February 17, 2016

Provider-Based Facilities: Beware of Tricky Licensure Requirements

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What are the types of facilities that usually seek provider-based status? The Centers for Medicare & Medicaid Services (CMS) generally receives enrollment applications in significant numbers from the following: radiology and imaging centers, cancer centers, wound care centers, surgical centers, sleep centers, cardiology specialty units, pain management clinics, and off-campus emergency departments.

Which type of facility does not qualify for this enrollment determination? To name a few, ambulatory surgical centers, home health agencies, skilled nursing facilities, comprehensive outpatient rehabilitation facilities, hospices, and inpatient rehabilitation units are excluded from the Inpatient Prospective Payment System (IPPS) for acute hospital service. 

Facilities that perform functions necessary for the successful operation of providers but do not furnish services of a type for which separate payment could be claimed under the Medicare or Medicaid payment systems include independent diagnostic testing facilities, end-stage renal disease (ESRD) facilities, ambulatory, and rural health clinics affiliated with hospitals having 50 or more beds. 

To file a successful application and maneuver your way through the Medicare Administrative Contractor (MAC) and CMS checklist review process, pay attention to the requirements in 42 CFR Section 413.65 (d) that apply to the following components: licensure, clinical service integration, financial integration, and, of course, public awareness. 

Licensure requirements can sometimes be tricky. Generally, the department of the provider, the remote location of the hospital or the satellite facility, and the main provider must be operated under the same license, and it must be current. This is usually the license issued by the state department of health (DOH) where the hospital operates. The MACs and CMS will expect that a copy of the license be enclosed in order to satisfy their checklist review. In addition, correspondence with the DOH should be included, if appropriate, to clarify any potential questions that could arise during the review process. DOH survey documentation may be needed as well if a separate license is required by the state. 

The clinical services of the provider-based organization and the main provider must be integrated. What does this mean? Here are a few questions the hospital personnel gathering this information should be considering: Does professional staff at the provider-based facility have privileges at the main provider? Does the main facility medical director have oversight responsibility for the facility? Does the main facility provider maintain the same oversight of the facility as it does with other components? Are medical records integrated with those of the main provider? Is the facility operated under common medical bylaws? The relevant MAC and CMS will look at the documentation and see if it supports the same frequency, intensity, and level of accountability in the medical director roles for each entity. So make sure such information is clearly defined in your application. 

Medical staff committee oversight and interaction, including quality assurance and utilization review, must be coordinated and integrated between the two organizations. Inpatient and outpatient services need to be seamless, in that patients who require further care have full access to all services of the main provider and are referred when appropriate to the proper inpatient or outpatient department of the main hospital provider. 

Financial integration can be a complicated requirement to satisfy. Financial operations of the provider-based facility must be fully integrated within the financial system of the hospital, as evidenced by the recommended attestation documentation. An appropriate trial balance with a designated cost center that documents revenue and expenses for the provider-based department (PBD) should be submitted to the MAC. The chart of accounts and Medicare cost reports should provide a roadmap for the reviewer to conclude that the PBD is consolidated into the financial records of the hospital. Highlighting the PBD in red or some other color on the trial balance will help the reviewer make the proper decision as it pertains to inclusion of the PBD. Examples of unacceptable documentation include budgets, income statements, and expense reports, since these documents likely will not be helpful in helping the MAC verify whether the revenue and expense of the PBD is included in the trial balance or general ledger of the main provider. 

Public awareness was highlighted in my previous article, so I will just reiterate that providing a real-life example of how a patient could incur two or more coinsurance amounts and a range of out-of-pocket costs is what the MAC or CMS reviewer is looking to see in the enrollment documentation. 

Finally, another appeal tip to be aware of is timeliness, should a hospital find itself in this process with the Provider Reimbursement Review Board (PRRB). The 180-day filing period after receipt of a “final determination” from the MAC or CMS has been the subject of many controversial preliminary decisions by the PRRB. While I cannot tell you how the current PRRB decides timeliness issues, I can tell you that when I was an administrative law judge (ALJ) with this panel, we granted a three-day grace period, allowing for mailing issues encountered by providers with receipt of the final determination. 

Maintain proper mailing documentation to demonstrate that you are in compliance with this deadline so you can have your day in court if needed.

About the Author 

Stanley J Sokolove, CPA, is a former CFO technical compliance monitor for CMS. In that role, Mr. Sokolove provided oversight of the banking, finance and internal controls for CMS relating to NHIC, Corp., the DME MAC for Jurisdiction A. Prior to this position, Mr. Sokolove was an Administrative Law Judge, serving as a member of the Provider Reimbursement Review Board in Baltimore, Md. Mr. Sokolove is a member of the RACmonitor editorial board and makes appearances on Monitor Mondays.

Contact the Author 

ssokolove@comcast.net

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