On June 17, 2016, the Department of Health and Human Services’ Office of Inspector General (OIG) released a report entitled “CMS Is Taking Steps to Improve Oversight of Provider-Based Facilities, But Vulnerabilities Remain” (OEI-04-12-00380).

The OIG reviewed oversight by the Centers for Medicare & Medicaid Services (CMS) of compliance by hospitals with the Medicare provider-based status regulations (42 CFR 413.65) to ensure that outpatient departments that were billing and receiving Medicare facility fees met the requirements.

The OIG reviewed a sample of 50 hospitals that owned and operated off-campus outpatient departments and had not submitted attestations seeking provider-based determinations for such facilities.

The OIG found that more than three-quarters of these hospitals operate off-campus outpatient departments that fail to comply with at least one provider-based requirement.

Examples of provider-based requirements that were not met include demonstrating that an off-campus outpatient department is operating under the control of the main provider and beneficiaries are provided written notices of liability for a professional fee and a facility fee.

The OIG stated that CMS has not provided it with evidence that services in provider-based facilities provide benefits that justify the additional costs to Medicare and beneficiaries.

Therefore, the OIG continues to support previous recommendations of the OIG and the Medicare Payment Advisory Commission to either eliminate provider-based status or equalize payment for the same physician services provided in different settings.

If CMS does not seek authority to implement these measures, the OIG recommends that CMS:  (i) implement systems and methods to monitor billing by all provider-based facilities; (ii) require hospitals to submit attestations seeking provider-based determinations for all their provider-based facilities; (iii) ensure that CMS Regional Offices and Medicare Administrative Contractors apply the provider-based requirements appropriately when reviewing attestations; and (iv) take appropriate actions against those hospitals that the OIG has identified their off-campus outpatient departments do not comply with the provider-based requirements.

The OIG report is accessible at http://oig.hhs.gov/oei/reports/oei-04-12-00380.pdf.