everything you wanted to know about hospital clinics · © wipfli llp 2 presentation overview two...

© Wipfli LLP 1

Everything You Wanted to Know About Hospital Clinics

Presented bySteven Rousso, MBA, MPA

Partner

© Wipfli LLP 2© Wipfli LLP 2

PRESENTATION OVERVIEW

Two Topics• Everything you wanted to know about hospital clinics

and….• Update on the new provider based reimbursement rules− Affecting all provider based entities including clinics


CLINICS?

What is a Clinic?• Is it a license category?• Can it be a physician’s office?• Does it have to deliver medical care?• Do they have to be provider based if they are part of the

hospital?• Can they hire physicians?• Are there eligibility rules?• Are there federal regulations?


CLINIC MODELS

License (if applicable) Dictates Clinic Model or Model will dictate License?• Both are interrelated

MY OTHER CAR

IS A GURNEY!


DESIGNATION WILL DICTATE LICENSE

Federal designations such as Rural Health Clinics (RHC’s) & Federally Qualified Health Centers (FQHC’s) are not licenses

RHC’s can be physician offices, community clinics or hospital based departments

FQHC’s can be community clinics, county clinics (exempt from licensure) and even hospital based clinics• (no more hospital based clinics in California, expired in

1999)


CLINICS - MYTH OR FACT?

Clinics always lose money on a direct basis Clinics can be used as a community investment tool Clinics receive more reimbursement than physician

practices Clinics need additional licensed personnel Clinics have special regulations Clinics must adhere to OSHPD 3 regulations Clinics need an approval by CDPH before they can

open


OBJECTIVES FOR DEVELOPING CLINICS

Objectives of Clinics• Referrals?• Defend your backyard – locals rule!• Support Specialists• McDonalds Theory?• Expansion of primary care • Expansion of service area


OBJECTIVES

Allows Hospitals to assume business risk Strategy to retain physicians who may otherwise

leave the area Strategy to build larger physician organization (e.g.,

1206 (l) medical foundation Were important in ACO development


WHY DEVELOP THESE?

Level the playing field with competitors Physician Recruitment (physical space) Not all your eggs in one basket Where do you want to lose less? Community needs Ability to hire physicians Community Image Loss leader? Hospital/Physician Branding Physician requests


WHO DEVELOPS CLINICS?

The Usual Suspects• Physicians• Community Clinics• Public Health Dept’s• County’s• Hospital’s• Academic Medical Centers• Districts• Walmart• Even SNF’s


WHAT’S SPURRED THE GROWTH?

Clinic Volume Explosion – Why?• Treatments geared toward outpatient• Easy to get in game• Physicians wanting to be employed• Technology advances• Old provider based rules!• Reimbursement− FQHC’s, RHC’s


FUTURE GROWTH?

Will This Growth Continue?• ACO’s & Medical Home?• Expansion of Medi-Cal eligibility – no longer applicable??

• Continued Technology Advances• Repeal of Corporate Practice?− CAH’s are allowed to hire physicians now!

• A relatively low investment• Continual shift towards outpatient services


CLINIC ALTERNATIVES

Traditional Clinic Alternatives• MSO• Friendly PC• Foundation model (l)• Physician guarantees• Free market• All have business risk and legal considerations


VARIOUS CLINIC MODELS

Clinic Models:• 1206 (b) – political subdivisions, districts, counties,

government entities• 1206 (d) – outpatient departments of hospitals• 1204 (a) Primary Care - community clinics − Ability to hire physicians

• RHC’s, FQHC’s – not really models• Retail Clinics• Urgent Care Clinics


MODELS, CONT

Other Clinic Models• All exempt from licensure

− Foundation Model 1206 (l) − Academic Medical Centers 1204 (g)− Student Health Centers 1204 (j) − Clinics operated less than 30 hours (h)

~ Part of 1204(a) only

Clinic Models


THE FUTURE?


1206(D) HOSPITAL OUTPATIENT CLINIC

California• Title 22, Article 5 of the California Code of Regulations

(“CCR”)− General Requirements− Outpatient Service Requirements− Outpatient Service Equipment and Supplies− Outpatient Service Space

A lot of words but few real requirements


LICENSING OPTIONS

1206 (d) Clinic?• Hospital Outpatient Department − Part of hospital− On license - required as a supplemental service− Easy application

• No separate provider numbers• Contract with physicians• Doesn’t require a survey • Will require OSHPD 3 sign off


LICENSING OPTIONS

1206 (d) Clinic?• Advantages − Split billing− Medicare recent changes− Relatively easy application− No separate board− No real staff requirements− No minimum hours or service requirements− Hospital signage− No licensing fee− Medical records and other support and ancillary services

can be provided by Hospital


LICENSING OPTIONS

1206 (d) Clinic?:• Disadvantages − OSHPD 3− Lose money, always− Overhead allocation you may not want!− May be perceived as competition by medical staff− Difficult to close down once you open− JCAHO− Scope of practice issues− Deductibles and co-pays under Hospital

~ Lots of complaints!


OSHPD REQUIREMENTS

Licensed Entity = OSHPD 3 required Not Licensed = no requirement for OSHPD 3

• Its that’s simple!− And an architect’s sign off!


1206(D) DISTANCE REQUIREMENTS

California• CA H&S Code 1250.8• 15 miles for maximum distance hospital physical plants can

be from one another if using the same license• Exception for outpatient services• No real distance requirement in California− (for outpatient clinics only)

• How can that be? However…


CLINIC DISTANCE REQUIREMENTS

Medicare Distance Requirements• Not mandatory but advised


MEDICARE DISTANCE RULES

Medicare Distance Requirements• 35 mile rule – to be provider based• 8 or 9 exceptions• Medicare only• There are no Medi-Cal provider based rules other than to

say they follow Medicare


1206 (B)

Why These?• Exempt from licensure• Government entity− e.g., district hospital

• Easy to get in game• Mostly used as defense• Easiest of all models• No requirements• No JCAHO, No survey!


1204 (A)

Primary Care Clinics:• Title 22 – 1204 H&S Code• Full application• Survey – 300 conditions• OSHPD 3• Fire Clearance• Medicare 855• Transfer agreement


PRIMARY CARE CLINICS

Advantages:• Can hire physicians – really?− Not a regulation, AG’s opinion

• Non-profit and grant eligible• Off the Hospitals books• No overhead draw• No accreditation• Intermittent clinics• Pre-cursor to FQHC


PRIMARY CARE CLINICS

Disadvantages:• RN requirement• Separate license and survey• OSHPD 3• Sliding fee scale requirement• Application fee• Timing, low priority for state surveys


NO SUCH THING AS A HOSPITAL SATELLITE CLINIC

Unless you have a 1204 (a) - licensed community clinic

If you have 5 outpatient clinics:• 5 lines on your license


URGENT CARE CLINICS

Not really a model No federal or state regulations No license or designation Any provider can basically say they offer urgent care

services


WHAT ABOUT MEDICARE?

Medicare Enrollment:• 855 A, B, R, I• Or just bill under the Hospital’s outpatient number• Will Need NPI• Separate by location• Medicare doesn’t recognize clinic licenses• Its always enrollment


OTHER CLINIC MODELS

FQHC’s and RHC’s Its raining money How does $300 a visit sound?


RHC = RURAL HEALTH CLINIC

Eligibility• Rural – really non-urbanized

~ Census Bureau only!• Underserved designation− HPSA, MUA

• Hospital, community clinic or physician• Why go thru this? - its called $PPS• Enhanced Medi-Cal and Medicare reimbursement – great

model for rural hospitals


FQHC = FEDERALLY QUALIFIED HEALTH CENTER

Eligibility• Underserved designation− MUA, MUP

• Community Clinic Licensed − Exempt if government entity

• Why go thru this? How about $$$• Enhanced Medi-Cal and Medicare reimbursement • Not a hospital program – Sorry− Community Board (not the hospital’s board) − Can support but not own− ED diversion program


1206(L)

Medical Foundation preferred:• No license• Stable practice environment (W-2)• Single bill for patients• But for some reason, hospitals are reluctant to use

“systems” foundation model due to OH expense they get hit with!


HAVE YOU THOUGHT OF THESE?

Other Considerations Before You Start Your Own Clinic• Views of Medical Staff• Scope of practice considerations, e.g., medical assistants• Union issues• JCAHO• Own line item & P&L• Provider based• Overhead draw• Licensing• Build vs. affiliate • Capital

CLINIC?


HAVE YOU THOUGHT OF THESE?

Other Considerations• Building standards – UBC, OSHPD III• 3 day rule for Medicare admissions for same owners• Split billing• EMTALA− on and off campus


WHICH CLINIC MODEL CAN HIRE PHYSICIANS

1206 L 1204 A 1204 G 1206 B

• If county− Not 1206 d’s

• But critical access hospitals can


COMPENSATION TO PHYSICIANS

Payment Models• Contractor agreement• Hourly• RVU’s• Collections• Daily• Salary• Visit• Combination plate• RHC’s, FQHC’s− No physician billing!


DON’T LOOK AT THE P&L OF CLINIC

Financial results are not the benefits of the clinic You wouldn’t look at the loss of physician

guarantees? Track referrals if possible

• Two or three inpatient referrals flips the switch!


WHICH CLINIC MODEL IS FOR YOU?

Depends on what you want to accomplish?• Hire physicians• Recruitment• Referrals• Prevent physicians from leaving?• Expand service area?• Political?


PROVIDER-BASED

Provider-based is a Medicare billing status and process for physician services that are provided in a hospital outpatient department


NO ONE ELSE CARES THAT THE CLINIC IS PROVIDER BASED

Other Payers• Will just pay you like a physicians office• Provider based for Medi-Cal but free-standing with

Medicare?• License versus billing


BACKGROUND OF PROVIDER BASED RULES

Outpatient departments and clinics that qualify for provider based status under Medicare receive higher reimbursement than those paid to a free-standing facility− Could be 40 to 50% higher

Provider based facilities are considered extensions of the main hospital, and due to the hospital regulatory requirements, this justified the higher reimbursement

Result: Significant increase in provider based clinics• Hospitals operating provider based clinics several states

away! Result: April 2000, CMS issued requirements for provider based

departments – specific criteria to asses this status− Employees, license, signage, integration, etc


BACKGROUND OF RULES

Rules clarified in 2002 and amended April 2003:• Eliminated requirement for a provider to obtain affirmative

approval from CMS as a pre-condition for billing as a provider based facility

• CMS could go back and try to recover payment from provider based facilities if it is determined that the clinic wasn’t provider based

• If approved by CMS via the attestation process, and later determined that the entity wasn’t provider based, CMS will not try to recover prior payments


SHOULD WE FILE AN ATTESTATION?

An attestation is a voluntary signed statement by the provider stating they meet all required provider-based criteria

Provides written support of compliant process Educates staff on requirements And avoids prior liabilities if you are not in compliance with

the provider based rules but have been billing as such• Differs depending on whether clinic is “on or off” campus• Off campus sites must submit documentation with attestation


OIGS CONCERN

OIG’s 2009 and 2010 work plan included a significant focus on hospital owned facilities claiming provider based status:• Federal requirements for hospital based designation• Ensuring place of service codes has been correctly identified

RAC Audits - strong emphasis on reviewing place of service codes – guess why?


WHY THE CONCERN?

Chief benefit – entitled to APC payments under Medicare

As well as physician payments• Two bills

− UB92− CMS 1500


OIG’S WORK PLAN – 3 IMPORTANT PROVISIONS Provider based status for inpatient and outpatient facilities Hospital ownership of physician practices Place of service errors

• 22 for hospital outpatient setting• 11 for office setting


DISTINCTION BETWEEN ON CAMPUS AND OFF CAMPUS SITES August 2002 – CMS makes important distinctions between on-

campus and off campus sites. Definition: Physical area immediately adjacent to the providers

main building, other areas and structures that are not strictly contiguous to the main building, but are located within 250 yards of the main building.


REQUIREMENTS FOR ON AND OFF CAMPUS CLINICS Licensure Ownership control Administration and Supervision Public Awareness Financial Integration Clinical Integration

− Integrated medical staff− Integrated medical records− Quality monitoring


ADDITIONAL REQUIREMENTS FOR OFF CAMPUS CLINICS Must meet all the standards applicable to on-campus sites but

have additional requirements including: Ownership Administration and Supervision Location in immediate vicinity

− 35 mile rule comes into play− Straight line – not road miles


ADDITIONAL REQUIREMENTS FOR BOTH ONAND OFF CAMPUS CLINICS: EMTALIA – doesn’t apply for off campus Site of service Provider agreement Non discrimination Billing of Medicare patients Facility fee to Medicare patients but not required for other payers Payment window


ADDITIONAL OBLIGATIONS FOR OFF CAMPUS SITES

Informing Medicare beneficiaries• How much is patients liability?

Physician supervision• Must be present


MANAGEMENT CONTRACTS

Management contracts for on campus and off campus provider based sites are permissible, however, for off campus you must meet the following criteria:• The provider, not the management company must employ all

direct patient care staff• Facility must be integrated with main provider• The management contract must be held by main provider, not

parent organization


PROVIDER-BASED CLINICS - SHOULD YOU OR SHOULDN’T YOU? Evaluating Benefits vs. Costs of Converting to Provider-Based Clinic Status Financial Analysis

• Reimbursement impact• Conversion costs

Physician Relations• Employed versus contract physicians

Other Objectives• Internal politics• Community relations/perceptions• Competition• Compliance


HELPFUL HINTS

Evaluate your provider-based facilities – are you billing as such? Internally audit for compliance with ALL provider-based

requirements Review on campus versus off campus requirements and

obligations Ensure billing is properly identified and using the proper

modifier(s) and POS code

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