Congress seeks feedback on changes to Medicare payment policy for certain off-campus hospital outpatient departments, site-neutral payments; American Hospital Association weighs in with CMS

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Posted by Anne Phelps, Principal, US Health Care Regulatory Leader on February 12, 2016.

A letter seeking comments on site-neutral payments under Medicare went out to the health care community from Congressional leaders on Friday, February 5 and highlighted a recent change in law that will affect Medicare payments for certain provider-based off-campus hospital outpatient departments (PBD HOPDs).

On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015, which included a provision on site-neutral payments for PBD HOPDs. Beginning January 1, 2017, the provision will bar PBD HOPDs that execute CMS provider agreements after November 2, 2015 (the date the law was enacted), from being reimbursed under the CMS Outpatient Prospective Payment System (OPPS). PBD HOPDs barred from OPPS will only be eligible for reimbursement under the Medicare Physician Fee Schedule (PFS) or the Ambulatory Surgical Center Prospective Payment System (ASC PPS), both of which have generally lower reimbursement rates than OPPS.

The change in payment policy for these HOPDs is a major consideration for health systems because of the policy’s potential effect on operations, revenue streams, and volume. To prepare for the upcoming changes, health systems may need to revisit some physician payment agreements, evaluate the impact of participating in the 340B Drug Pricing Program, and assess their reporting and other administrative processes.

Details of the Letter

As health care stakeholders eagerly await guidance from the Administration on how this change in law will be applied, they have raised concerns with members of Congress. This prompted Rep. Fred Upton (R-MI), chairman of the House Energy & Commerce Committee, and Rep. Joe Pitts (R-PA), chairman of the Energy & Commerce Health Subcommittee, to issue a letter requesting formal feedback on policies related to the enactment of the PBD HOPD provision and recommendations for how the House Energy & Commerce Committee should approach site-neutral payments going forward.

The letter highlights recommendations from the Medicare Payment Advisory Commission (MedPAC) and findings from a Government Accountability Office (GAO) report in favor of site-neutral payments, as well as calls from supporters of site-neutral payments to enact further site-neutral policies across Medicare. Conversely, the letter cites concerns raised with the House Energy & Commerce Committee related to the policy’s effect on hospitals’ financial viability; a “lack of specificity on those HOPDs that are ‘grandfathered’ and a need for statutory clarity on issues surrounding implementation, growth, relocation, and change of purpose”; and the short period of time to the provision’s effective date, among other issues.

Responses to the letter are due to the House Energy & Commerce Committee by February 19, 2016.

AHA voices concerns on site-neutral payments

The same day that congressional leaders sent their letter to health care stakeholders, the American Hospital Association (AHA) sent a letter to Andy Slavitt, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), urging the agency to apply the policy so that it would not affect HOPDs in some circumstances. Specifically, the AHA urged CMS to implement the policy so that:

  • Items and services provided in the same facility as a dedicated emergency department (which are exempted from the change in policy) would fall under the exception to the site-neutral payment
  • HOPDs that rebuild or relocate to a new facility would be exempt from the change in policy so long as they were billing the OPPS prior to November 2, 2015
  • HOPDs that change or expand the type of outpatient services they offer would still be eligible for reimbursement through OPPS
  • A change in ownership of an HOPD would not nullify the facility’s grandfather status
  • Medicare payment for facilities affected by the change in policy would include both a facility fee and a professional fee
  • There would be minimal disruption to billing and payment for all providers and payment systems involved

For more information regarding the impact of these regulatory developments on your organization, please contact:

Anne Phelps
US Health Care Regulatory Leader
Latest conversations from Anne Phelps on Twitter

Lloyd Haggard
Deloitte Advisory Director
Deloitte & Touche LLP

Gordon Sanit
Deloitte Advisory Director
Deloitte & Touche LLP

Daniel Esquibel
Deloitte Advisory Senior Manager
Deloitte & Touche LLP

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