3. Disability. An individual who has received disability benefits for 25 months may enroll for Medicare Part B benefits, even if under the age of 65.

Transcription

1 MEDICARE PART B Barry D. Alexander, Esq. Nelson Mullins Riley & Scarborough, LLP 4140 ParkLake Ave., GlenLake One, 2 nd Floor Raleigh, NC barry.alexander@nelsonmullins.com I. MEDICARE PART B: GENERAL INTRODUCTION Medicare Part B, the Supplementary Medical Insurance (SMI) program, is a voluntary insurance program for the aged and disabled. The Part B program is supplemental to the Part A program and generally covers: Physician services; Nonphysician services (e.g., CRNA, physician s assistant, clinical social workers, nurse midwives, etc.); Supplies incident to physicians services, e.g., drugs (not self-administered with certain exceptions); Nonphysician services incident to physicians services; Outpatient services (including outpatient surgical services); Diagnostic services furnished to outpatients by or under arrangements made by a hospital or a CAH; Diagnostic laboratory, X-ray and other diagnostic tests; Medical supplies, appliances, and devices; Durable medical equipment prosthetics, orthotics and supplies ( DMEPOS ); Ambulance services; Outpatient physical therapy and speech pathology services; and Pneumococcal vaccinations, hepatitis B vaccine, blood clotting factors for hemophilia patients 1 A. Eligibility for Part B. Automatic enrollment if entitled to Part B: 1. Anyone entitled to Part A benefits (by entitlement to Social Security or Railroad Retirement Act retirement or disability benefits, Medicarequalified government employment, or end stage renal disease benefits) is automatically enrolled in Part B unless he or she declines coverage; 2 or 2. Has attained age 65 and is a resident of the United States; and 1 42 C.F.R (42 C.F.R (a))

2 (a) (b) is a citizen of the United States, or an alien lawfully admitted for permanent residence who has resided in the U.S. continuously during the five years immediately prior to enrollment Disability. An individual who has received disability benefits for 25 months may enroll for Medicare Part B benefits, even if under the age of ESRD beneficiaries. Persons with end-stage renal disease (ESRD) may enroll after a three-month waiting period. 42 C.F.R Medicare defines ESRD as that stage of kidney impairment that appears irreversible and requires a regular course of dialysis or kidney transplantation to maintain life. 42 C.F.R (b). 5. Lou Gehrig's Disease. Persons with Lou Gehrig's disease (Amyotrophic lateral sclerosis or ALS) may also enroll in Part B with no waiting period. Medicare General Information, Eligibility, and Entitlement Manual - CMS Pub , Ch C.F.R C.F.R In the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000 (BIPA), Pub L (Dec. 21, 2000), Congress enacted a number of changes to the Medicare statute. Among those changes is a provision, Section 115, which eliminates the waiting period for persons with Amyotrophic Lateral Sclerosis (ALS). 1

3 B. Beneficiary Premium And Cost Sharing 1. Monthly Premium. The monthly premium for calendar year 2013 is scaled depending upon the beneficiaries' income as reflected in The 2013 monthly premiums are as follows: Beneficiaries who file an Beneficiaries who file a individual tax return withjoint tax return with income: income: Income-related monthly adjustment amount Total monthly premium amount Less than or equal toless than or equal to $85,000 $170,000 $0.00 $ Premium Greater than $85,000 and Greater than $170,000 less than or equal to and less than or equal to $107,000 $214,000 Greater than $107,000Greater than $214,000 and less than or equal toand less than or equal to $160,000 $320,000 $42.00 $ $ $ Greater than $160,000Greater than $320,000 and less than or equal toand less than or equal to $214,000 $428,000 $ $ Greater than $214,000 Greater than $428,000 $ $ If a beneficiary is married and lived with their spouse at some time during the taxable year, but filed a separate tax return, the following chart will apply: Beneficiaries who are married but file a separate tax return from their spouse: Income-related monthly adjustment amount Total monthly premium amount Individuals with a MAGI of $85,000 or less $0.00 $ Individuals with a MAGI above $85,000 up to $129,000 $ $ Individuals with a MAGI above $129,000 $ $ State Medicaid programs may buy-in Medicaid recipients into the Medicare program by paying the premium amount. These dual eligibles are eligible for both Medicare and Medicaid. 2

4 2. Deductibles And Coinsurance. The 2013 annual deductible is $147 (for most services). There is also a separate blood deductible. The coinsurance payment is 20% (with limited exceptions, such as clinical laboratory tests and Part B home health services) of the fee schedule amount for the service at issue after payment of the annual deductible. Medicare pays the remaining 80%. There is also up to a 5% coinsurance payment for hospice benefits. 3. Services Not Subject To Annual Deductible. The Part B deductible is not applied to all services and is excluded for the following: Home health services Clinical diagnostic laboratory services Fecal occult blood tests Pneumococcal and influenza virus vaccine Donation of kidney for transplantation surgery Federally qualified health center services Expenses incurred in meeting blood deductible Most covered screening services II. COVERAGE General. Part B covers medical and other health care services subject to specific coverage exclusions and conditions of coverage as well as exclusions resulting from the noninclusion of services in the statutory definition of the term medical and other health care services. 5 A. Non-Covered Services. Selected services not covered under Part B are set forth on Addendum B. B. Physicians Services Part B covers the professional services performed by a physician for a patient, including diagnosis, therapy, surgery, consultation and care plan oversight. 6 The services must be rendered by the physician or by others under the incident to provisions. As a general rule, the physician must examine the patient in person or be able to visualize some aspect of the patient s condition without the interposition of a third person s judgment. Consultations can be performed using interactive, real-time telecommunications systems (not telephones, faxes, or s). 7 Professional services are covered if provided 5 42 C.F.R Care plan oversight exists where there is physician supervision of patients under care of home health agencies or hospices that require complex and multi-disciplinary care modalities involving regular physician development and/or revision of care plans C.F.R

5 within the United States, and may be performed in a home, office, institution, or at the scene of an accident. A patient s home is anywhere he or she makes his or her residence (e.g., home for the aged, a nursing home, a relative s home, etc.). 8 Covered physician services include: Doctors - Services performed by medical doctors (MDs) and doctors of osteopathic medicine (DOs). 9 Limited License Practitioners - Services performed by limited license practitioners, physician extenders (e.g., nurse practitioners, physician assistants, etc.) dentists and oral and maxillofacial surgeons, optometrists, podiatrists, and chiropractors. 10 C. Services Furnished By Nonphysician Clinical And Technical Personnel - Services of nonphysician personnel are generally covered under Part B under the following circumstances: 1. Diagnostic and Therapeutic Services General Criteria. Part B coverage requires therapeutic and diagnostic services to be furnished under direct physician supervision. Payment for diagnostic tests may be made only if the physician ordering the test is also the physician treating the patient (except for: (i) x-rays ordered for chiropractic patients with spinal subluxation, and (ii) diagnostic mammography ordered based on findings of a screening mammography). 11 Nontreating physician practitioners clinical nurse specialists, clinical psychologists, clinical social workers, nurse-midwives, nurse practitioners, and physician assistants may also order tests if within their scope of authority Incident To Services and Supplies: Part B covers items and services incident to a physician s professional services (including drugs and biologicals which usually cannot be self-administered), that are: o Furnished in a non-institutionalized setting (not a hospital or SNF); 13 o Commonly furnished in the office or clinic of a physician (or other practitioner); o Commonly furnished either without charge, or included in the physician s (or other practitioner s) bill; 8 42 U.S.C.A. 1395x(g) U.S.C.A. 1395x(r) U.S.C.A. 1395x(r) C.F.R (a), (b) C.F.R (a)(3). 13 Medicare Benefit Policy Manual, Ch. 15, 50 (CMS Pub ); 42 C.F.R (p)(1). 4

6 o Furnished as an integral, although incidental, part of the physician s, or other practitioner s, personal professional services; o Furnished under the physician s or practitioner s direct supervision (physician or practitioner is present in office suite and available to provide assistance and direction). The physician (or other practitioner) directly supervising the auxiliary personnel, however, need not be the same physician (or other practitioner) upon whose professional service the incident to service is based Physician-Directed Clinics. CMS has acknowledged that, in a physiciandirected clinic, direct supervision can come from more than one physician. 15 A physician-directed clinic as one in which: o A physician is present whenever the clinic is open to perform medical (rather than administrative) services. o Each patient is under the care of a clinic physician and nonphysician services are under medical supervision. o A clinic physician may be a clinic employee or an independent contractor for coverage of the nonphysicians services and for reassignment of physicians claims. 16 In physician directed clinic or group practice settings, direct personal physician supervision can be the responsibility of several physicians, and ordering and supervising physician need not be the same. 17 PRACTICAL NOTE: CMS has clarified that services having their own statutory benefit category (e.g., diagnostic radiology tests) are covered under that category rather than as incident to services and not applicable supervision standards for that service. As a result, the applicable level of supervision may be more stringent than the incident to requirements. See, 67 Fed. Reg. 79,966, 79,994 (December 31, 2002). See, also Transmittal No (Aug. 28, 2002). 4. Additional Incident To Requirements. 18 o Auxiliary Personnel. Auxiliary personnel may be (i) full-time or part-time direct employees of the physician (or other C.F.R , ; Medicare Benefit Policy Manual, Ch. 15, 50 (CMS Pub ). 15 Medicare Benefit Policy Manual, Ch. 15, 60.3 (CMS Pub ). 16 Medicare Claims Processing Manual, Ch. l, (CMS Pub ). 17 Medicare Benefit Policy Manual, Ch. 15, 60.3 (CMS Pub ). 18 Medicare Benefit Policy Manual, Ch. 15, 50 et seq. (CMS Pub ) 5

7 practitioner) or clinic; (ii) leased employees of the supervising physician, physician group practice, or the legal entity that employs the physician; or (iii) effective January 1, 2002, independent contractors. o Expense to Physician. Services must represent an expense to the physician as a practitioner in professional practice. o Leased Employees. For leased employees, there must be a written employee lease agreement which provides that: The nonphysician, although leased by the leasing company, provides services as the leased employee of the physician or other entity. The physician or other entity exercises control over all actions taken by the leased employee. The arrangement must satisfy the common law test of an employer/employee relationship. Transmittal No (Oct. 1, 1996). o Allied Health Professionals. Coverage has also been extended to services furnished incident to the services of certain allied health professionals (e.g., nurse practitioners and physician assistants). D. Diagnostic Tests 1. Technical versus Professional Components. o Technical component is that portion of a diagnostic test, such as the actual taking of the X-ray or MRI image by a technician. o Professional component of a diagnostic test is the portion provided by the physician or non-physician practitioner, such as the interpretation of an X-ray or MRI image. 2. Statutory Criteria. The Medicare statute at 42 U.S.C.A. 1395x(s)(3) separately covers diagnostic x-ray tests... diagnostic laboratory tests, and other diagnostic tests that: o Are furnished by an entity that is licensed or approved if required under state law. o Meet other health and safety conditions the Secretary finds necessary Special Requirements for Advanced Diagnostic Imaging Services. Section 135 of the Medicare Improvements for Patients and Providers Act U.S.C.A. 1395x(s)(16), (17) 6

8 of 2008 (MIPPA) requires that suppliers of the technical component advanced diagnostic imaging services, including MRI and CT, be accredited by an accreditation organization designated by the Secretary of the Department of Health and Human Services. 4. Supervision of Diagnostic Tests. CMS requires that effective January 1, 2001, diagnostic tests be subject to physician supervision but requires different levels of supervision (from general to personal) depending on the nature of the test. 20 o General Supervision requirement, meaning that the test is furnished under the physician s overall direction and control, but that the physician need not be physically present. o Direct Supervision requirement, meaning that, in an office setting, the physician must be in the office suite and immediately available to furnish direction and assistance, but the physician need not be in the room as the procedure is being performed. o Personal Supervision requirement, meaning the physician must be in attendance in the room as the procedure is performed. PRACTICAL NOTE: In Program Memorandum B (April 19, 2001), CMS lists the supervision level for each diagnostic test by CPT code. Those codes are also in the Medicare Physician Fee Schedule Database and generally can be downloaded from each carrier s website. 5. Ordering Diagnostic Tests. Special rules apply to the ordering of diagnostic tests, modifications to those orders and the furnishing of additional tests as follow-up Anti-Markup/Purchased Diagnostic Test Rule. The 2009 MPFS now final provisions implementing the Anti-Markup rule. The law which has formed the basis of this provision provides that "[i]f a physician's bill or a request for payment for services billed by a physician includes a charge for a diagnostic test described in section 1861(s)(3) (other than a clinical diagnostic laboratory test) for which the bill or request for payment does not indicate that the billing physician personally performed or supervised the performance of the test or that another physician with whom the physician who shares a practice personally performed or supervised the performance of the test," then the amount of payment to that physician shall be limited as set forth in the law. Where the rule applies, the C.F.R (b), (c); Program Memorandum B (Apr. 19, 2001) 21 Transmittal No (Sept. 27, 2001); Program Memorandum AB (Sept. 26, 2001) (relating to ordering of tests) 7

9 physician's payment is limited to the lowest of the performing supplier's "net charge," the billing physician or other supplier's actual charge, or the Medicare fee schedule amount. Based on this principle of "sharing a practice," the 2009 MPFS establishes two alternative tests to determine whether this requirement is satisfied. Alternative 1. Under this approach, if a physician supervising the TC or PC performs substantially all (at least 75%) of his or her professional services for the billing physician or supplier, the antimarkup rule would not apply because that physician will be considered to "share a practice" with the billing physician. This physician can be an owner, employee or contractor but, again, he or she must furnish substantially all of his or her professional services through the billing physician during a 12-month period. Assume for example that a reading radiologist works part-time (20%) for a physician practice reading diagnostic tests. The reading radiologist reads the films back at his office or his home. This diagnostic service will be subject to the anti-mark-up payment rule because the 75% threshold cannot be met by the reading radiologist who is not located at the practice site. 22 Alternative 2 Modified Site-of Service. Under this approach, physicians that supervise a TC or perform a PC of a diagnostic test in same office as billing physician will be deemed to share a practice with the billing physician and, therefore, the test will not be subject to the anti-markup-rule. For application of Alternative 2, the office of the billing physician is the same building where the ordering physician performs substantially the full range of patient care services that the ordering physician generally provides. For the TC, the physician supervising must be an owner, employee, or independent contractor and the physician supervising the PC must be an employee or independent contractor. 23 CMS clarifies that "same building" is to be defined consistent with Stark and, so, the diagnostic test (e.g., the MRI) can be located on any floor in the same building where the ordering physician provides substantially the full range of professional services. However, like the Stark rule, "same building" is defined to exclude parking lots. CMS further clarifies that, within the same building, multiple physician practices can share a diagnostic center so long (1) the practices are leasing the space in block periods; (2) applicable supervision for the diagnostic test can be met during that time period. CMS C.F.R (a)(2)(ii) C.F.R (a)(2)(iii). 8

10 clarifies under Alternative 2 that certain types of shared imaging center in the same building leased on a block lease will not trigger application of the anti-markup rule. 24 E. Nonphysician Practitioner Services 1. Physical Therapists (PTs), Occupational Therapists (OTs) And Speech-Language Pathologists (SPs) 25 (a) General Coverage Requirements. Treatment furnished pursuant to written treatment plan that is reviewed at least every thirty days and that prescribes the type, amount, frequency and duration of the services, the diagnosis and the anticipated goals. Periodic certification of medical necessity required. 26 Service complexity and sophistication require performance by or under supervision of a qualified PT or OT. Patient expected to improve significantly in reasonable and generally predictable period, or requires services to establish safe and effective maintenance program. (b) Rehabilitation Facilities. In certified rehabilitation clinics, rehabilitation agencies and providers, services are covered as provider services (not separately billable by practitioner). 24 In the preamble to the final rules, CMS provides the following example: Physician A orders a diagnostic test, which is conducted by a technician and supervised by Physician B in a diagnostic testing facility located in the basement of Medical Office Building. Physician B also performs the PC of the test in the diagnostic testing facility. Physician B reassigns her right to bill for the TC and the PC of the test to Physician A. The diagnostic testing facility is shared, under block-time exclusive use leases, by Physicians A, C and D. Neither the TC, nor the PC, is subject to the anti-markup payment limitation, because the TC and the PC were performed in the office of the billing physician or other supplier. We are permitting shared space arrangements for diagnostic testing services that occur in the same building because we believe that such arrangements can promote efficiency without raising the same concerns for over utilization or other abuse as arrangements that involve centralized buildings for diagnostic testing. We reiterate, however, that we continue to have concerns with the present use of the in-office ancillary services exception and that we may issue a proposed rulemaking at a future date to address those concerns. 73 Fed. Reg. 69,726, 69,808 (Nov. 19, 2008) C.F.R , , , , C.F.R

11 (c) Private Practices. Services of qualified PTs and OTs in private practice (including services furnished by assistants employed by and furnishing services under the direct supervision of qualified therapist) are covered pursuant to 42 C.F.R (c), (c). Qualified therapist is in private practice if the therapist: Is legally authorized to engage in private practice by state. Engages in private practice on a regular basis as unincorporated solo practice, group practice, partnership, a professional corporation or other incorporated physical therapy practice. Effective March 1, 2003, private practice may include serving as an employee of a physician group or as an employee of a group that is not a professional corporation if allowed by State law. 27 Is free of administrative and professional control by an employer (e.g., physician, institution, or agency). (d) MIPPA. Section 143 of the MIPPA permits speech-language pathologists in private practice to bill Part B effective July 1, 2009, subject to the same conditions applicable to physical and occupational therapists described above. 2. Clinical Psychologists (CPs) & Licensed Clinical Social Workers (LCSWs). Both direct services and incident to services and supplies are covered. LCSW services covered only as provider services when furnished in hospitals, SNFs and ESRD facilities Certified Nurse Midwives (CNMs). Coverage of full range of services if authorized by state law Certified Registered Nurse Anesthetists (CRNAs) And Anesthesiologist s Assistants (AAs). Anesthesia services and related care are covered if rendered by CRNA or AA, subject to payment and qualification rules. Generally, subject to supervision requirements; however, governors of each state, in consultation with the state s Boards of Medicine and Nursing may exempt CRNAs from current physician supervision rules, consistent with state law Fed. Reg. 79,966, 79,987 (Dec. 31, 2002) C.F.R , C.F.R Fed. Reg. 56, (Nov. 13, 2001). 42 C.F.R

12 5. Physician s Assistants (PAs). Direct services and incident to services are covered. Services must be performed under general physician supervision. Payment is made at 85% of the physician fee schedule amount and is only made to the PAs employer (which can include employment and contractual relationships) Nurse Practitioners (NPs) And Clinical Nurse Specialists (CNSs). NPs are subject to qualification rules (NPs applying for the first time for a Medicare billing number after January 1, 2003, are required to possess a master s degree in nursing). NPs and CNSs providing services must be working in collaboration with a licensed physician. Collaboration means documented relationship with one or more physicians to deliver health care services, but in which the physician need not be present. Services of both NPs and CNSs are covered in all settings as authorized by state licensure laws. NPs and CNS may require direct medical payment Audiologists (Otologic Examinations). Diagnostic testing performed by a qualified audiologist is covered when necessary for the evaluation of the need for or appropriate type of medical or surgical treatment of a hearing deficit or a related medical problem. 33 But, if performed only to determine the need for or the appropriate type of hearing aid, the services are excluded whether performed by a physician or a nonphysician. 34 F. Outpatient Providers And Freestanding Supplier Entities 1. Hospital Outpatient Departments/Provider Based Entities. This includes payment for hospital outpatient services (e.g. diagnostic, surgical, therapeutics and other general Part B services) rendered in provider based entities or departments. Provider based rules only apply to those services for which there is a payment differential. Entities for which there is no such differential include the following (therefore no provider based determination): (i) ASCs; (ii) CORFs; (iii) HHAs; (iv) SNFs; (v) Hospices; (vi) Inpatient rehabilitation units excluded PPS; (vii) IDTFs; (viii) ESRD facilities; and (ix) Ambulances C.F.R ; Medicare Benefit Policy Manual, Ch. 15, 190 (CMS Pub ); Medicare Claims Processing Manual, Ch. 12, 110, 110.2, 110.3, 120B (CMS Pub ); (Transmittal No (Dec. 13, 2001)) C.F.R , ; Medicare Benefit Policy Manual, Ch. 15, 200, 210 (CMS Pub ); Medicare Claims Processing Manual, Ch. 12, 110, 110.2, 120, (CMS Pub ); (Transmittal No (Dec. 13, 2001)) 33 Medicare Benefit Policy Manual, Ch. 15, 80.3 (CMS Pub ) 34 Medicare Benefit Policy Manual, Ch. 16, 90 (CMS Pub ) 11

13 An entity seeking provider based status must satisfy certain regulatory criteria. Some criteria apply to all entities seeking provider based status (regardless of location on or off the main hospital s campus) while others apply only to so called off-campus entities, or to entities operated as part of a joint venture or management agreement. Any entity seeking provider based status must satisfy requirements applicable to: licensure, clinical services integration, financial integration, public awareness, other miscellaneous obligations applicable to hospitals and hospital outpatient departments (including, but not limited to, EMTALA, use of the correct site-of-service indicator, etc.), and location requirements. Any entity that is located off the main hospital s campus must satisfy specific additional requirements applicable to: ownership and control, administration and supervision, and the provision of written co-insurance notifications to beneficiaries. 35 See Addendum C for Complete Provider-Based Criteria. PRACTICAL NOTE: The authors recommend the AHLA s Regulation, Accreditation and Payment (RAP) Practice Group s Provider-Based Status Tool Kit 2. Clinical Laboratories. This includes the provision of certain classes of diagnostic laboratory services furnished by clinical laboratories that are appropriately licensed/approved and certified under the Clinical Laboratory Improvement Act of 1988 ( CLIA ); Clinical labs certified under CLIA for a given special group of diagnostic services may only provide and bill Medicare for those services. Physician office laboratories (POL) are also subject to the CLIA. A complexity-based system of standards, which regulate laboratories according to the type of tests performed, rather than the site of testing. 36 On November 23, 2001, CMS issued a rule detailing numerous national coverage decisions and documentation requirements applicable to clinical diagnostic laboratory tests Comprehensive Outpatient Rehabilitation Facilities ( CORFs ). This includes items and services furnished by an entity which is capable of providing a full range of rehabilitation services on an outpatient basis at a single location. Covered services include: (1) physicians' services; (2) physical, occupational, and respiratory therapy and speech-language pathology services; (3) prosthetic and orthotic devices, including testing, C.F.R C.F.R (d); 42 C.F.R. pt. 493; Fed. Reg. 58,788-58,890 (Nov. 23, 2001) 12

14 fitting, or training in the use of such devices; (4) social and psychological services; (5) nursing care provided by or under the supervision of a registered professional nurse; (6) drugs and biologicals that cannot be selfadministered; (7) supplies and durable medical equipment; and (8) other items and services that are medically necessary for the rehabilitation of the patient and are ordinarily furnished by comprehensive outpatient rehabilitation facilities, including a single home environment evaluation visit. 38 There must be potential for restoration or improvement of lost or impaired functions for CORF services to be covered. Treatments involving repetitive exercises (i.e., maintenance programs, general conditioning or ambulation) that do not require the skilled services of therapists or other professional rehabilitation practitioners are not covered. CORFs are Subject to certification and recertification requirements. CORFs must also satisfy conditions of participation Providers Of Outpatient Physical Therapy, Occupational Therapy And Speech Pathology Services. As certified providers, the following organizations may furnish services through direct employees, leased employees, or independent contractors. 40 o Rehabilitation Agencies. Rehabilitation agencies that utilize an integrated multi-disciplinary program providing, at a minimum, physical therapy or speech pathology services and a rehabilitation program including social and vocational adjustment services. 41 o Certified Rehabilitation Clinics. Certified rehabilitation clinics that furnish physical therapy services and outpatient physician services through a group of three or more physicians. o Public Health Agencies. Public health agencies that are established by a state or local governments Renal Dialysis Facilities End Stage Renal Disease (ESRD) Facilities. 43 Services covered in an ESRD include: home dialysis supplies and equipment; self-care home dialysis support services; and institutional 38 Soc. Sec. Act 1861(cc); 42 C.F.R ; Medicare Benefit Policy Manual, Pub , Ch. 12, C.F.R ; 42 C.F.R ; Medicare Benefit Policy Manual, Pub , Ch. 12, 10; U.S.C.A. 1395cc(e); 42 C.F.R , C.F.R , C.F.R , C.F.R ,

15 dialysis services. Special rules for physicians services rendered under the ESRD program can be found at 42 C.F.R ESRD facilities are subject to conditions of participation regarding patient care plans, management, minimum services, and personnel Federally Qualified Health Centers ( FQHCs ). FQHCs furnish primary health care and ancillary services, including preventive care, subject to specific financial, management, and community-based governance requirements Rural Health Clinics ( RHCs ). 46 RHCs furnish a designated array of primary care and diagnostic services on an outpatient basis in medicallyunderserved rural areas. CMS has issued amended rules that refine the conditions that an RHC must satisfy to qualify for payment. 68 Fed. Reg. 74,792-74,818 (Dec. 24, 2003). 8. Portable X-Ray Suppliers. Portable x-ray services, including diagnostic mammography, are covered when furnished at the patient s home or residence used as a patient s home and in nonparticipating institutions. These services must be performed under the general supervision of a physician and are subject to certain conditions relating to health and safety. Diagnostic portable x-ray services are also covered under Part B when provided in participating SNFs and hospitals, under circumstances in which they cannot be covered under hospital insurance (i.e., the services are not furnished by the participating institution either directly or under arrangements) Ambulatory Surgical Centers (ASCs). 48 Furnishes outpatient surgical procedures in a non-provider based setting that CMS has determined can be safely performed in ASC settings. Such services are covered when furnished in a facility that: o Operates exclusively for the purpose of providing surgical services to patients not requiring overnight hospitalization. o Has an agreement to participate in the Medicare program (accepts assignment). o Satisfies Medicare conditions of coverage C.F.R C.F.R , ; 42 C.F.R. pt C.F.R ; 42 C.F.R (c); 42 C.F.R ; 42 C.F.R. pt C.F.R , (c) C.F.R

16 49 42 C.F.R ASCs need not be located in a separate building and may operate under common ownership and control of a hospital, physician s office, or clinic. However, an ASC must be separate from other services by at least semipermanent walls and doors, and it generally may not commingle functions in common space with other health care activities. 10. Home Health Agencies (HHAs). Home health services include the following services and items: (1) nursing service, as defined in the applicable State Nurse Practice Act, which is provided on a part-time or intermittent basis; (2) home health aide service provided by a home health agency; (3) Medical supplies, equipment, and appliances suitable for use in the home. 49 HHA services must be provided: Must be needed for a condition for which the patient required inpatient hospital services or extended care services; To beneficiaries in need of skilled nursing services on an intermittent basis, PT or SLP services; In the patient s residence which does not include a hospital, nursing facility, or intermediate care facility for the mentally retarded, except for home health services in an intermediate care facility for the mentally retarded; Pursuant to a written plan of care that is established and reviewed every 60 days by the attending physician. The first 100 days of HHA services are covered under part A. After that 100 days, services provided by HHAs, or to beneficiaries in an HHA are covered under Part B. 50 While HHA services are covered under Part B there is no more consolidated billing requirement. 11. Independent Diagnostic Testing Facility (IDTF). 51 Medicare pays for diagnostic procedures under the physician fee schedule when rendered by freestanding entities which meet the following conditions: o May be a fixed location, a mobile entity, or an individual nonphysician practitioner (note while a portable x-ray supplier may not be an IDTF, the entity owning/operating the portable x-ray supplier may dually enroll as an IDTF and a portable x-ray supplier; provided, however, that when services are provided they are only billed under one Medicare provider number or the other); o Is independent of physician s office or hospital; U.S.C.A. 1395d(a)(3), 1395k(a)(2)(A) C.F.R ; Medicare Program Integrity Manual (CMS Pub )

17 o Has a supervisory physician who; Has direct and ongoing oversight of quality of testing, equipment operation and calibration, and qualifications of nonphysician personnel who use the equipment; Has demonstrated proficiency in the performance and interpretation of each type of diagnostic procedure performed; and Supervises each test (either general, direct or personal); o To extent nonphysician personnel are used, they must demonstrate basic qualifications to perform tests and have documentation of training and proficiency; o All tests performed by an IDTF must be ordered in writing by patient s treating physician or nonphysician practitioner. The treating physician or practitioner must have had a prior relationship with the patient and be treating patient for a specific medical condition; o An IDTF generally may not add procedures for testing without written order from treating physician or practitioner; and o Compliance with the "Application Certification" or "Performance" Standards which in part include the following: 52 Operate in compliance with all applicable Federal, State, and local licensure and regulatory requirements; Provide complete and accurate information its enrollment applications and report updates to that information within 30 days; Maintain a physical facility on an appropriate site; Have all applicable diagnostic testing equipment available at the IDTFs physical site and a catalog of portable diagnostic testing equipment. Report any changes in testing equipment to the carrier within 90 days; Maintain a primary business phone under the name of the business and make that number available in a local directory and through directory assistance; Maintain a comprehensive liability insurance policy of at least $300,000 per location that covers both the place of business and all customers and employees of the IDTF; Agreement to accept only those patients referred for diagnostic testing by an attending physician and not to directly solicit patients; Answer beneficiaries' questions and respond to their complaints; Fed. Reg , (December 1, 2006) 16

18 Openly post these Performance Standards for review by patients and the public; Disclose to the government, any person having ownership, financial, control, or other legal interest in the supplier at the time of enrollment or within 30 days of a change; Calibrate and maintain all testing equipment; Have technical staff on duty with the appropriate credentials to perform tests, and maintain copies of such credentials; Maintain "proper" medical record storage; and Permit CMS, its agents and contractors, to conduct unannounced, onsite inspections to confirm the IDTF's compliance with these standards. With the exception of hospital-based and mobile IDTFs, a fixed-base IDTF is prohibited from the following: Sharing a practice location with another Medicare-enrolled individual or organization; Leasing or subleasing its operations or its practice location to another Medicare-enrolled individual or organization; or Sharing diagnostic testing equipment used in the initial diagnostic test with another Medicare-enrolled individual or organization. 53 In 2009, CMS also added the following two new performance standards for IDTFs: Enrolls for any diagnostic imaging services that it furnishes to a Medicare beneficiary, regardless of whether the service is furnished in a mobile or fixed base location; and Bills for all mobile diagnostic services that are furnished to a Medicare beneficiary, unless the mobile diagnostic service is part of a hospital service provided under arrangement with that hospital C.F.R (g) C.F.R (g)(16) and (17). On December 16, 2008, CMS posted an important FAQ on the CMS website clarifying these new IDTF provisions. The FAQ provides as follows: Feedback - My company leases/contracts diagnostic testing equipment and/or non-physician personnel described in 42 CFR to an enrolled Medicare provider/supplier (e.g., medical group practice). Do I need to enroll as an Independent Diagnostic Testing Facility (IDTF)? Answer - Companies that lease or contract with a Medicare enrolled provider or supplier to provide: a) diagnostic testing equipment; b) non-physician personnel described in 42 CFR (c); or c) diagnostic testing equipment and non-physician personnel described in 42 CFR (c) are not required to enroll as an IDTF. Medicare continues to evaluate arrangements where both diagnostic testing equipment and non-physician personnel are contracted to a Medicare enrolled provider or supplier and where the Medicare enrolled provider or supplier is billing for the diagnostic service. Accordingly, as clarified by this FAQ, entities that merely provide contracted services, including equipment and 17

19 12. Freestanding Radiation Therapy Centers. 55 Radiation therapy furnished in nonprovider facilities under direct personal supervision of a physician. Not required to be certified or meet any other CoPs. 13. Sleep Disorder Clinics. 56 Reasonable and necessary diagnostic tests for narcolepsy and sleep apnea and limited therapeutic services. Not required to be certified or meet any other CoPs. 14. Suppliers Of Durable Medical Equipment, Prosthetics, Orthotics, And Supplies (DMEPOS). 57 o Durable medical equipment ( DME ) refers to items that: can withstand repeated use; are primarily and customarily used for medical purposes; are generally not useful in the absence of illness or injury; and are used in the home. For purposes of reimbursement, a beneficiary s home excludes inpatient hospitals and SNFs, or any other institutional healthcare facility. Accordingly, beneficiaries in these institutional settings are not entitled to separate benefits under Part B for DMEPOS items. Examples of DME items can include: wheelchairs, crutches, parenteral/enteral supplies, medical supplies, etc. o Prosthetics include devices that replace functioning of all or part of internal body organs for example, infusion equipment, parenteral and enteral nutrients. o Orthotics includes devices that correct deformities/improve mobility for example, artificial limbs. o Other items covered under the DMEPOS benefit include: inhalation drugs; intraocular lenses; medical supplies such as catheters, and ostomy care furnished by an HHA as part of a home health service furnished under 42 C.F.R (e); and dental prostheses. 58 o DMEPOS is generally furnished only with physician s prescription and Certification of Medical Necessity (CMN). To enroll as DMEPOS supplier in the Medicare program, an entity must satisfy the 21 supplier personnel, need not register as an IDTF. Importantly, these arrangements should be carefully analyzed under the revised and now final anti-markup rules discussed below as well as the Stark in-office ancillary services exception C.F.R (f), Medicare Benefit Policy Manual, Ch. 6, 50 (CMS Pub ) C.F.R , C.F.R

20 standards. 59 In MMA 302, Congress further directed that the Secretary establish quality standards for DME suppliers with independent accreditation organizations. o In August 2006 CMS posted new quality standards for suppliers of DMEPOS. These new standards were required under MMA 302(a)(1). DMEPOS suppliers must comply with the new quality standards in order to furnish items or services, and to receive or retain a billing number Ambulance Services. 61 Medically necessary emergency and nonemergency transports i.e., because of the patient s condition transport by other means would be contraindicated. Payments are made under a fee schedule. In general, ambulance services are covered under Part B if: o The services are medically necessary, meaning that the patient s medical condition is such that other means of transportation are contraindicated. The beneficiary s condition must require both the ambulance transportation itself and the level of service provided; o Medicare Part A payment is unavailable; o The transportation is provided by a suitable ambulance supplier meeting the requirements of 42 C.F.R , relating to vehicle and crew standards; and o The transportation is to the nearest appropriate facility; from hospital, CAH, or SNF to beneficiary s home; from SNF to nearest supplier of necessary services not available in SNF, plus return trip; to and from beneficiary s home to ESRD facility. Special rules apply to nonemergency ambulance trips, including: o The beneficiary must be either bed-confined (i.e., cannot be able to ambulate, sit in a chair or wheelchair or get out of bed without help), and there is documentation that other methods of transportation are contraindicated; or have a medical condition, regardless of the confinement, such that transportation by ambulance is medically required; and o A written order from the beneficiary s attending physician or from a PA, CNS or NP furnishing professional services or by an RN or discharge planner employed by the beneficiary s attending physician or by the facility where the beneficiary is being treated and from which the C.F.R Fed. Reg (August 18, 2006) C.F.R ,

21 beneficiary is transported. The ordering professional must have personal knowledge of the beneficiary s condition at the time of transport. 16. Community Mental Health Centers (CMHCs). CMHCs are suppliers of various mental health services to the community. CMHCs provide four core services: 1) outpatient services to the elderly, children and the severely mentally ill; 2) 24-hour-a-day emergency care; 3) day treatment or other partial hospitalization services; and 4) screenings to determine whether to admit patients to state mental health facilities. 62 III. PART B PAYMENT METHODS AND POLICIES A. Physician Payment under the Resource-Based Relative Value Scale (RBRVS)/ Medicare Physician Fee Schedule. 63 RBRVS assigns, for each particular service/procedure, values for physician work, practice expense, and malpractice expense components. The relative values are adjusted by geographic practice cost indices for each locality and the sum of the adjusted relative values for a service is multiplied by a national dollar conversion factor to determine the fee schedule amount. RBRVS payments are further subject to a site of service differential whereby the practice expense RVUs are reduced when services are performed in an office setting (e.g., physician practice setting). This differential does not apply to certain medical specialties (e.g., radiology), and in certain other non-office settings (e.g., hospital outpatient departments). 1. Application. The RBRVS fee schedule applies to: o Physicians (including limited license practitioners). o Services incident to physician services. o Radiology services (including MRI). o Outpatient physical, speech language pathology and occupational therapy. o Other diagnostic tests (with the exception of clinical laboratory tests). o Non-physician practitioners, but at reduced rates (generally limited to 85% of the physician fee schedule amount) The fee schedule also limits reimbursement to physician s assistants, nurse practitioners, clinical nurse specialists, nurse midwives, and certified registered nurse anesthetists who receive certain percentages of the fee schedule amount. 2. RBRVS & Fee Schedule Basics. Payment Under the Fee Schedule. The Medicare payment amount under the fee schedule is 80% of the lesser of: the physicians actual charge; or the fee C.F.R C.F.R ; 42 C.F.R

22 schedule for each service. The patient is responsible for the other 20% (the coinsurance) as well as the applicable Part B deductible. Relative Value Units (RVUs). RVUs for each procedure are the sum of a three component relative value scale. o Physician Work. Reflecting the physician s time and intensity of effort, skill, training and medical judgment. CMS has established special work RVUs for anesthesia and radiology services. o Malpractice Insurance. Reflecting the relative malpractice insurance cost associated with the service. o Practice Expense. Reflecting the overhead cost associated with delivering the service. Site of Service Differential. Under the physician fee schedule, some procedures have a separate Medicare fee schedule for a physician's professional services when provided in a facility and a non-facility setting. CMS furnishes both fees in the annual Medicare Part B Fee-Schedule update. Site of service payment differentials also apply in an inpatient psychiatric facility and in a comprehensive inpatient rehabilitation facility. All physician claims include a place of service code (POS) which is used to identify where the procedure is furnished. The list of places of service subject to a reduced facility fee includes: o Hospitals (POS code 21-23); o Skilled nursing facilities (SNF) for a Part A resident (POS code 31); o CORFs (POS 61); o Inpatient psychiatric facilities (POS 51); o Community mental health centers (CMHC) (POS code 53); and o Approved ambulatory surgical center (ASC) for a HCPCS code included on the ASC approved list of procedures - (POS code 24). Nonfacility fees are applicable to procedures furnished: o In a Physician s office (POS 11) o In SNFs to Part B residents - (POS code 32); o In an ASC that is not approved for Medicare regardless of the procedure; o In a Medicare approved ASC for a procedure not on the ASC list of approved procedures; o In all other facilities; o Outpatient therapy services, regardless of the actual setting Fed. Reg. 65,376, 65,440 (Nov. 1, 2000); 67 Fed. Reg. 79,996, 79,984 (Dec. 31, 2002). 21

23 Nonfacility fees are applicable to therapy procedures regardless of whether they are furnished in facility or nonfacility settings. Exceptions. For certain services, there will be only one level of practice expense RVUs per code. These include: o Services that have only a technical component or practice component RVU. o Certain evaluation and management services, such as nursing facility and hospital visits, performed exclusively in one setting. o Major surgical services. 3. Geographic Adjustment. The RVUs are adjusted by a Geographic Adjustment Factor (GAF), which is an average of the individual Geographic Practice Cost Indices (GPCIs) for each of the three RVU components in the locality in which the services are furnished. 4. Conversion Factor. The adjusted RVUs are multiplied by a national conversion factor to determine the allowed charge under the fee schedule. o 2013 Conversion Factor. For the period of January 1, 2013 through December 31, 2013, the CF is o Updates to Conversion Factor: determined by a formula using: Conversion factor update is Prior year s conversion factor. Estimated increase in Medicare Economic Index (MEI). An updated adjustment factor using changes in the Sustainable Growth Rate formula. 5. Sustainable Growth Rate (SGR). The SGR is used to determine the annual Medicare conversion factor update. 65 Under the statute, the conversation factor update for a year is determined by comparing cumulative actual expenditures to cumulative target expenditures (referred to as allowed expenditures in the statute) from April 1, 1996 through the end of the year preceding the year at issue. Absent Congressional relief, the SGR cuts for FY 2013 would have resulted in a 27.4% reduction U.S.C.A. 1395W(4)(f) 66 For a thorough analysis of the SGR impact on the 2013 Medicare Conversion Factor, see Payment/SustainableGRatesConFact/Downloads/sgr2013p.pdf. 22