Pros & Cons to Freestanding vs. Provider-Based Models

We are often engaged to opine and consult regarding the pros and cons of freestanding and provider-based urgent care models. 

Provider-based operations are developed as part of an existing operation (usually a hospital).  The tax identification number for the hospital would also serve the urgent care center.  Freestanding urgent care centers would, of course, have their own corporation and tax I.D. and bill as such.   

We advise against provider-based status and in favor of establishing a separate sub-corporation and tax I.D.  There are several reasons for this:   

1. Hospitals usually operate emergency departments and are generally subject to EMTALA statutes which stipulate conditions that limit their to pick and choose who they treat.  Specifically, EMTALA-governed entities are not limited in their ability to refuse patients treatment if they are unable to pay.  Urgent care centers operate with a much less costly fee basis and do not have the room to provide services to non-paying patients.  On the other hand, the less costly care makes for a more affordable delivery for those that can afford to pay.  The most efficient and effective urgent care centers identify patient due balances up front and notify patients at the door, collecting any such amounts prior to the patient leaving.  Hospitals charge both a facility fee and a professional fee, plus, they charge for all tests and studies done in addition.  Urgent Care centers are often governed by global fees for ONLY professional services.  If an urgent care center were to charge a facility and bill it to third parties, it could cause them to be subject to EMTALA.  Operators should be very careful in how they set up their operations for this reason.   

2. Hospitals are often certified by Joint Commission (JCAHO).  If the center is operated under the hospital tax identification number, surveyors could choose to survey the operation as an "Outpatient Center" and the guidelines are simply inappropriate for urgent care.  Doing so could cause excessive costs and slow the operation down, defeating the purpose for having set it up in the first place.  The Urgent Care Association of America has established a Certification process in conjunction with JCAHO and it is both cost effective and appropriate for urgent care.  There is no need to have any urgent care center operate as part of the hospital tax I.D.   

3. The prospective payment system, established by Medicare, requires that all services provided to patients for the same diagnosis, by related organizations within 72 hours of admission to the hospital, be treated as part of the admission. This is governed by tax I.D.  For this reason, any hospital operating an urgent care center as provider based would need to have and to maintain a method of tracking patients to follow their disposition post treatment in the urgent care center and to systematically consolidate charges for services that meet this criteria.  This is the law and, any action that is not consistent with it would constitute a compliance violation.  Operations that function distinct and apart from the hospital tax I.D. do not have this same requirement.  The 72-hour rule is silent on how to handle this, but practically speaking, there is no way to manage this except through tax I.D.   

These are 3 specific reasons to avoid setting up your urgent care center as hospital-based.  There are more, believe me.  Payors are likely not to reimburse the facility fees that you charge anyway and then you will be faced with trying why to patients.   

For help in setting up your urgent care center the right way, contact us