News / Resources

Topics covered in this issue of the Health Law Update include:

• OPPS—CMS Supervision “Clarification” Creates Confusion
• Hospitals—Court Limits Immunity for Reporting Suspected Abuse
• Practitioner Enrollment—CMS Issues Guidance on Reporting Responsibilities; Procedures
• Tax-Exempt Facilities—Federal and State Scrutiny of Charity Care; Community Benefits Addressed by Texas AG Charity Care Summit

OPPS—CMS SUPERVISION CLARIFICATION CREATES CONFUSION

In the preamble to the 2009 Proposed Outpatient Prospective Payment System regulation and the 2009 Final Outpatient Prospective Payment System (OPPS) regulation, the Centers for Medicare and Medicaid Services (CMS) has clarified its supervision requirements for services provided in both on- and off-campus hospital outpatient departments. Specifically, CMS now requires “direct supervision” of “incident to” services provided in a hospital outpatient department, regardless of whether it is on the hospital’s main campus.

CMS defines “direct supervision” as not requiring that a physician be present in the room when a procedure is performed, but rather that a physician be (1) “present on the premises of the location,” and (2) “immediately available to furnish assistance and direction throughout the performance of the procedure.” 42 C.F.R. § 410.27(f). When an “incident to” service is rendered in a provider-based department, CMS interprets “present on the premises” to require a physician to be “present on the premises of the entity accorded status as a department of the hospital.” 73 Fed. Reg. 68704 (Nov. 18, 2008). CMS further states that the OPPS “present on the premises” requirement parallels the Medicare Physician Fee Schedule’s “direct supervision” requirement for “incident to” services provided in physician offices, which specifically requires that the supervising physician be present in the same office suite where the services are being provided. Id.

While CMS indicated that its position was really a clarification, the clarification has created significant confusion for hospitals, especially those with off-campus, provider-based sites. Its clarification really evidences a disconnect between CMS policy and actual hospital operations that, if not changed or again clarified, should cause hospitals to closely examine the delivery of outpatient hospital services to ensure supervision requirements are met.

For more information, please contact Steven A. Eisenberg, or 216.861.7903, or Emily E. Williams, or 216.861.7373.

HOSPITALS—COURT LIMITS IMMUNITY FOR REPORTING SUSPECTED ABUSE

A federal court in Indiana recently held that a hospital reporting suspected child abuse to the proper local authority based upon the results of a routine drug screening of a newborn was, notwithstanding a reporting immunity statute, liable to the parents for failing to notify immediately the Department of Child Services when it subsequently learned the test results were erroneous. See McCauley v. Lake County Department of Child Services and Munster Medical Research Foundation, et al., No. 2:06-CV-4121(N.D. Ind. Dec 19, 2008).

The hospital learned that the routine drug screening test results were incorrect only after the Department of Child Services had taken custody of the children from the parents. Within eight days of first ascertaining that the results of drug screening were erroneous, the hospital notified the Department of Child Services. The parents claimed that the hospital’s report was made maliciously or in bad faith because it was made before the test results were confirmed. The court, however, found that the initial report was made in good faith and dismissed the malicious reporting claim under the immunity statute.

The parents then argued that the hospital should be liable to the parents if the hospital subsequently determines that the information reported was incorrect and takes no immediate remedial action to correct the report. The court held that while the Indiana statute provides that a person who makes or causes a report of child abuse or neglect to be made is immune from civil or criminal liability unless the report is made maliciously or in bad faith, it does not provide immunity to persons who make erroneous good faith reports but fail to correct them upon learning of the error. The court found that the hospital’s delay of at most eight days in correcting the report proximately caused the delayed return of the children to the parents.

While the McCauley decision is poor and unlikely to be followed, providers should assure that they have mechanisms in place to correct faulty reports to regulatory bodies in a prompt manner.

For more information, please contact Robert M. Wolin, or 713.646.1327.

PRACTITIONER ENROLLMENT—CMS ISSUES GUIDANCE ON REPORTING RESPONSIBILITIES; PROCEDURES

CMS recently issued guidance on the reporting responsibilities for individual physicians, physician group practices and individual non-physician practitioners enrolled in Medicare. For individual practitioners, both physician and non-physician, a change in practice location or change in final adverse action must be reported to CMS within 30 days of such change. A reportable change in practice location includes establishment of a new location, moving an existing location, closing a location or, surprisingly, a change in any portion of an existing practice location address where Medicare information is sent. A change in business structure, legal business name, tax identification number or payment information and an individual’s retirement or voluntary withdrawal from Medicare are events that must be reported within 90 days. For group practices, the reporting responsibilities are similar. In addition to a change in practice location or final adverse action, a group practice must also report a sale of more than five percent ownership or, with respect to partnerships, the addition or deletion of a partner within 30 days. Changes in legal business name, tax identification number, authorized or delegated officials, and payment information of groups must be reported within 90 days.

Likely the most overlooked of the reportable events for both individual practitioners and groups is a change in reassignment of benefits. The recent guidance tends to suggest that it is the duty of both the group and the individual practitioner to file a revised CMS-855R reassignment each time a physician is added to or withdraws his or her reassignment of Medicare benefits to a group practice. For multi-specialty faculty practice plans and other particularly large group practices, the duty to file a revised CMS-855R for each physician leaving the practice may prove to be a significant administrative burden. Thankfully, the new guidance also highlights PECOS, the Internet-based enrollment system that now allows individual practitioners to enroll and make amendments to enrollment information online. CMS expects PECOS to be available for use by group practices later this year.

For more information, please contact Emily E. Williams, or 216.861.7373.

TAX-EXEMPT FACILITIES—FEDERAL AND STATE SCRUTINY OF CHARITY CARE; COMMUNITY BENEFITS ADDRESSED BY TEXAS AG CHARITY CARE SUMMIT

In the first summit of its kind, the Texas Attorney General (AG), Greg Abbott, and members of his Charitable Trusts Section, Consumer Protection and Public Health Division, laid out their vision of the charity care statute in Texas with the intention of providing education to the non-profit hospital community regarding how to properly report charity care and community benefits under the Texas statute. First among the speakers was the chief auditor for the state who presented his ten “suggestions” for reporting and identified the most common pitfalls which have led to successful prosecutions by the AG’s office under the charity care statute.

In addition to this practical presentation and discussion from a Texas statute perspective, Steven Miller, commissioner of the Texas Exempt and Government Entities Division of the Internal Revenue Service (IRS) presented the IRS perspective on the new Form 990 and Schedule H. Miller intimated, during his discussion, that the IRS will be using the new information gathered as part of Schedule H, to evaluate more closely whether an entity is meeting a community benefits standard. He also addressed the scrutiny with which Congress is monitoring tax-exempt entities and their compliance with the community benefits standard. Miller indicated that the IRS would be reassessing the old 1969 “community benefit” standard sooner rather than later. Attendees were directed to understand thoroughly the new Schedule H and assess critically the manner in which they are claiming costs and reporting benefits to the IRS.

Baker Hostetler’s tax-exempt specialists and healthcare policy group are prepared to help clients work their way through these new forms and assure compliance with the Texas and federal statutes. We have worked extensively with the Texas Attorney General’s office and have federal tax-exempt expertise and lawyers who can guide our clients. We are prepared to provide you with assistance regarding the completion of the forms or to provide any additional assistance you may require.

For more information regarding these services, please contact Susan Feigin Harris, or 713.646.1307.

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