CMS Finalizes Policies on Site-Neutral Payments for Off-Campus Provider-Based Departments

CMS Finalizes Policies on Site-Neutral Payments for Off-Campus Provider-Based Departments


On November 1, 2016, the Centers for Medicare and Medicaid Services (CMS) released its 2017 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center Payment System Final Rule, which contains highly anticipated policies implementing legislative changes to how off-campus provider-based departments (PBDs) are paid.  Concurrently, CMS also released an Interim Final Rule with comment period (IFC) that establishes a mechanism for hospitals to report and receive payment under the Medicare Physician Fee Schedule (MPFS) for certain items and services provided at “non-excepted” (i.e., non-grandfathered) off-campus PBDs in 2017.

The changes implemented in the Final Rule and IFC stem from Congress’s enactment of Section 603 of the Bipartisan Budget Act (BBA) of 2015.  Section 603 of the BBA requires CMS to cease paying hospitals at the OPPS rate for services furnished in off-campus PBDs beginning January 1, 2017.  Exceptions exist for freestanding dedicated emergency departments, sites located within 250 yards of a remote inpatient hospital campus, or sites that began billing for services under the OPPS prior to November 2, 2015. 

Despite the volume of stakeholder comments requesting an implementation delay or additional flexibility, CMS finalized the majority of its policies as proposed, with certain noteworthy exceptions.  (Waller’s Healthcare Blog summary of the Proposed Rule can be found here.)  Following is an overview of the key site-neutrality provisions in the Final Rule and IFC.

Interim Payment for Services Furnished at Non-Excepted PBDs in 2017

Under the Proposed Rule, CMS contemplated that non-excepted PBDs would not be paid at all for services rendered in 2017, stating that the agency lacked the system capabilities to pay hospitals under the MPFS for services billed on institutional claims.  Rather, CMS proposed to pay only the physician for professional services rendered.  Acknowledging the immense financial difficulties of a year without hospital payments, as well as the significant regulatory and compliance concerns involved, CMS ultimately abandoned this proposal in favor of interim site-of-service payment rates for 2017.

Pursuant to the IFC, hospitals will generally receive 50% of the OPPS rate for items and services rendered by non-excepted PBDs in 2017, with certain exceptions. Such items and services will technically be payable under the MPFS, and hospitals will report them on their institutional claim form with the modifier “PN.”  The reduced 50% rate will not apply to other outpatient hospital services currently reimbursed at MPFS rates (e.g., therapy, preventative services, and separately payable Part B drugs).

Excepted Off-Campus PBDs and Limitations on Excepted Status

  • Service Expansion in Excepted Off-Campus PBDs: In its Proposed Rule, CMS proposed limiting the items and services that an excepted off-campus PBD could continue to bill under the OPPS post-January 1, 2017 to those within the same “clinical family” as those furnished and billed as of November 2, 2015.  Based on substantial public comment regarding the administrative burden, complexity, and potential beneficiary access problems associated with the proposal, CMS elected not to adopt this restriction.  Instead, CMS indicated that the agency will continue to monitor the issue and consider whether a limitation on service line expansion should be adopted in the future. 
  • Excepted Off-Campus PBD Relocation: Notwithstanding widespread concern expressed by hospitals, CMS is finalizing its proposal regarding relocation of an excepted off-campus PBD.  Under the adopted policy, excepted PBDs must continue furnishing and billing for items and services at the same physical address listed on the hospital’s enrollment form as of November 2, 2015 in order to retain grandfathered status.  Notably, CMS is incorporating some flexibility through an exceptions process which will be limited to extraordinary circumstances outside a hospital’s control, such as natural disasters, significant seismic building code requirements, or significant public health and safety issues.  Such exceptions will be evaluated on a case-by-case basis by the appropriate CMS Regional Office and are expected to be rare and unusual.     
  • Excepted Off-Campus PBD Changes of Ownership: As contemplated under the Proposed Rule, CMS will only permit excepted off-campus PBDs to retain grandfathered status following a change of ownership if the purchaser acquires the entire hospital with which the PBD is affiliated and accepts assignment of the hospital’s Medicare provider agreement from the previous owner.

A more detailed analysis of the Final Rule and IFC, which are scheduled for publication in the Federal Register on November 14, 2016, will be forthcoming.  In the meantime, CMS is soliciting public comments on certain aspects of both the Final Rule and IFC.  Waller attorneys are available to assist with stakeholder comments, which are due by December 31, 2016.

Thank you to Aubrey Beckham, Belmont University College of Law, for her help in preparing this article.

Subscribe Now!

Recommended Content

Top of Page