The new U.S. budget is very bad for provider-based, off-campus facilities – and it was even worse before Congress revised it. But a top health care lawyer holds out hope it can be revised again in the facilities' favor.
Until recently, hospitals and health systems could build or buy "off-campus" facilities and get facility as well as physician payments for Medicare work done in them. But in the Bipartisan Budget Act of 2015, which President Obama signed into law on Nov. 2, Sec. 603 ("Treatment of off-campus outpatient departments of a provider") will as of 2017 exclude facilities of this kind from the hospital outpatient prospective payment system (OPPS).
"Unless they’re on campus, grandfathered, within 25 yards of an inpatient remote location, or operating as a dedicated emergency department under EMTALA, they’re banned from billing under OPPS after January 1," says Lawrence W. Vernaglia, a partner with Foley & Lardner LLP in Boston and chair of the firm’s Health Care Industry Team. "That is, they only get compensation under other Part B methodologies, like the MPFS [Medicare physician fee schedule], which is effectively a ban. They have to absorb all the costs of hospital overhead and regulatory compliance – like safety, Joint Commission, state health regulations, the works – and get nothing for it."
In an earlier draft, the terms were even worse: If an off-campus facility claimed exemption on emergency-department grounds, it would have to have billed a certain percentage of dedicated emergency E/M codes 99281-99285 to get it. Now, they just have to meet EMTALA standards.
"This came out of left field," says Vernaglia. "Not that there haven’t been discussions of revenue reduction in outpatient for years. But this showed up out of the blue and the industry barely had time to respond."
Vernaglia's been nosing around the Hill, though, and finds "some congressmen are upset about the impact on their communities" of the provision. And the coming expiration on December 11 of the Continuing Resolution, which is still needed to fund government activities, presents an opportunity for at least a modification of the section.
"Our goal is to show folks on the Hill that there are a lot of projects underway in various degrees of completion that will be affected – from signed letters of intent to shovels in the ground," says Vernaglia. He expects intrested parties to push for at least a more lenient interpretation of grandfathered projects – "right now, unless you actually dropped a bill under OPPS, you’re not grandfathered."
Vernaglia thinks there's a good case for rolling the changes back. "Before this a hospital could extend its reach 70 miles to serve its community," he says. "Now it’s 500 yards. That’s a big change."