstrate if provider-based facilities meet the requirements for the designation, which has contributed to Medicare overpayments.
“Because the Medicare attestation process for provider-based status is voluntary, facilities may bill Medicare at the higher provider-based rate without demonstrating to CMS that they meet provider-based requirements,” wrote the OIG. “Thus, these hospital facilities may be improperly billing Medicare at the higher provider-based facility amount and may be receiving overpayments.”
While CMS offers incentives to attest requirements, such as only collecting overpayments from the date of the last demonstration rather than when the facility first received the designation, most hospitals do not submit the demonstrations. Out of the 50 hospitals involved in the OIG investigation, three-quarters had not attested their provider-based facilities, which were found to have at least one unmet requirement.
The OIG explained that common unmet requirements were proving that an off-campus facility was integrated with the main provider and demonstrating that beneficiaries were aware of potential cost increases for medical services received at the provider-based facility.
CMS regional offices and contractors also reported challenges with acquiring documentation from hospitals and receiving clear guidance from CMS administration regarding necessary documentation.
“The lack of specific guidance on the documentation needed to support compliance with provider-based requirements may contribute to inconsistencies in the attestation approval process across CMS regional offices, as well as delays and review burden,” explained the report.
Additionally, CMS cannot segregate on- and off-campus provider-based billing from all of its claims data to ensure that specific facilities are appropriately billing, stated the report. For example, on-campus provider-based facilities use the same place-of-service code as outpatient hospital departments.
“The inability to identify all facilities billing as provider-based limits CMS in calculating and recouping potential overpayments to facilities that do not meet provider-based requirements,” explained the OIG.
This could also lead to limited enforcement of the Bipartisan Budget Act of 2015, wrote the OIG. The act, which is scheduled to start in 2017, mandates that off-campus outpatient facilities cannot be reimbursed at a higher rate unless it had been billing for services under the higher rate before November 1, 2015.
The report stated that CMS would not be able to pinpoint which off-campus provider-based facilities should be grandfathered under the act.
After the investigation, the OIG recommended that CMS terminate all provider-based designations. However, CMS did not agree with the conclusion.
As an alternative, the OIG advised the following:
If CMS elects not to seek authority to implement these measures, we recommend that it (1) implement systems and methods to monitor billing by all provider-based facilities, (2) require hospitals to submit attestations for all their provider-based facilities, (3) ensure that regional offices and MACs apply provider-based requirements appropriately when conducting attestation reviews, and (4) take appropriate action against hospitals and their off-campus provider-based facilities that we identified as not meeting requirements.
With the upcoming implementation of the Bipartisan Budget Act of 2015, CMS may need to revise current processes for determining improper Medicare and patient billing. Through recommended revisions, the OIG aims to help CMS reduce Medicare spending and retrieve overpayments.
Dig Deeper:
• Medical Billing Needs Revenue Cycle Management Transparency
• Patient Billing Challenges Revenue Cycle Management
