Corporate Compliance

Note from Hugh

Medicare Insider, March 4, 2008

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In the February 19, 2008 Medicare Weekly Update, we reported on a CMS Transmittal (R1445CP) that "manualized" the January 2008 Hospital Outpatient Prospective Payment System (OPPS) update. As it turns out, that same day CMS issued another transmittal (R82BP) that also purported to manualize the January 2008 OPPS update. Transmittal R1445CP updates the Medicare Claims Processing Manual and Transmittal R82BP updates the Medicare Benefit Policy Manual. Last week CMS issued a MLN Matters article on both of these transmittals.

Hospitals should study both of these transmittals very carefully, particularly Transmittal R82BP. While the title of the transmittal refers to "manualization," in reality CMS made significant policy changes in that transmittal that arguably have nothing to do with "manualizing" the January 2008 OPPS Update.

I'd like to explore one of the revised manual sections this week. Prior to the issuance of Transmittal R82BP, the hospital "incident to" rule was addressed in the Medicare Benefit Policy Manual, Chapter 6 § 20.4.1. Transmittal R82BP revised Section 20.4.1 and renumbered it as Section 20.5.1. The revised Section 20.5.1 includes, among other changes, the following language (CMS uses red text for new or revised language):

    However, if the services are furnished at a department of the hospital which has provider-based status in relation to the hospital under 42 CFR 413.65 of the Code of Federal Regulations, the services must be rendered under the direct supervision of a physician who is treating the patient. "Direct supervision" means the physician must be present and on the premises of the location and immediately available to furnish assistance and direction throughout the performance of the procedure. It does not mean that the physician must be present in the room when the procedure is performed.

There are at least two aspects of this revised language that are significant. First, under the prior section (Section 20.4.1), the level of supervision required was "direct personal supervision." CMS has deleted the word "personal" in the new Section 20.5.1. This is a helpful change. The word "personal" was always confusing in the context of the hospital "incident to" rule.

Second, the prior section (Section 20.4.1) and the replacement section (Section 20.5.1) both require the supervising physician to be a physician who is "treating the patient." Prior to this latest revision, many of us wondered if the language "treating the patient" really reflected current CMS policy. The fact that CMS revised the section and left in the "treating the patient" language strongly suggests that CMS really does require that the supervising physician be a treating physician. This means, for example, that if a hospital operates a "provider-based" clinic, Medicare will not cover therapeutic services (e.g., facility evaluation and management services) furnished in the clinic by a hospital RN unless there is a physician present in the clinic to supervise the services and that physician is a treating physician with respect to the patient receiving the services from the RN. This may cause many hospitals to need to re-think how they staff and operate provider-based clinics.

There is an argument; however, that this treating physician requirement only applies to provider -based sites located off the hospital campus. But, that is a discussion for another day.

Editor's note: HCPro welcomes comments from readers of the Medicare Weekly Update. While Mr. Aaron is unable to answer individual questions, questions from readers will be considered for possible inclusion in the "Note from Hugh" section of future editions of the Medicare Weekly Update or in the Q&A sections of other HCPro publications and Web sites (in which case, you will receive a copy of the Q&A prior to or upon publication).

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