Everything You Wanted To Know About Hospital Clinics

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Everything You Wanted toKnow About Hospital ClinicsWho, What, Where and Why?Presented bySteven Rousso, MBA, MPAPartner Wipfli LLP1

PRESENTATION OVERVIEW Two Topics Everything you wanted to know about hospital clinicsand .Update on the new provider based reimbursement rules Affecting all provider based entities including clinics Wipfli LLP2

CLINICS What is a Clinic? Is it a license category?Can it be a physician’s office?Does it have to deliver medical care?Do they have to be provider based if they are part of thehospital?Can they hire physicians?Are there eligibility rules?Are there federal regulations? Wipfli LLP3

CLINIC MODELS License (if applicable), Dictates Clinic Model or Model will dictate License? Both are interrelatedMY OTHER CARIS A GURNEY! Wipfli LLP4

DESIGNATION WILL DICTATE LICENSE Federal designations such as Rural Health Clinics(RHC’s) & Federally Qualified Health Centers(FQHC’s) are not licenses RHC’s can be physician offices, community clinics orhospital based departments FQHC’s can be community clinics, county clinics(exempt from licensure) and even hospital basedclinics (no more hospital based clinics in California, expired in1999) Wipfli LLP5

CLINICS - MYTH OR FACT Clinics always lose money on a direct basis Clinics can be used as a community investment tool Clinics receive more reimbursement than physicianpractices Clinics need additional licensed personnel Clinics have special regulations Clinics must adhere to OSHPD 3 regulations Clinics need an approval by CDPH before they canopen Wipfli LLP6

OBJECTIVES FOR DEVELOPING CLINICS Objectives of Clinics Referrals?Defend your backyard – locals rule!Support SpecialistsMcDonalds Theory?Expansion of primary careExpansion of service area Wipfli LLP7

OBJECTIVES Allows Hospitals to assume business risk Strategy to retain physicians who may otherwiseleave the area Strategy to build larger physician organization (e.g.,1206 (l) medical foundation Were important in ACO development Wipfli LLP8

WHY DEVELOP THESE? Level the playing field with competitorsPhysician Recruitment (physical space)Not all your eggs in one basketWhere do you want to lose less?Easy way to gain access to new service areaAbility to hire physiciansCommunity ImageLoss leader?Hospital/Physician BrandingPhysician requestsCommunity needs Wipfli LLP9

WHO DEVELOPS CLINICS? The Usual Suspects PhysiciansCommunity ClinicsPublic Health Dept’sCounty’sHospital’sAcademic Medical CentersDistrictsWalmartEven SNF’s Wipfli LLP10

WHAT’S SPURRED THE GROWTH? Clinic Volume Explosion – Why? Treatments geared toward outpatientEasy to get in gamePhysicians wanting to be employedTechnology advancesOld provider based rules!Reimbursement FQHC’s, RHC’s Wipfli LLP11

FUTURE GROWTH Will This Growth Continue? ACO’s & Medical Home?Expansion of Medi-Cal eligibility no longer applicable?Continued Technology AdvancesRepeal of Corporate Practice? CAH’s are allowed to hire physicians now!A relatively low investmentContinual shift towards outpatient services Wipfli LLP12

CLINIC ALTERNATIVES Traditional Clinic Alternatives MSOFriendly PCFoundation model (l)Physician guaranteesFree marketMobile clinicsAll have business risk and legal considerations Wipfli LLP13

VARIOUS CLINIC MODELS Clinic Models: 1206 (b) – political subdivisions, districts, counties,government entities1206 (d) – outpatient departments of hospitals1204 (a) Primary Care - community clinics Ability to hire physiciansRHC’s, FQHC’s – not really modelsRetail ClinicsUrgent Care Clinics Wipfli LLP14

MODELS, CONT Other Clinic Models All exempt from licensure Foundation Model 1206 (l)Academic Medical Centers 1204 (g)Student Health Centers 1204 (j)Clinics operated less than 30 hours (h) Part of 1204(a) onlyClinic Models Wipfli LLP15

THE FUTURE? Wipfli LLP16

1206(D) HOSPITAL OUTPATIENT CLINIC California Title 22, Article 5 of the California Code of Regulations(“CCR”) General RequirementsOutpatient Service RequirementsOutpatient Service Equipment and SuppliesOutpatient Service SpaceA lot of words but few real requirements Wipfli LLP17

LICENSING OPTIONS 1206 (d) Clinic? Hospital Outpatient Department Part of hospital On license - required as a supplemental service Easy applicationNo separate provider numbersContract with physiciansDoesn’t require an on-site surveyWill require OSHPD 3 sign off Wipfli LLP18

LICENSING OPTIONS 1206 (d) Clinic? Advantages Split billing No longer for Medicare? Relatively easy application No separate board No real staff requirements No minimum hours or service requirements Hospital signage No licensing fee EMR and other support and ancillary services can be provided byHospital REFERRALS Wipfli LLP19

LICENSING OPTIONS 1206 (d) Clinic? Disadvantages OSHPD 3Lose money, alwaysOverhead allocation you may not want!May be perceived as competition by medical staffDifficult to close down once you openJCAHOScope of practice issuesDeductibles and co-pays under Hospital Lots of complaints! Wipfli LLP20

OSHPD REQUIREMENTS Licensed Entity OSHPD 3 required Not Licensed (exempt) no requirement for OSHPD Its that’s simple! Wipfli LLP21

1206(D) DISTANCE REQUIREMENTS California CA H&S Code 1250.815 miles for maximum distance hospital physical plants canbe from one another if using the same licenseException for outpatient servicesNo real distance requirement in California (for outpatient clinics only)How can that be? However Wipfli LLP22

CLINIC DISTANCE REQUIREMENTS Medicare Distance Requirements Not mandatory but advised Wipfli LLP23

MEDICARE PROVIDER BASED RULES Medicare Distance Requirements 35 mile rule8 or 9 exceptionsProvider based rulesMedicare onlyThere are no Medi-Cal provider based rules other than tosay they follow Medicare Wipfli LLP24

1206 (B) Why These? Exempt from licensureGovernment entity e.g., districtsEasy to get in gameMostly used as defenseEasiest of all modelsNo requirementsNo JCAHO, No survey! Wipfli LLP25

1204 (A) Primary Care Clinics Title 22 – 1204 H&S CodeFull applicationSurvey – 300 conditionsOSHPD 3STDMedicare 855Transfer agreement Wipfli LLP26

PRIMARY CARE CLINICS Advantages Can hire physicians – really? Not a regulation, AG’s opinionNon-profit and grant eligibleOff the Hospitals booksNo overhead drawNo accreditationIntermittent clinicsPre-cursor to FQHC Wipfli LLP27

PRIMARY CARE CLINICS Disadvantages RN requirementSeparate license and surveyOSHPD 3Sliding fee scale requirementApplication feeTiming, low priority for state Wipfli LLP28

NO SUCH THING AS A HOSPITALSATELLITE CLINIC Unless you have a 1204 (a) - licensed communityclinic If you have 5 outpatient clinics: 5 lines on your license5 PTAN numbers Wipfli LLP29

URGENT CARE CLINICS Not really a model No federal or state regulations No license or designation Any provider can basically say they offer urgent careservices Wipfli LLP30

WHAT ABOUT MEDICARE? Medicare Enrollment: 855 A, B, R, I Will always be a 855BWill Need NPISeparate by locationMedicare doesn’t recognize clinic licensesIts always enrollment Wipfli LLP31

OTHER CLINIC MODELS FQHC’s and RHC’s Its raining money How does 300 a visit sound? Wipfli LLP32

RHC RURAL HEALTH CLINIC Eligibility Rural – really non-urbanizedUnderserved designation HPSA, MUAHospital, community clinic or physicianWhy go thru this? - its called PPSEnhanced Medi-Cal and Medicare reimbursement – greatmodel for rurals Wipfli LLP33

FQHC FEDERALLY QUALIFIED HEALTHCENTER Eligibility Underserved designation MUA, MUPCommunity Clinic Licensed Exempt if government entityWhy go thru this? How about 300/visit?Enhanced Medi-Cal and Medicare reimbursementNot a hospital program – Sorry Community Board (not the hospital’s board) Can support but not own ED diversion program Wipfli LLP34

1206(L) Medical Foundation preferred No license/JCAHO (non-profit clinic)Stable practice environment (W-2)No JCAHOSingle bill for patientsLegal/regulatory risks & limitationsH&S code language, corporate practice, Stark, etc.But for some reason, hospitals are reluctant to use“systems” foundation model due to OH expense they gethit with! Wipfli LLP35

HAVE YOU THOUGHT OF THESE? Other Considerations Before You Start Your OwnClinic Views of Medical StaffScope of practice considerations, e.g., medical assistantsUnion issuesJCAHOOwn line item & P&LProvider basedCLINIC?Overhead drawLicensingBuild vs. affiliateCapital Wipfli LLP36

HAVE YOU THOUGHT OF THESE? Other Considerations Building standards – UBC, OSHPD III3 day rule for Medicare admissions for same ownersSplit billingEMTALA on and off campus Wipfli LLP37

WHICH CLINIC MODEL CAN HIREPHYSICIANS 1206 L1204 A1204 G1206 B If countyNot 1206 d’sBut critical access hospitals can Wipfli LLP38

COMPENSATION TO PHYSICIANS Payment Models Contractor ombination plateRHC’s, FQHC’s No physician billing! Wipfli LLP39

DON’T LOOK AT THE P&L OF CLINIC Financial results are not the benefits of the clinic You wouldn’t look at loss of physician guarantees? Track referrals if possible Two or three inpatient referrals flips the switch! Wipfli LLP40

WHICH CLINIC MODEL IS FOR YOU? Depends on what you want to accomplish? Hire physiciansRecruitmentReferralsPrevent physicians from leaving?Expand service area?Political? Wipfli LLP41

Provider-basedRegulations Wipfli LLP42

PROVIDER-BASED Provider-based is a Medicare billing status andprocess for physician services that are provided in ahospital outpatient department Wipfli LLP43

PROVIDER BASED RULES BACKGROUND Outpatient departments and clinics that qualify forprovider based status under Medicare receive higherreimbursement than those paid to a free-standingfacility Could be 40 to 50% higher Provider based facilities are considered extensionsof the main hospital, and due to the hospitalregulatory requirements, this justified the higherreimbursement Wipfli LLP44

PROVIDER BASED RULES BACKGROUND Result: Significant increase in provider based clinics Hospitals operating provider based clinics several statesaway! Result: April 2000, CMS issued requirements forprovider based departments – criteria to assess thisstatus Wipfli LLP45

PROVIDER BASED RULES BACKGROUND Rules clarified in 2002 and amended April 2003 Eliminated requirement for a provider to obtain affirmativeapproval from CMS as a pre-condition for billing as aprovider based facilityCMS could go back and try to recover payment fromprovider based facilities if it is determined that the clinicwasn’t provider basedIf approved by CMS via the attestation process, and laterdetermined that the entity wasn’t provider based, CMS willnot try to recover prior payments Wipfli LLP46

SHOULD WE FILE AN ATTESTATION? An attestation is a voluntary signed statement by theprovider stating they meet all required providerbased criteria Provides written support of compliant process Educates staff on requirements And avoids prior liabilities if you are not incompliance with the provider based rules but havebeen billing as such Differs depending on or off campus Off campus sites must submit documentation with attestation Wipfli LLP47

OIGS CONCERN OIG’s 2009 and 2010 work plan included asignificant focus on hospital owned facilities claimingprovider based status Federal requirements for hospital based designationEnsuring place of service codes has been correctlyidentified RAC Audits Strong emphasis on reviewing place ofservice codesGuess why? Wipfli LLP48

WHY THE CONCERN? Chief benefit – entitled to APC payments underMedicare As well as physician payments Two bills UB92CMS 1500 Wipfli LLP49

NO ONE ELSE CARES THAT THE CLINIC ISPROVIDER BASED Other Payers Will just pay you like a physicians officeProvider based for Medi-Cal but free-standing withMedicare?License versus billing Wipfli LLP50

OIG’S WORK PLAN Three Important Provisions Provider based status for inpatient and outpatient facilitiesHospital ownership of physician practicesPlace of service errors 22 for hospital outpatient setting 11 for office setting Wipfli LLP51

DISTINCTION BETWEEN ON CAMPUS ANDOFF CAMPUS SITES August 2002 – CMS makes important distinctionsbetween on-campus and off campus sites. Definition: Physical area immediately adjacent tothe providers main building, other areas andstructures that are not strictly contiguous to the mainbuilding, but are located within 250 yards of the mainbuilding. Wipfli LLP52

REQUIREMENTS FOR ON AND OFFCAMPUS CLINICS LicensureOwnership controlAdministration and SupervisionClinical Integration Integrated medical staffIntegrated medical recordsQuality monitoring Wipfli LLP53

REQUIREMENTS, CONTINUED Public Awareness Financial Integration Location in immediate vicinity Wipfli LLP54

ADDITIONAL REQUIREMENTS FOR OFFCAMPUS CLINICS Must meet all the standards applicable to on-campussites but have additional requirements including OwnershipAdministration and SupervisionLocation in immediate vicinity Wipfli LLP55

ADDITIONAL REQUIREMENTS FOR ON ANDOFF CAMPUS CLINICS EMTALA – doesn’t apply for off campusSite of serviceProvider agreementNon discriminationBilling of Medicare patients Facility fee to Medicare patients but not required for otherpayers Payment window Wipfli LLP56

ADDITIONAL OBLIGATIONS FOR OFFCAMPUS SITES Informing Medicare beneficiaries Physician supervision Wipfli LLP57

MANAGEMENT CONTRACTS Management contracts for on campus and offcampus provider based sites are permissible,however, for off campus you must meet the followingcriteria The provider, not the management company must employall direct patient car staffFacility must be integrated with main providerThe management contract must be held by main provider,not parent organization Wipfli LLP58

PROVIDER-BASED CLINICS - SHOULD YOUOR SHOULDN’T YOU? Evaluating Benefits vs. Costs of Converting toProvider-Based Clinic Status Financial Analysis Reimbursement impact Conversion costsPhysician Relations Employed versus contract physiciansOther Objectives Internal politicsCommunity relations/perceptionsCompetitionCompliance Wipfli LLP59

HELPFUL HINTS Evaluate your provider-based facilities – Internallyaudit for compliance with ALL provider-basedrequirements Review on campus versus off campus requirementsand obligations Ensure billing is properly identified and using theproper modifier(s) and POS code Wipfli LLP60

srousso@wipfli.com Wipfli LLP61

hfsconsultants.com Wipfli LLP62

Everything You Wanted to Know About Hospital Clinics Who, What, Where and Why? Presented by Steven Rousso, MBA, MPA . And avoids prior liabilities if you are not in compliance with the provider based rules but have

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