We are providing you with this information because of continued billing problems that we are noting regarding ESWL procedures provided under arrangements for hospital outpatients. This Bulletin is intended to further clarify the Medicare reimbursement requirements for these type services as reflected in Section 3007 of the Medicare Intermediary Manual. We had previously issued a Provider Bulletin on this same topic on May 12, 1995.

A hospital may have others furnish certain covered items and services to their patients through a contractual arrangement under which receipt of payment by the hospital for the services discharges the liability of the beneficiary or any other person to pay for the service. In order to meet this requirement, the lithotripsy unit cannot bill either the patient or the patient's insurance company, but instead must seek payment for the non-physician services from the hospital. Any physician services would be billed separately by the physician who furnished them.

In permitting hospitals to furnish services under contractual arrangements, it was not intended that the hospital merely serve as a billing mechanism for the other party. Accordingly, for services provided under a contractual arrangement to be covered, the hospital must exercise professional responsibility over the arranged-for-service.

The hospital's professional supervision over arranged-for-services requires application of many of the same quality controls as are applied to services furnished by salaried employees. The hospital must accept the patient for treatment in accordance with its admission policies, maintain a complete and timely clinical record on the patient which includes diagnosis, medical history, physician's orders and progress notes relating to all services received and maintain liaison with the attending physician with regard to the progress of the patient and the need for revised orders. The patient must be registered on the hospital's records as an outpatient and must receive services, rather that supplies alone, from the hospital. The patient must go to the hospital for all pre-op lab work required of the lithotripsy unit or physician such as: blood work, pre-op KUB, EKG etc.

Since an ESWL service is classified as a therapeutic service, if this procedure is furnished outside a hospital under contractual arrangement, it must be provided as incident to a physician's service under the direct personal supervision of the physician.

Should the services be performed outside of the hospital building, a determination must be made as to the freestanding/hospital-based designation of the service location, prior to billing the intermediary. If services are performed outside the hospital without a designation being made, we will recoup any monies paid. Please contact either Linda Uzzle at (410) 561-4118 or Dorothy Braunsar at (410) 561-4128 of the Audit and Reimbursement Department, should a location require a designation.

If you have any questions regarding this Bulletin, please contact either Clarke Bowie, Medicare Fraud Coordinator, Medicare A Fraud Unit, at (410) 561-4102 or Donna Blaschak, Auditor, Medicare A Fraud Unit, at (410) 561-4111.