Pros, Cons of Provider-Based Space Are Weighed in New Environment

Before a North Dakota hospital could turn a new primary care clinic into a provider-based department, it had to run the compliance gauntlet. The hospital, owned by Catholic Health Initiatives (CHI), answered questions on a provider-based self-audit tool and met with people from finance, compliance and revenue cycle. It was a good thing because that’s how Sheri Heinisch, regional corporate responsibility officer for CHI in Fargo, heard the hospital planned to lease space to a visiting specialist. Medicare only allows so-called co-location if strict provider-based requirements are met relative to physical space, and failure to satisfy them can lead to a loss of provider-based status. The hospital wasn’t taking any chances; it found non-hospital space for the visiting specialist, Heinisch says. That was a relief, but the near miss was a reminder of the importance of vetting provider-based space.

The potential for compliance problems—and recent payment cuts—are forcing more careful examination of provider-based space. The calculus of whether the costs of provider-based space outweigh the benefits has changed because of Sec. 603 of the Bipartisan Budget Act of 2015, CMS’s site neutrality payment policy of 2019 and more bundling of charges under the outpatient prospective payment system (OPPS), all of which may make freestanding clinics a more attractive option in some cases depending on reimbursement, 340B drugs, location and patient population. Meanwhile, compliance mistakes may run the gamut, from billing for services provided incident to the physician’s services to dropping modifiers off claims.

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