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CMS released its 2017 Medicare Outpatient Prospective Payment System (OPPS) proposed rule, which contains proposals to implement Section 603 of the Bipartisan Budget Act of 2015 (BBA).  CMS is accepting public comments on the proposal through September 6, 2016.

The BBA established a methodology for site-neutral payments for off-campus provider-based departments (“HOPDs”) beginning January 1, 2017, subject to certain exceptions for emergency departments and grandfathered facilities (those off-campus HOPDs billing for services under the OPPS prior to November 2, 2015).  The BBA does not impact on-campus HOPDs, or HOPDs located within 250 yards of a remote inpatient location.

For more information on the Bipartisan Budget Act, please see Murer’s previous post available here


In summary, CMS proposes to maintain the exception under the BBA for all services furnished in an emergency department (including non-emergency services), an on-campus HOPD, or an HOPD within 250 yards of a remote inpatient location.

With regard to grandfathered HOPDs, CMS proposes to continue reimbursement under the OPPS for services within “clinical families” furnished and billed by the HOPD prior to November 2, 2015. CMS proposes 19 clinical families, which are grouped by APC codes.  As such, there is potential for limited expansion of services in grandfathered locations.

However, grandfathered HOPDs may not relocate, with CMS stating the facility must remain at “the same physical address reported on the hospital’s enrollment record as of November 2, 2015.”  CMS also states the unit or suite number is considered part of the address, and a provider may not expand into other units within the same multi-unit building to extend the grandfather status.  This proposed rule stresses the importance of maintaining an accurate Medicare 855A Enrollment Record.  CMS is also accepting public comments to create a limited exception for natural disasters and other circumstances outside of hospital control.

Also, a grandfathered HOPD will lose its status under a change of ownership, unless the new owner acquires the main provider and accepts the Medicare provider agreement.

Furthermore, although the proposed rule does not address any “mid-build” exception under the BBA, legislation recently passed the House of Representatives and is currently before the Senate in this regard.

For more information on the “mid-build” legislation, please see Murer’s previous posts available here 


 and here 


Additionally, hospitals may own and operate off-campus practice locations not subject to an exception under the BBA.  These facilities will be subject to site neutral payments.  CMS proposes to utilize the Medicare Physician Fee Schedule to accomplish this.  Beginning January 1, 2017, CMS will issue payment to the billing practitioner at the nonfacility rate; no separate payment will be made to the hospital unless pursuant to a payment system other than the OPPS (i.e., the Clinical Lab Fee Schedule or CLFS).

CMS recognizes this may require hospitals to engage in business arrangements with physicians, and is accepting public comments regarding impacts under the reassignment rules and fraud and abuse laws.

In recognition of this proposal’s limitations, CMS intends this as a “one-year, temporary solution,” and is accepting public comments on the design of a payment system specific to off-campus practice locations to be implemented in CY 2018.

Under current 340B Drug Pricing Program guidelines, 340B eligibility of practice locations is tied directly to provider-based status and treatment as a reimbursable cost center on the Medicare cost report.  Given the uncertainty surrounding the future payment system for off-campus practice locations, impacts to the 340B Drug Pricing Program are still ambiguous.

The question remains whether a hospital will be able to include a newly established HOPD, which is not subject to a BBA exception, as a reimbursable cost center on the Medicare cost report, leading to 340B eligibility as a child site.  For example, CMS does provide some guidance regarding laboratory services paid under the CLFS, stating hospitals should report these laboratory services on a reimbursable cost center on the hospital cost report.  Alternatively, HRSA may revise its eligibility requirements for 340B practice locations to include sites that may not be considered HOPDs for Medicare billing purposes.

CMS is also seeking comments regarding whether hospitals should identify, outside of the Medicare 855A Enrollment Record, all excepted off-campus HOPDs (i.e., grandfathered or emergency department locations).  If so required, CMS would collect information regarding the facility name and address, the date on which it began billing under the OPPS, and the clinical families of services for which it billed prior to November 2, 2015.  CMS would create a new form and filing process by which providers may meet this reporting requirement.

Murer Consultants will continue to closely monitor the regulatory process, and will provide updates as they become available.  Murer is also available to prioritize projects related to these proposed regulations, such as updating 855A enrollment records, to assist in preservation of grandfathered status, and designing strategies to contract with physicians in order to share in MPFS nonfacility payments.

Should you have any questions regarding these proposed rules or any other matter, please contact Murer Consultants at (708) 478-7030.

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