Hospital Provider Based Status Review

OIG 2016 Work Plan Coverage


There’s a lot of activity in the area of provider based facilities and hospitals outpatient departments. Laws are changing to equalize reimbursement that is available between provider-based and physician office settings. Services provided in a provider-based setting are still eligible for higher rates of reimbursement; but that is changing. In the future this differential will be reduced or removed entirely. Differential reimbursement will be eliminated in 2017 except for certain grandfathered facilities.  There is even talk now that grandfathering will eventually be targeted.

Hospitals are rushing to establish provider based arrangements that will be grandfathered once the law changes in 2017. This in turn is leading to deeper scrutiny by CMS on the methods of billing in the provider-based environment and determination of whether a facility is actually provider based.

There is currently no survey process to assure that the conditions of provider-based status are being met. Rather, a hospital must simply certify that it meets the requirements described in 42 CFR section 413.65 and CMS transmittal 8–0 3–030.

The identification of the issue of provider based status by the OIG reflects the changes in this area of the law and signals that the OIG will be looking more closely at the conditions for meeting provider based rules and the conditions required for facilities to be be grandfathered into the current reimbursement differential.  The stepped-up reimbursement that is currently available results in an area of potential abuse that the OIG will be scrutinizing with additional zeal. Arrangements that are being structured last minute to be grandfathered in under previous laws will likely be subject to even further scrutiny and should be carefully structured to assure compliance.