CMS proposes to pay for physician services using the facility (vs. non-facility) rate for the physician component of diagnostic services and for nondiagnostic services that are:
1) performed in the three days prior to an inpatient admission
2) related to the admission, and
3) are performed in a physician practice that is wholly owned or operated by the hospital.
Since the technical component of any outpatient diagnostic services and admission-related nondiagnostic services are included on the hospital’s claim for the inpatient stay, CMS believes this change from the non-facility rate to the facility rate will avoid duplication of payment for supplies, equipment and staff that are paid directly to the hospital by Medicare.
As currently defined, an entity or practice is wholly owned by a hospital if a hospital is the sole owner of the entity. An entity or practice is wholly operated by a hospital if the hospital has exclusive responsibility for conducting and overseeing the entity’s routine operations, regardless of whether the hospital also has policymaking authority over the entity. If an entity, wholly owned or operated by a hospital, treats a patient who becomes an inpatient within the three-day period, the entity must submit charges with a newly-created HCPCS modifier to alert CMS to pay for the physician services at the lower facility rate.