CMS Excludes “Provider-Based” Clinics from All EHR Incentives

by Louis Wenzlow, Rural Wisconsin Health Cooperative On December 30th, CMS released its proposed rule for the ARRA electronic health record incentive program. Among the issues that will impact rural providers is which physicians will qualify for the Medicare and Medicaid eligible professional incentives. Summary My interpretation of which eligible professionals (see Key ARRA Language for definitions of eligible professional) qualify for the incentives is as follows:

  • Eligible professionals that practice in RHCs and FQHCs are not eligible for Medicare incentives. They are eligible for Medicaid incentives if they have at least 30% patient volume attributable to "needy" patients.
  • Eligible professionals that practice in clinics designated as "provider-based" are not eligible for either Medicare or Medicaid incentives
  • Eligible professionals that practice in independent or non-provider-based hospital-owned clinics (that use place of service code 11 on their 1500s) are eligible for the Medicare incentives. They are also eligible for the Medicaid incentives if they have at least 30% Medicaid volume (20% if they are Pediatricians). But they can participate in only one of the two (Medicare or Medicaid) programs
  • See next sections for language and rationale supporting this interpretation
The impact of this incentive structure is that many physicians practicing in rural health clinics and federally qualified health centers, as well as all physicians practicing in "provider-based" clinics (many of which are in rural communities) will be unfairly excluded from much needed incentives. CMS should revise the proposed rule to create a distinction between hospital-based physicians (i.e. physicians that predominantly use the hospital's inpatient EHR, such as pathologists and ER physicians) and physicians that practice in clinics, including provider-based clinics (i.e. physicians that predominantly use a physician clinic EHR). The latter physicians should all be eligible for incentives, with the understanding that provider-based clinics in CAHs cannot claim both eligible professional and CAH incentives for costs associated with the same EHR modules. Key ARRA Language ARRA states that "No incentive payment may be made under this paragraph in the case of a hospital based eligible professional ... a hospital-based eligible professional means, with respect to covered professional services furnished by an eligible professional during the EHR reporting period for a payment year, an eligible professional, such as a pathologist, anesthesiologist, or emergency physician, who furnishes substantially all of their services in a hospital setting (whether inpatient or outpatient) and through the use of the facilities and equipment, including qualified electronic health records, of the hospital.  The determination of whether an eligible professional is a hospital based EP shall be made on the basis of the site of service (as defined by the Secretary) and without regard to any employment or billing arrangement between the eligible professional and any other provider." In ARRA, covered professional services are defined as "the meaning given such term in (k)(3)."  [1848 (k)(3) of the Social Security Act established RBRVS (Resource-Based Relative Value Scale) under which physicians bill Medicare for reimbursement using 1500 forms. The implication of this is that those clinics that do not bill with 1500s do not provide eligible covered professional services and are therefore excluded from the ARRA Medicare incentive.] A Medicare eligible professional is a physician as defined in Section 1861 (r) of the Social Security Act:  Doctor of Medicine or Osteopathy, Doctor of Dental Surgery or of Dental Medicine, Doctor of Podiatric Medicine, Doctor of Optometry, Chiropractor. A Medicaid eligible professional is a physician, dentist, certified nurse midwife, nurse practitioner, and physician assistant (insofar as the assistant is practicing in a rural health clinic that is led by a physician assistant or is practicing in a Federally Qualified Health Center that is so led). Key CMS Proposed Rule Language "In our proposed approach, a hospital-based eligible professional, would be ineligible to receive an EHR incentive payment under either Medicare or Medicaid, regardless of the type of service provided, if more than 90 percent of their services are identified as being provided in places of service classified under place of service codes 21, 22, or 23." See last section for additional CMS proposed rule language. Implications for RHCs and FQHCs Rural Health Clinics (RHCs) and Federally Qualified Health Centers (FQHCs) bill using USB04s rather than 1500s, so physicians practicing in RHCs and FQHCs are not eligible for Medicare incentives. However, RHC and FQHC physicians that have at least 30% of their volume attributable to needy (Medicaid, sliding fee, uncompensated care, or Title XXI) individuals are specifically mentioned as eligible for Medicaid incentives. Physicians practicing in RHCs and FQHCs that do not meet this threshold of "needy" care do not qualify for any federal incentives. Implications for Provider-Based Clinics Even though they bill using 1500s, clinics with the designation "provider-based" use the place of service code 22 (Outpatient Hospital), so physicians practicing in "provider-based" clinics are not eligible for either the Medicare or Medicaid incentives. Implications for Independent and Non-Provider-Based Hospital-Owned Clinics Independent and non-provider-based hospital-owned clinics bill using 1500s and use the place of service code 11 (office), so physicians practicing in such clinics are eligible for the Medicare incentives. EPs in these clinics are also eligible for Medicaid Incentives if the Medicaid provider is an eligible professional who: (1) has at least 30% patient volume attributable to Medicaid patients, (2) is a pediatrician that has at least 20% patient volume attributable to Medicaid patients. These eligible professionals may choose to participate in either the Medicare or the Medicaid incentives but not both. Additional Relevant CMS Proposed Rule Language "Because that the parenthetical after the term "hospital setting" in the statutory definition of hospital-based EP specifically refers to both inpatient and outpatient hospital settings, we believe the term "hospital setting" should be defined to also include the outpatient setting. So although a "hospital" is an institution that primarily provides inpatient services, we propose to define the term "hospital setting" for purposes of the Medicare and Medicaid EHR incentive payment programs to also include all outpatient settings where hospital care is furnished to registered hospital outpatients. For purposes of Medicare payment and conditions of participation, it is CMS's longstanding policy to consider as outpatient hospital settings include those outpatient settings that are owned by and integrated both operationally and financially into the entity, or main provider, that   owns and operates the inpatient setting. For example, we consider as outpatient hospital settings all types of outpatient care settings in the main provider, on-campus and off campus provider-based departments (PBDs) of the hospital, and entities having provider based status, as these entities are defined in §413.65... "Because, by definition of the requirements for provider-based departments and entities, EPs who furnish substantially all of their covered professional services to hospital outpatients use the hospital's facility and equipment, including the integrated medical record system, for which payment is made by Medicare to the hospital, we believe these EPs should be considered hospital-based EPs, and thus excluded from the Medicare EP EHR incentive payments. This is fully consistent with the definition of hospital-based EPs in section 1848(o)(1)(C)(ii) of the Act... "In summary, we propose that EPs that provide substantially all of their professional services in the inpatient hospital setting, in any type of outpatient hospital setting, or in any combination of inpatient and outpatient hospital settings, be considered hospital-based EPs... "We propose to consider the use of place of service (POS) codes on physician claims to determine whether an EP furnishes substantially all of their professional services in a hospital setting and is, therefore, hospital-based... "In our proposed approach, a hospital-based eligible professional, would be ineligible to receive an EHR incentive payment under either Medicare or Medicaid, regardless of the type of service provided, if more than 90 percent of their services are identified as being provided in places of service classified under place of service codes 21, 22, or 23. Accordingly, for both Medicare and Medicaid incentive payment purposes, we propose that a hospital-based eligible professional is defined as an EP who furnishes 90 percent or more of their covered professional services in any of the above listed places of service."