CMS Clarifies Physician Supervision Requirements for Therapeutic and Diagnostic Hospital Services

The Centers for Medicare and Medicaid Services (CMS) published the Outpatient PPS Final Rule in October 2009, and McGladrey’s team of health care regulatory professionals thoroughly examined the rule’s hundreds of pages to simplify its complicated discussions.

Our clients, prospective clients and other interested parties would particularly benefit from clarification of one critically important issue within the outpatient regulatory rule: Physician Supervision, a concept that has been poorly defined for decades.

Guidance began to trickle in at the beginning of the current decade with the implementation of the Outpatient Prospective Payment System (OPPS) rule, referred to as Ambulatory Patient Classifications, or APCs. CMS felt it necessary to define and clarify a number of ambiguous issues such as Physician Supervision, as well as provider-based regulations and other relevant OP department responsibilities. CMS intentionally avoided similar issues such as OP bundling and services provided under arrangement. However, the problem with Physician Supervision and related issues is that CMS created more questions than answers.

With regard to Physician Supervision, we historically have struggled with a variety of questions, including:

• What level of supervision is necessary for incidental services?
• What is the difference in supervision requirements for “on-campus” versus “off-campus” procedures?
• How should these requirements be addressed for Part B Clinics versus Part A providers?
• Who decides what appropriate supervision is and should be?
• What are the differences between therapeutic and diagnostic procedures?
• Who is qualified to provide supervision over incidental services?
• What types of services require supervision?
• What about services provided under arrangements? Are supervision requirements the same of these, too?
• Who is considered a “physician” for purposes of these “Supervision Rules”?
• What are the rules for nonphysician practitioners (e.g., physician assistants, nurse practitioners, clinical social workers, clinical nurse specialists and clinical psychologists)?

The confusion was exacerbated by fiscal intermediaries who tried to provide clarification. Unfortunately, the fiscal intermediaries’ guidance seemed rigid and inconsistent with previous understandings of CMS intentions, especially with regard to hospital “on-campus” supervision presumptions and to OP services, such as cardiac rehab, that are provided to high-risk patients.

In other words, CMS has long presumed that physician supervision requirements were being met with regard to incidental services provided in a hospital setting. While CMS says it is only clarifying this policy, the clarifications are materially different in a number of ways; for example, it appears that a physician’s presence no longer satisfies this requirement. Services like cardiac rehab, on the other hand, require physicians to satisfy the “immediate availability” provision to ensure meaningful intervention when needed.

Some intermediaries initially defined these requirements very narrowly, essentially requiring supervising physicians to remain within these departments, or at least be in close proximity to them. In the new regulations, CMS does not differentiate these requirements from other therapeutic services — though, in response to commenters, it specifically stated that cardiac rehabilitation services will be bound by this broad policy.

The following are our interpretations of the Physician Supervision requirements for Incidental Services:

Who is considered a physician or nonphysician practitioner, and thus may be authorized to supervise IP and OP ancillary services?
For purposes of this rule, a physician is defined as an M.D., a D.O. or a chiropractor. Although nonphysician practitioners are not considered physicians, they are specifically allowed to provide supervision of therapeutic (though not diagnostic) services. (Therapeutic services are defined as all services — X-ray, lab, MRI, etc. — that are not specifically diagnostic.) The justification for distinguishing supervision requirements for therapeutic versus diagnostic procedures is that existing regulations governing X-ray and certain other diagnostic procedures specifically require physicians to provide supervision and do not mention nonphysician practitioners performing in this capacity. When CMS made this clarification, it acknowledged the unreasonableness of forbidding nonphysician practitioners from providing supervision over diagnostic tests they are specifically trained to perform, while allowing them to provide supervision of therapeutic services under similar circumstances.

It also is important to note that, for purposes of this regulation, CMS defines nonphysician practitioners as physician assistants, nurse practitioners, clinical social workers, clinical psychologists, clinical nurse specialists and nurse midwives. Clinical social workers were actually omitted from the proposed rule; they were subsequently included in the final rule in response to commenter arguments comparing their roles in extending psychiatric medical services to psychiatric patients with other nonphysician practitioners’ roles within their medical scope of service.

Furthermore, as one might have expected, the supervisory roles of nonphysician practitioners are limited to services they are approved to provide directly to patients, albeit always under the “general supervision” of a physician (with general supervision defined as being available by telephone). Similarly, CMS added clinical psychiatrist to its approved list of supervision medical personnel as it relates to psychiatric and neuro-psychiatric tests.

What type and level of supervision is required for diagnostic and therapeutic services?
It is important to note that CMS distinguishes the supervision requirements of diagnostic versus therapeutic services. Moreover, CMS expressly states that all hospital services, whether provided under arrangement or directly by hospital personnel, will be held to the supervisory standards. Finally, it is critical to understand that CMS defines supervision requirements at three different levels.

General Supervision, defined above, refers to the physician’s availability to provide appropriate medical guidance by phone; Direct Supervision requires the physician to be “immediately available” in terms of both proximity and time, as well as to possess the requisite competence to enable effective intervention, if necessary. (With regard to proximity, this requirement does not oblige the physician to actually be in the room when the procedure is performed.)

In CMS’s initial proposal, this requirement would be satisfied if the physician remained on campus and within its physician premises. This initial “proposed” definition specifically prohibited the supervising physician from residing within any other entity, even if located on campus. In other words, a physician could not be located in an on-campus provider-based entity, such as a home health agency, rural health clinic or skilled nursing facility, or in an independent diagnostic testing facility or other co-located hospital entity. This requirement seemed rigid; when challenged by commenters, CMS apparently agreed that differentiating between provider number/type of on-campus provider and nonprovider entities does not correlate with effective supervision or the provision of quality medical services. Accordingly, this requirement was modified so that a physician may now reside anywhere on campus, including in the previously excluded provider-based entities, as well as in on-campus physician offices. One caveat remains: The physician will not be considered “immediately available” if attending to another patient.

The third and ultimate level of supervision is referred to as Personal Supervision.

Direct supervision is the minimum standard for therapeutic services. It really is that simple — though with two notable exceptions: Therapy and end-stage renal disease are not defined as outpatient hospital services and are accordingly, not impacted by the “hospital standard.” Supervision requirements for these services are defined under their unique benefit requirements.

That said, commenters challenged CMS on whether this standard — direct supervision for therapeutic services — was oversimplified. Questioning the idea that all therapeutic services are essentially equal, they wondered whether some of these services might be provided with less supervision. For now, at least, CMS seems committed to a single standard for most therapeutic services.

Supervision requirements for diagnostic services, on the other hand, will now be dictated by the Medicare Physician Fee Schedule (MPFS) Relative Value File. This has been the official standard for hospital provider-based departments since 2000, but will now be applied to all hospital-based diagnostic services, creating a more level playing field among different service sites.

Clarifications of off-campus provider-based departments’ supervision requirements
Beginning in 2000, CMS held that off-campus provider-based departments must comply with supervision requirements established for free-standing physician clinics. Accordingly, supervising physicians were required to be present and on the campus of these provider-based departments. At the time, this appeared to create an uneven playing field for clinics, when compared to hospital departments, regarding the “supervision presumption” mentioned previously. With the issuance of these “clarifying rules,” it now appears these differences may be less significant. All said, with this final rule, CMS felt it necessary to slightly modify this regulatory requirement; it now requires offsite provider-based supervisory physicians to be “present in the off-campus provider-based department” in meeting the Direct Supervision requirement.

Retroactive compliance of services offered before 2010
Some commenters expressed concern that because these rules are being presented as clarifications of existing policies — as opposed to substantive changes in policy — CMS may attempt to litigate deviations from these “previously misunderstood and other undefined” and recent clarifications. CMS came short of providing safe harbors, but suggested it will use discretion in its enforcement activities.

For more information about this complex topic, contact your local health care consultant.

Jim Sink is the managing director and practice lead for the Midwest Regional Health Care Group. He can be reached at jim.sink@mcgladrey.com.