2 lawyers weigh in on OIG report putting spotlight on provider-based billing

HHS' Office of Inspector General recently released a report detailing vulnerabilities in CMS' oversight of billing at provider-based facilities.

The report investigated a random sample of 333 hospitals and found that provider-based facilities often receive payments as much as 50 percent higher than payments for the same services performed in a freestanding facility. Out of 50 hospitals that reported owning at least one provider-based facility that was not registered through the voluntarily attestation process, 75 percent failed to meet one or more of the provider-based requirements.

Provider-based billing has been on the OIG's radar for quite some time, according to Emily Cook, a partner at McDermott Will & Emery's Los Angeles location who counsels healthcare providers on complex regulatory and reimbursement matters.

Ms. Cook and Monica Wallace, a partner at McDermott Will & Emery's Chicago location who provides complex regulatory and transactional counseling to healthcare organizations, recently spoke with Becker's Healthcare about provider-based billing and the OIG's findings.

Note: Responses have been lightly edited for length and clarity.

Question: What were your initial reactions to the recent OIG report and its findings?

Emily Cook: This is not the first time OIG has taken a look at this topic — it's been an ongoing concern for them. The results of the report were not particularly surprising. OIG believes that CMS should take a more active role to monitor and enforce provider-based facilities. While CMS is currently involved in oversight and enforcement, they are not taking all the steps the OIG would like. CMS' position is that the program promotes clinical integration and access to acute care facilities, which the OIG believes is not proven from their report.

Monica Wallace: The OIG wants to eliminate the provider-based designation, but CMS doesn't want to get rid it. Instead, it wants to improve and modify the system. While the findings of the study were not surprising, the specific stats were interesting. Of the 50 hospitals the report looked at, two-thirds of them did not have correct attestation applications. Some hospitals have an internal process where they always go the attestation route, which is consistent with what I see in my own practice. However, other people don't submit them at all.

Q: How is CMS currently addressing the vulnerabilities in its provider-based billing system?

EC: CMS is addressing certain aspects, specifically through the provider-based attestation process. To be approved through the attestation process, facilities must submit information proving their provider-based status. CMS takes action against facilities that submit information that does not seem correct. While submission through the attestation process is voluntary, a bulk of CMS' enforcement access occurs through this method. CMS also has a modifier and service code to actively monitor provider-based locations.

MW: The report showed a variety of approval rates for provider-based status ranging from 21-98 percent. Clearly, CMS' regional offices are implementing approvals differently. We might see more internal training for regional officers to make the process more consistent.

Q: What are the implications if no regulatory action is taken regarding the vulnerabilities in provider-based billing?

EC: I think we'll see additional scrutiny of provider-based attestations, along with more review of locations if there's reason to believe they don't fit requirements. The consequence for incorrectly billing a provider-based facility can result in potential repayments for CMS if the provider-based facility's billing is too high. Facilities will also have an increased risk of recoupment actions being initiated by CMS. I've seen a lot of clients evaluate whether internal reviews are necessary. This issue gives entities a good opportunity to discuss their provider-based locations to decide if they are legitimate.

MW: A number of hospitals were able to provide documentation of how they apply to requirements for provider-based facility status, but the study found a lot of hospitals that couldn't prove their status or had no papers at all. It's in the best interest for hospitals to make sure they have documentation in case they are ever audited and need to produce sufficient documentation.

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