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Hospitals Act Now! You Only Have Until February 13, 2017 to Seek Grandfathered Status for “Mid-Build” Off-Campus Departments.

January 9, 2017

The 21st Century Cures Act (the Act) is a new law that grants welcomed relief for some hospital projects impacted by the site-neutral payment provisions of the Bipartisan Budget Act of 2015 (BBA). But hospitals must act quickly to benefit from this new law!

Section 603 of the BBA, which was enacted on November 2, 2015, materially reduced reimbursement for new off-campus hospital outpatient departments (HOPDs). Under the BBA, as of January 1, 2017, most items and services furnished by an off-campus HOPD (dedicated emergency departments excluded), are no longer paid under the Hospital Outpatient Prospective Payment System unless the HOPD was billing Medicare as a HOPD prior to November 2, 2015. The BBA dealt a significant blow to many hospitals that had committed capital and resources to developing and constructing off-campus outpatient departments, but had not yet started billing for services from these locations as of November 2, 2015.

On December 13, 2016, President Obama signed into law the 21st Century Cures Act. The title of the Act reflects its substantial emphasis on therapeutic innovation, such as cancer research and FDA drug and device review; mental health; and substance abuse. The Act also offers relief to hospitals that had already started and were at “mid-build” on off-campus department projects as of the enactment of the BBA.

Specifically, Section 16001 of the Act created an exception to the BBA site-neutral payment provisions for off-campus departments that were under construction or development on November 2, 2015. A hospital with a “mid-build” off-campus outpatient department on that date may avail itself of the exception if the provider, by February 13, 2017 takes the following steps:

  • files an attestation that the new department meets the requirements of a provider-based department;
  • resubmits the providers’ CMS 855A enrollment form, including information regarding the new department; and
  • certifies in writing, from the CEO or COO, that the provider had, before November 2, 2015, a binding written agreement with an outside unrelated party for the actual construction of the new department.

According to guidance issued by the Centers for Medicare & Medicaid Services (CMS),1 hospitals should submit the above materials to their Medicare Administrative Contractor (MAC). An off-campus department of a provider that meets the requirements will be excepted for items and services furnished on or after January 1, 2018, and thus reimbursed under the Hospital Outpatient Prospective Payment System after that date.

Hospitals that had off-campus outpatient departments in “mid-build” on November 2, 2015, should take immediate steps to submit the above materials to their MACs. Otherwise, they will miss an opportunity to qualify the off-campus department for reimbursement under the Hospital Outpatient Prospective Payment System effective January 1, 2018. The submission deadline is February 13, 2017. If you have questions about submitting a provider-based status attestation or other materials, please contact HDJN’s Reimbursement team.

1. CMS web guidance “Note Regarding Implementation of Sections 16001 and 16002 of the 21st Century Cures Act.”

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.