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Provider-Based Requirements

The Office of the Inspector General, HHS recently published a report on off-campus units that were covered under Medicare as provider-based facilities. OIG conducted a study to make sure that only those facilities that meet the CMS requirements receive the provider-based reimbursements.

For a facility to be eligible as a provider-based unit, it should be licensed, and located within 35 miles of parent facility. The off-campus unit should also prove that a good number of patients getting care from them also get the same from the parent facility. Furthermore, they should comply with non-discrimination rules, and integrate the financial operations and clinical services with the parent hospital.

The OIG study significantly differentiates facilities that are designated as provider-based and those that are freestanding. The report shows that provider-based facilities are reimbursed 50% more than the freestanding ones. This means that if a freestanding facility is wrongly labeled as provide- based, it will cost Medicare quite a lot, as reimbursements and out-of-pocket costs will be higher for the beneficiary getting care at the particular unit.

Medicare Administrative Contractors (MACs) are to review the documents that are submitted by facilities that seek provider-based designation. MACs can then recommend the approval or denial of the same to the regional CMS office.

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The OIG Study

OIG found that about 50% of the hospitals in the study owned provider-based facilities, and about two-third of such hospitals did not attest for at least one of their provider-based facilities. The study also revealed that more than 75% of the hospitals that own provider-based facilities did not comply with at least one of the mandatory requirements set by CMS.

The OIG report also identified many loopholes in the CMS provisions to prove if a particular facility is really an off-campus provider-based unit. Although CMS has been trying to improve their POS codes, in an effort to distinguish off-campus provider-based from on-campus provider-based facilities, the OIG report claims that the changes are not enough to do the task.

The Office of the Inspector General recommended CMS to eliminate the provider-based Medicare reimbursement system and implement a site-neutral program instead. CMS is yet to comment on their provider-based designation system.