On November 2, 2015, President Obama signed into law the Bipartisan Budget Act of 2015 (Act). Section 603 of the Act reduces Medicare payments to newly-enrolled provider-based, off-campus hospital outpatient departments (HOPDs), off-campus defined as a facility that is more than 250 yards from a hospital’s main buildings or a remote location of a hospital.

The Act provides that new provider-based, off-campus HOPDs added to a hospital’s Medicare enrollment after the date of enactment will not be eligible for payment under the Centers for Medicare and Medicaid Services’ (CMS) Outpatient Prospective Payment System (OPPS) beginning January 1, 2017. Rather, payment for services furnished in these facilities will be made under other payment systems, provided the requirements for payment under such systems are met. This change would not affect already existing and enrolled provider-based, off-campus HOPDs that are currently billing for services.

On February 5, ranking Republican Members of the US House of Representatives’ Committee on Energy and Commerce (Committee) released correspondence soliciting comments on the implementation of the Act, Section 603, and related policies.  The Committee acknowledged that it has received “a large amount of feedback since enactment of [the Act].” Some concerns expressed to the Committee include:

  • The Act’s potential impact on hospitals’ financial viability;
  • The Act’s lack of specificity on HOPDs that are “grandfathered” under Section 603 and a need for statutory clarity on issues surrounding implementation, growth, relocation, and change of purpose of these HOPDs;
  • The short period of time surrounding enactment of Section 603 and a concern regarding significant current investment of future HOPDs that range in development from architectural planning to nearly operational;
  • The unique populations served by certain safety net hospitals located in medically underserved areas and the impact of Section 603 on their ability to continue to perform community outreach;
  • Whether alternative payment rates, such as the Medicare Physician Fee Schedule payment rate, will reflect an appropriate level of reimbursement.

Comments received by the Committee to-date reflect recommendations ranging from the requested retroactive implementation of Section 603 reimbursement changes to the proposed enactment of additional site-neutral payment policies across the Medicare program.

Given the wide breath of suggestions that the Committee has already received, the Committee requests that interested members of the health care community provide formal feedback on issues the Committee should examine in the context of both the enactment of Act Section 603 and other changes to site neutral payment policies. The Committee specifically requests that proposals be budget-neutral or otherwise further the solvency of the Medicare program. The Committee also asks that any proposals describe benefits to Medicare beneficiaries, patients, and the Medicare program overall. Comments must be submitted to the Committee no later than February 19, 2016.

On January 26, 2016, CMS held a Hospital Quality Open Door Forum on several topics, including prospective rulemaking interpreting the Act, Section 603. During the forum, CMS analyst David Rice described that the agency would propose regulations interpreting the Act, Section 603, as part of the 2017 OPPS Notice of Proposed Rulemaking. Mr. Rice acknowledged the significant number of questions already posed to CMS regarding Section 603 and explained that providers can provide comments and questions to the agency through a special mailbox (Provider-BasedDepartments@cms.hhs.gov) or the formal notice and comment rulemaking process.

Please contact us if you need assistance in preparing comments to either the House Energy and Commerce Committee or CMS regarding interpretation of the new statutory requirements governing Medicare payments for services furnished in hospital new off-campus outpatient departments.