On Tuesday, November 1, CMS published its Calendar Year 2017 Outpatient Prospective Payment System (OPPS) final rule with comment period. The final rule includes provisions implementing the Bipartisan Budget Act of 2015, Section 603. On the same date CMS also issued an interim final rule with comment period that establishes Medicare Physician Fee Schedule (MPFS) rates for certain items and services furnished by certain hospital off-campus outpatient departments. We describe herein in general terms some of the Section 603 related provisions in the final rule and interim final rule.
Under the Bipartisan Budget Act of 2015, Section 603, beginning January 1, 2017, items and services furnished by “off-campus department[s] of a provider” generally will not be paid under the OPPS but instead will be paid under another “applicable payment system” (General Rule). “Off-campus outpatient department of a provider” means a department of a provider (as defined in the provider-based regulations) that is not located on a hospital’s campus (as defined in the provider-based regulations) or within 250 yards from a remote location of a hospital (also as defined in the provider-based regulations). The General Rule also does not apply to items and services furnished by (i) a dedicated emergency department (as defined at 42 CFR 489.24(b)); or (ii) a department of a provider that was billing under the OPPS with respect to covered outpatient department services furnished prior to November 2, 2015 (Bipartisan Budget Act of 2015 Enactment Date).
In the final rule, CMS finalizes those items and services that will continue to be paid under the OPPS (Excepted Items and Services). The final rule provides that effective January 1, 2017, for cost reporting periods beginning on or after January 1, 2017, items and services that do not meet the definition of Excepted Items and Services will be excluded from payment under the OPPS. Excepted Items and Services are items and services furnished on or after January 1, 2017: (i) by a dedicated emergency department; or by an “excepted off-campus provider-based department” (Excepted PBD) that has not impermissibly relocated or changed ownership. Excepted PBD means a department of a provider that as of November 2, 2015 was located on a hospital’s campus or within 250 yards from a remote location of a hospital. Excepted PBD also includes a department of a provider that was billing under the OPPS with respect to covered OPD services furnished prior to November 2, 2015.
The final rule provides that an Excepted PBD that impermissibly relocates or changes ownership loses its excepted status. CMS explains in the preamble to the final rule that if an Excepted PBD relocates from its physical address as of November 2, 2015, unless the relocation meets an exception, items and services furnished therein will lose their excepted status and beginning January 1, 2017 will no longer be paid under the OPPS. There is a limited exception for Excepted PBDs that relocate (temporarily or permanently) due to extraordinary circumstances beyond the hospital’s control, for example, natural disasters. CMS Regional Offices will be responsible for evaluating and determining whether relocated Excepted PBDs meet this limited exception. In the final rule, CMS implements its proposal that an Excepted PBD will maintain its excepted status if the hospital has a change of ownership and the new owner accepts the previous owner’s Medicare provider agreement. The final rule does not provide an exception to the General Rule for potential Excepted PBDs that were under development or in mid-build status as of November 2, 2015.
The final rule and interim final rule include two significant changes from the proposed rule. First, in the proposed rule CMS proposed to limit Excepted Items and Services that an Excepted PBD could bill under the OPPS beginning January 1, 2017 to those items and services within the same service lines that were furnished and billed prior to November 2, 2015. Specifically, if after November 2, 2015 an Excepted PBD would furnish outpatient services that were not within the same clinical families of services listed by APC group number provided by the Excepted PBD prior to the Enactment Date, beginning January 1, 2017 these additional outpatient services would not be considered Excepted Items and Services and would not be paid under the OPPS. CMS did not implement this policy in the final rule. Rather, an Excepted PBD can provide new services that will continue to be paid under the OPPS. CMS does indicate that it will monitor Excepted PBDs’ expansion of clinical service lines and continue to consider whether a limitation on service line expansion should be implemented in the future. Second, as previously described, Section 603 provides that beginning January 1, 2017, Medicare payments for Non-Excepted Items and Services will not be made under the OPPS but rather “under the applicable payment system . . . if the requirements for such payment are otherwise met.” CMS explained in the preamble to the proposed rule that it was unable to propose a mechanism for payment for Non-Excepted Items and Services under an applicable payment system that is not the OPPS. CMS described that hospitals have the option of enrolling off-campus outpatient departments in Medicare as freestanding suppliers or have the physician or other practitioner bill under the MPFS with Place of Service 11 (Clinic) and be paid the non-facility rate instead of the facility rate and the hospital seek payment from the physician or other practitioner for his/her use of the off-campus outpatient department. In the final rule, however, CMS finalizes the MPFS as the “applicable payment system” for Non-Excepted Items and Services provided by Non-Excepted PBDs. The interim final rule provides a billing mechanism for hospitals to bill Medicare and receive payment for Non-Excepted Items and Services furnished to Medicare beneficiaries in Calendar Year 2017. The interim final rule establishes final site-specific rates under the MPFS for the technical component of all Non-Excepted Items and Services. Hospitals will be paid under the MPFS at these newly-established MPFS rates for Non-Excepted Items and Services, which will be billed on UB-04 claim forms with new claim modifier “PN” to indicate that an item or service is a Non-Excepted Item and Service. In Calendar Year 2017, the payment rate for Non-Excepted Items and Services will generally be 50 percent of the OPPS rate (with certain exceptions). Physicians who furnish professional services related to Non-Excepted Items and Services will continue to be paid on the Form CMS-1500 claim form at the facility rate.
CMS will accept comments on the final rule and interim final rule through December 31, 2016. A fact sheet describing the final rule and interim final rule is available at https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-11-01-3.html. The final rule and interim final rule are available at https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-26515.pdf.
