Corporate Compliance

Physician supervision for on-campus provider-based departments

Medicare Insider, December 16, 2008

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A colleague (another healthcare lawyer) contacted me last week to talk about CMS’s discussion in the 2009 Outpatient Prospective Payment System (OPPS) final rule of Medicare coverage for clinic visits furnished in a clinic located within a hospital. In a nutshell, my colleague pointed out that CMS now appears to be taking the position that Medicare coverage of therapeutic (i.e., non-diagnostic) services furnished by a non-physician in a clinic located within a hospital requires that a supervising physician be physically located in the clinic. She wondered, “Can they really be saying that?” Well, although not entirely clear, it appears that CMS may in fact be taking that position.

For many years, it was widely thought that for services furnished in a clinic located in a hospital, CMS merely required that a physician be present in the hospital and immediately available if needed in the clinic. That position seemed consistent with the original OPPS final rule (published in April 2000), in which CMS stated:

Our proposed amendment of [the “incident to” regulation] to require direct supervision of hospital services furnished incident to a physician service to outpatients does not apply to services furnished in a department of a hospital that is located on the campus of that hospital. For hospital services furnished incident to a physician service to outpatients in a department of a hospital that is located on the campus of the hospital, we assume the direct supervision requirement to be met . . .

However, in the 2009 OPPS final rule (published in November 2008) CMS states:

In the April 7, 2000 OPPS final rule with comment period (65 FR 18525), we further clarified that “on the premises of the location” means that the physician must be present on the premises of the entity accorded status as a department of the hospital. This means that the physician must be present in the provider-based department . . .
While we have emphasized and will continue to emphasize the direct supervision requirement for off-campus provider based departments, we do expect direct physician supervision of all hospital outpatient therapeutic services, regardless of their on-campus or off campus location. [emphasis added]

It is clear (and has been clear for many years) that the supervising physician must be physically located in a provider-based clinic if the clinic is not located on the hospital campus. However, if CMS is now taking the position that the supervising physician must be physically present in the clinic, even if the clinic is located within a hospital, that will profoundly affect the way many hospital clinics operate. I am hopeful that CMS will provide further guidance on this issue during (or, ideally, prior to) the January hospital open door forum conference call.

Final note: Keep in mind that this controversy relates only to therapeutic services. Seperate conditions of coverage apply for diagnostic services.



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