This assumes two reimbursement streams:
1. insurer->private physician concerning to the services provided by the private physician
2. insurer->hospital concerning to the rest of the services provided by the hospital staff.
If all the treatment is provided by the private physician the 2nd stream will not make sense.
I would not be surprised if this scenario occurs, but as I have no coding or billing experience, I cannot confirm it.
A number of our clients co-own a facility (surgical center). Based on our experience with this, which includes the two reimbursement streams listed below, I will say that your two reimbursement streams quoted above are absolutely correct. And this also speaks to the points made by Billergirlnyc in her last several points. For any reimbursement, there are always at least these two charge streams / reimbursement streams:
1. cost of the provider (what he gets paid for the procedure(s), labs, radiology, etc. performed), and;
2. cost of the facility (to include facility overhead and supplies used up in the performance of the procedure(s)).
Codes are structured so as to distinguish between these two cost creaters / reimbursement streams - service/
procedure fees and
facility fees. (See Billergirlnyc comments above.)
So, your statement
If all the treatment is provided by the private physician the 2nd stream will not make sense needs to be interpreted in the context of these two cost creators:
3
When the private doctor is providing service in his private office, at least the Medicare reimbursement calculations take into account the facility overhead and supplies used up in the performance of the procedures. Because both sources of cost are included in this calculation by Medicare, there is only one reimbursement stream. Both facility costs and procedure charges are included in this one reimbursement.
4
When the private doctor is providing service in some facility other than in his private office (e.g. surgical center, hospital), by definition there must be two reimbursement streams (from Medicare at least). Since the doctor does not own the facility in which he is doing the procedure(s), it makes no sense for Medicare to send reimbursement for both facility costs and procedure charges to the provider. So - provider bills for and gets paid for procedures (using AMA CPT Codes) and facility (surgical center; hospital) bills for and gets paid for facility fees (using ICD-9, Vol 3 procedure codes where appropriate).
So - to rephrase your statement -
Even if all the treatment is provided by the private physician, the 2nd stream makes sense because it is needed to cover facility costs. I've just outlined the basic reason why this statement is true. As you noted, there are always exceptions - and I'm sure there are exceptions to this as well. But, this basic setup holds in the majority of instances.
Because of the potential for confusion and error in properly billing for facility fees and procedure and lab charges, we turned down our clients' request that we also handle the billing for the co-owned surgical center. We asked that they instead turn to someone well-versed in the ways of billing for facilities, which they did. But we have to coordinate with the facility-fee billers, so it is obvious to us that there are two reimbursement streams to the physicians that co-own and use the surgical center.
Edit: Regarding the phrase used by rferreira in #2 above -
the rest of the services provided by the hospital staff: For the purposes of simplification to make a point in this post, I'm including these services provided by the hospital staff, and reimbursement for them, in my term
overhead - which is part of the facility fee / reimbursement calculation. Whether
the rest of the services provided by the hospital staff is actually part of the facility fee / reimbursement in real life, I don't know.