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CMS Issues Long-Awaited Guidance for Off-Campus Provider-Based Departments

July 6, 2016

Since the passage of Section 603 of the Bipartisan Budget Act of 2015 (BBA), which imposed site-neutral payment reductions on new off-campus hospital outpatient departments (HOPDs) that began billing Medicare after November 2, 2015, hospitals have been waiting for the Centers for Medicare and Medicaid Services (CMS) to issue guidance on how the agency plans to enforce the new law. Today, CMS finally released its pre-publication version of the FY 2017 Outpatient Prospective Payment System (OPPS) Proposed Rule, which includes long-awaited guidance on many questions surrounding the enforcement of Section 603, including:

  • Emergency Departments. CMS proposes to exempt all serviced furnished by a dedicated emergency department (ED) (whether or not they are emergency services) from the application of Section 603.
  • On-Campus HOPDs. CMS proposes to exempt services provided at an on-campus HOPD from the application of Section 603, based on the existing definition of “on campus” under the provider-based rules (250 yards).
  • Remote Location HOPDs. CMS proposes to exempt services provided at off-campus HOPDs that are within 250 yards (straight-line distance) from any point of a remote location of a hospital.
  • Relocation. CMS proposes that grandfathered off-campus HOPDs (those billing prior to November 2, 2015) “would no longer be excepted if the excepted [HOPD] moves or relocates from the physical address that was listed on the provider’s hospital enrollment form as of November 1, 2015.” CMS is soliciting comments on whether it should develop a limited relocation exception process for disasters or other extraordinary circumstances.
  • Expansion of Services. CMS states that a grandfathered off-campus HOPD (those billing prior to November 2, 2015) may only be reimbursed under OPPS for the provision of items and services it was furnishing prior to the date of enactment of Section 603. Items and services that are not part of a clinical family of services furnished and billed by the grandfathered off-campus HOPDs prior to November 2, 2015 would be subject to payment outside of OPPS. CMS states that it expects hospitals to maintain documentation showing what lines of service were provided at each off-campus HOPD prior to November 2, 2015 and that such documentation must be available to CMS and its contractors upon request.
  • Change of Ownership. CMS proposes to allow the excepted status for an off-campus HOPD to be transferred to new ownership only if ownership of the main provider is also transferred and the Medicare provider agreement is accepted by the new owner.
  • New Payment Methodologies. CMS proposes that the Medicare Physician Fee Schedule (MPFS) will be the “applicable payment system” for the majority of non-excepted items and services furnished in an off-campus HOPD for CY2017. CMS stated that due to the complexity of the OPPS and MPFS payment systems, it does not believe there is a way to allow off-campus HOPDs to transfer to billing under the MPFS by CY2017. Therefore, physicians performing services in off-campus HOPDs would be paid based on the professional claim and at the nonfacility rate. CMS noted that if an off-campus HOPD meets all requirements, it may enroll as a different provider or supplier type (such as an ASC or group practice), and become eligible to bill under the applicable payment system. CMS is soliciting comments regarding the establishment of a separate payment policy specific to off-campus HOPDs for CY2018.

For more detailed analysis regarding how the 2017 OPPS Proposed Rule affects your organization and its provider-based departments, please contact Emily Towey.

The information contained in this advisory is for general educational purposes only. It is presented with the understanding that neither the author nor Hancock, Daniel, Johnson & Nagle, PC, is offering any legal or other professional services. Since the law in many areas is complex and can change rapidly, this information may not apply to a given factual situation and can become outdated. Individuals desiring legal advice should consult legal counsel for up-to-date and fact-specific advice. Under no circumstances will the author or Hancock, Daniel, Johnson & Nagle, PC be liable for any direct, indirect, or consequential damages resulting from the use of this material.