CMS Clarifies IPPS Rule on Services Made 'Under Arrangement'

Within the inpatient prospective payment system (IPPS) proposed rule are an assortment of major and minor clarifications which—to a varying degree—will have an effect on a number of hospital departments. One of these updates comes in the form of a clarification to Medicare’s “under arrangement” provision.

When a patient is at a PPS hospital, the hospital is required to provide all covered services the patient needs. In some cases, however, the patient may require a service that the hospital cannot provide. For example, the patient may require a positron emission tomography scan and the hospital does not have a PET scanner.

The hospital may send the patient to a nearby hospital or facility for this service, but keep the patient as their inpatient throughout the process. This scenario is a perfect example of “under arrangement” services, according to Kimberly Anderwood Hoy, JD, CPC,director of Medicare and compliance for HCPro, Inc.

In the most recent IPPS proposed rule, the Centers for Medicare & Medicaid Services clarified that diagnostic and therapeutic services may be provided “under arrangement with another provider, but routine services such as nursing and medical social services must be provided by the hospital, according to Hoy.

At first blush, this does not seem concerning because these are not the types of services normally thought of as provided “under arrangement.” However, the CMS makes it clear that it considers even registry or contracted nursing services to be provided “under arrangement” and not by the hospital: 

In situations in which certain routine services are provided under arrangements ‘‘in the hospital,’’ for example, contracted nursing services, we believe the arrangement generally results in the hospital exercising the same level of control over those services as the hospital does in situations in which the services are provided by the hospital’s salaried employees. Therefore, if these services are provided in the hospital to its inpatients, we consider the services as being provided by the hospital. However, if these services are provided outside the hospital, the services are considered as being provided under arrangement, and not by the hospital.

CMS’s clarification does afford hospitals an exception for the most common of these registry or contracted nurses arrangements, as long as the service is provided in the hospital. However, it  leaves some unanswered questions that may be addressed in the final rule, Hoy says. “What about clinical social worker (CSW) services? Does this extend to those services and will the same exception apply that if they are provided in the hospital they will be considered to be provided by the hospital? Presumably whatever change is made would also apply to these services, but it’s unclear as of now.”

Other open questions include how the clarification will apply to nursing services associated with diagnostic and therapeutic services that are purchased under arrangements (e.g. recovery services) and to what extent it may affect other contractual arrangements when the hospital has to provide services that it is unable to provide directly.

“While this isn’t a huge change, it’s definitely something of which providers should be aware. If you look at the example of CSW services provided during inpatient stays—which is an approved issue for all four recovery audit contractors (RACs)—this clarification could have implications for how this is billed if the ‘in hospital’ exception is not extend broadly to all contracted services, leaving these unbillable by both the hospital and the CSW,” Hoy says.

Since this clarification was in the IPPS proposed rule, providers—particularly those that provide inpatient services outside of the hospital—will want to keep an eye out for the final rule later this year. In addition, affected providers should submit comments on this rule if they have questions or concerns about how this will affect contracted medical social services or other services they provide, Hoy says.