Hospital Facility Fees and Telehealth During COVID-19 Pandemic Revisited

As we reported earlier,¹ the Centers for Medicare & Medicaid Services (CMS), as part of its blanket waivers issued on March 30, 2020,² has waived the location requirement for provider-based status for the duration of the COVID-19 public health emergency (PHE).  And in its interim final rule published on April 6, 2020,³ CMS further confirmed that physicians billing Medicare for telehealth services should use the place-of-service code that would have been appropriate had the patient visit been in person.⁴  This means that a provider-based physician will be reimbursed at the facility rate, which is typically lower than the office rate for a physician’s professional services.

CMS rationale for paying provider-based physicians for telehealth services at the lower facility rate is that the hospital, and not the physician, is incurring the facility costs, such as clinical staff, supplies, and equipment.⁵ But in the April 6 interim final rule, CMS indicated that the hospital itself could not bill for the facility fee when one of its provider-based physicians performs telehealth services for a patient at home, even though the patient otherwise would have presented at the provider-based clinic.⁶ However, in various teleconferences, CMS personnel indicated that the agency was revisiting this issue in light of recent comments.⁷  CMS is apparently now revising its position.

In a new interim final rule posted on April 30, 2020,⁸ CMS has indicated that a hospital can now bill facility fees under certain circumstances:

When a registered outpatient of the hospital is receiving a telehealth service, the hospital may bill the originating site facility fee to support such telehealth services furnished by a physician or practitioner who ordinarily practices there.  This includes patients who are at home, when the home is made provider-based to the hospital (which means that all applicable conditions of participation, to the extent not waived, are met), under the current waivers in effect for the COVID-19 PHE.⁹

CMS notes that a patient’s home is not a traditional provider-based department (PBD) for which facility fees are reimbursable.  But the agency goes on to state that a patient’s home may be considered a hospital’s PBD during the COVID-19 PHE, if applicable requirements are satisfied.  These include that (i) the patient is registered as a hospital outpatient and (ii) the patient’s home has been made “provider based” with respect to the services being provided.¹⁰  This interim final rule, however, does not specify any process for hospitals to follow in “making” such locations provider-based other than to ensure that all applicable, non-waived conditions of participation are met.

CMS’s further guidance regarding facility fees in this telehealth context will be welcome news to hospitals with provider-based, outpatient departments whose physicians provide telehealth services during the pandemic.  Additional guidance, however, also would be welcome as to how hospitals are to ensure that they are meeting all requirements for making the patient’s home provider-based in connection with the receipt of telehealth services.

If you have specific questions or require further information, please contact Neil W. Hoffman, Ph.D, R. Michael Barry, or Madison M. Pool. Please refer to AGG’s Coronavirus (COVID-19) Resource Center for additional legal alerts.

[1] Hospital Facility Fees and Telehealth During COVID-19 Pandemic, R. Michael Barry and Neil W. Hoffman, PhD (April 21, 2020), Alerts, Arnall Golden Gregory LLP.

[2] COVID-19 Emergency Declaration Blanket Waivers for Health Care Providers, available at https://www.cms.gov/about-cms/emergency-preparedness-response-operations/current-emergencies/coronavirus-waivers.

[3] 85 Fed. Reg. 19230 (Apr. 6, 2020).

[4] Id., at 19233.

[5] Id.

[6] Id.

[7] E.g., COVID-19 Office Hours (Apr. 16, 2020).

[8] CMS Interim Final Rule, CMS-5531-IFC, RIN 0938-AU32, available at https://www.cms.gov/files/document/covid-medicare-and-medicaid-ifc2.pdf.

[9] Id., Sections II. F. 3-4.

[10] Id.