Earlier this year, Congress passed the Consolidated Appropriations Act (“CAA”), which imposes two new requirements on hospitals that operate off-campus, provider-based clinics. These hospitals must now:

• • Obtain separate national provider identification (“NPI”) numbers for each of their provider based clinics; and
  • Submit an attestation of compliance for each of their provider-based clinics.

While they have until the end of 2027 to complete these tasks, affected hospitals are encouraged to get started as soon as possible. There are, at least, three reasons. First, the penalty for failing to meet the compliance deadline is loss of the enhanced reimbursements provided by Medicare for items and services rendered in provider-based facilities. These payment boosts can be substantial. For example, one study estimated that the government paid an average of 51% more for initial preventative examinations performed in provider-based facilities than the same examinations performed in freestanding physician offices. Another study found that reimbursement rates may be up to four times higher for provider-based facilities than for physician offices. Hospitals often rely on these additional funds to offset losses in departments like psychiatry, family birthing, substance abuse treatment, and pediatrics, which provide essential services to the community but frequently operate at financial losses.

A second reason for hospitals to start right away is that obtaining separate NPIs and submitting compliance attestations requires significant work. The Provider-Based Designation Checklist created by Noridian—the Medicare Administrative Contractor (“MAC”) for Oregon, Washington, Alaska, and several other Western states—is itself 19 pages long. This checklist is intended to be used by Noridian to confirm that a hospital has met all the requirements for designating a facility as provider-based; it is not intended to be used by hospitals as a substitute for a comprehensive attestation form, like the sample attestation template issued by the Centers for Medicare and Medicaid Services (“CMS”) in 2003. Even so, the checklist is a helpful reference because it gives hospitals a sense of the types and amount of information that MACs expect to receive from them. For example, a hospital can glean from reading 42 CFR Sec. 413.65 that its off-campus facility must be located within 35 miles of the hospital in order to qualify for provider-based status. But it may not appreciate until reviewing the checklist that its attestation of compliance must be supplemented by maps or an online service like GPS Visualizer showing the straight-line distance between its main campus and the off-campus facility.

A third reason for hospitals to act now is that they are likely to identify gaps and errors in the course of preparing their compliance attestations. These deficiencies may be relatively innocuous and easily addressed by  hospitals that have not yet started billing under the provider-based billing rules. But they can raise sticky compliance issues for hospitals that have been billing under the rules for months or, even, years. Stated simply, a claim submitted under the provider-based billing rules by a hospital that knows (or later determines) it is not in compliance with the rules is a false claim. This fact is not obviated by CMS’s historical reticence to enforce the provider-based billing rules aggressively. Hospital lawyers, compliance specialists, auditors, and revenue cycle professionals must therefore work together to identify whether, why, and to what extent the hospital may have submitted bills that were not fully compliant with the provider-based billing rules. They then must decide upon an appropriate corrective action plan, which may involve reporting and refunding of any identified overpayments.

Today, hospitals are faced with a growing list of regulatory and financial pressures. In Oregon and other states, these pressures have left a high percentage, if not a majority, of hospitals with negative or negligible operating margins. The relatively high reimbursement rates offered for items and services supplied by provider-based facilities have been an essential source of revenue and optimism for hospital CFOs and finance team members. But these premium payments are at risk for hospitals that do not immediately begin the work of obtaining separate NPIs and submitting compliance attestations as required by the CAA. When it comes to shoring up their continued eligibility for provider-based reimbursements, there really is no time like the present for Pacific Northwest hospitals.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.