The Proposed Rules are of special concern to hospitals because they contain new criteria for determining whether the hospital's outpatient departments and off-campus facilities qualify as provider-based. HCFA has indicated the provider-based rules will go into effect within 30 days following adoption and publication of the final rules. This is in contrast to other portions of the Proposed Rules that have been delayed until after Jan. 1, 2000, due to concerns about year 2000 problems. Hospitals should not wait until the 30-day period following publication of the final rules to make sure their provider-based facilities meet the new criteria.
Definition
The Proposed Rules define a provider-based entity as "a provider of healthcare services_ either created by, or acquired by, a main provider for the purpose of furnishing healthcare services under the name, ownership and administrative and financial control of the main provider." The Proposed Rules state HCFA must make this provider-based determination in advance before the entity begins billing for services as provider-based or before it includes any allowable costs of those services on its cost reports. Criteria for such a determination include:
- Licensure -The provider-based entity and the main provider are operated under the same license, except in areas where state law requires a separate license for the provider-based entity.
- Common Ownership and Control -The provider-based entity and main provider must have the same owner and be governed by the same board of directors and bylaws. Facilities owned and operated in joint ventures with other parties cannot be considered provider-based unless the main provider is owned and operated by the same joint venture.
- Common Administration and Supervision -This includes a day-to-day reporting relationship and common financial services (billing, payroll, salary structures).
- Integrated Clinical Services -This may be evidenced by common privileges, monitoring and oversight, medical records and full access to all services of the main provider.
- Financial Integration -Evidence includes shared income and expenses between the main provider and the provider-based entity. Additionally, the costs of the provider-based entity are reported in a cost center of the main provider and the financial status of the provider-based entity is incorporated and readily identified in the main provider's trial balance.
- Public Awareness -The provider-based entity is held out to the public and other payers as part of the main provider.
- Location in the Immediate Vicinity -The parties should be on the same campus unless the provider-based entity and the main provider can furnish data to demonstrate they serve the same patient population. Provider-based entities are not considered to be in the immediate vicinity if they are located in a different state from the main provider.
If a hospital treats a facility or organization as provider-based before obtaining determination of provider-based status, the Proposed Rules indicate HCFA may investigate and reconsider all payments to that main provider to determine whether the designation was appropriate. If HCFA finds the entity was not provider-based, it will seek to recover all payments in excess of those payments that should have been made in the absence of the provider-based status.
The good news, however, is recovery will not be made for services billed prior to the effective date of the rules that finally are adopted as long as the main provider made a good-faith effort to operate the entity as provider-based.
The proposed rules can be found at 63 FR 47552.