 Thomas Greeson, JD |
In a question and answer session, Thomas Greeson, JD, attorney with Reed Smith LLC, Falls Church, Va, discusses legal issues associated with contracting to provide services for a hospital’s Medicare patients.
Axis Imaging News : Are there opportunities for independent freestanding imaging centers to contract with hospitals to supply imaging services?
Greeson : Yes. An imaging center can lease a portion of its technical-component services to a hospital, so long as the contract is consistent with Medicare rules (and the hospital’s agreements with payors). When the imaging center provides services to certain hospital patients who are Medicare beneficiaries, those contracts are referred to as under-arrangement agreements.
Axis Imaging News : What restrictions do hospitals have in outsourcing technical-component services for Medicare patients?
Greeson : Medicare rules prohibit payment for nonphysician services furnished to hospital patients (including inpatients and certain outpatients), unless the services are furnished by the hospital, either directly or under an arrangement. Each Medicare-participating hospital must agree to furnish directly all covered nonphysician services required by its Medicare inpatients and certain Medicare outpatients, or to have the services furnished under an arrangement.
Axis Imaging News : Why should an imaging center care about this rule?
Greeson : Civil monetary penalties can be levied (in amounts of up to $2,000 for each item or service) against any person who knowingly and willfully presents, or causes to be presented, a bill or request for payment to Medicare Part B for Medicare inpatients or for a Medicare outpatient subject to the prohibition against unbundling.
Axis Imaging News : The prohibition against unbundling claims for technical-component services to Medicare inpatients seems clear, but does this rule apply to all Medicare outpatients who are referred to an imaging center from a hospital?
Greeson : No. The prohibition applies to those services furnished to a hospital outpatient during an encounter with the hospital. Thus, a patient who receives an additional diagnostic procedure at the hospital on the same day would not necessarily fall under the bundling rule if the additional procedure is not performed during the encounter that proximately led to the test being ordered in the first instance. An encounter is defined as a direct personal contact between a patient and a physician or other person who is authorized, by state licensure and by hospital bylaws (if applicable), to order or furnish hospital services for diagnosis or treatment.
Axis Imaging News : Does contracting with the hospital to provide under-arrangement services to Medicare beneficiaries preclude the imaging center, in any way, from billing as an independent diagnostic testing facility or diagnostic radiology practice (with payment under the Medicare physician fee schedule) for patients outside the hospital arrangement?
Greeson : No. The prohibition applies to technical-component billing for patients for whose care the hospital is required to bill, but not to other patients.
Axis Imaging News : What form do these under-arrangement agreements usually take? What are some of the negotiating points?
Greeson : These are fairly straightforward agreements. They provide for a fee schedule for which the hospital pays the imaging center an agreed rate for each technical-component service provided. Generally, the agreement calls for monthly payment for the services provided, and payment is made to the imaging center whether the hospital has been paid yet for the service or not. The imaging center must be paid a fairmarket-value rate that does not vary, based on the volume or value of the referral of Medicare patients to the center, during the course of the agreement.
Axis Imaging News : What is the typical duration of such a contract?
Greeson : The agreement should be set for a term of not less than a year, and it may be for a term of up to 3 years if the hospital is a tax-exempt entity or a similar number of years if it is not. The agreement can contain an evergreen provision that allows for regular 1-year renewal periods.
Axis Imaging News : Is there a downside for the imaging center? What are the pitfalls involved, and how can the contract protect the center against a negative outcome?
Greeson : If an imaging center is otherwise fully utilized, its revenues are more likely to be enhanced by providing services to patients directly, rather than via under-arrangement agreements with a hospital. These agreements are beneficial to both hospitals and imaging centers, however, by giving the hospital the ability to ensure that technical-component radiology services are available to their patients and by helping the imaging center that wants to utilize all the available capacity of its scanners.
Axis Imaging News : Do these agreements come into play in any other setting?
Greeson : Yes. Medicare requires all skilled nursing facilities to have written under-arrangement agreements with outside suppliers to provide nonphysician services to their nursing-facility inpatients who are paid under Medicare consolidated billing rules.
Kris Kyes is technical editor of Decisions in Axis Imaging News.
