A new OIG report examines CMS’s oversight of Medicare billing by provider-based facilities – that is, facilities that operate under the ownership, administrative, and financial control of a hospital and meet other requirements, and that bill as an outpatient department of the hospital rather than a freestanding facility. The OIG observes that Medicare payments under the hospital outpatient prospective payment system (OPPS) for services performed in provider-based facilities can be more than 50% higher than payments for the same services performed in a freestanding facility.

The OIG examined a sample of 50 hospitals that reported owning off-campus provider-based facilities but that had not voluntarily attested that the facilities met associated requirements. The OIG determined that more than three-quarters of these hospitals did not meet at least one provider-based facility requirement, such as demonstrating that the off-campus facility was operating under the control of the main provider and that beneficiaries were notified of potential cost increases for services at the provider-based facility. While the OIG cites CMS efforts undertaken this year to improve oversight of provider-based facilities, including implementing new place-of-service codes and modifiers on claims, the OIG expressed concern that CMS still may not be able to identify all provider-based billing and potential overpayments based on claims data.

The OIG reiterates its longstanding recommendation to seek legislative authority to eliminate the provider-based designation, or otherwise equalize payment for the same physician services provided in different settings (noting that the Bipartisan Budget Act of 2015 already eliminates higher payment for certain new off-campus provider-based facilities). Alternatively, the OIG recommends that CMS: (1) implement systems to monitor billing by all provider-based facilities, (2) require hospitals to submit attestations for all of their provider-based facilities, (3) provide additional guidance to CMS regional offices and MACs on the applicable standards, and (4) take appropriate action against hospitals and their off-campus provider-based facilities identified by OIG as not meeting requirements.

For additional information, see the full report, “CMS Is Taking Steps To Improve Oversight of Provider-Based Facilities, But Vulnerabilities Remain.”