Starting next year, Medicare would no longer pay a higher hospital outpatient facility fee for certain items and services provided in an off-campus, provider-based setting (place of service 19), under a CMS proposal issued July 6.
The agency plans to implement
Section 603 of the Bipartisan Budget Act of 2015, which will eliminate provider-based payment arrangements for hospital-owned practices that were set up after Nov. 2, 2015, the date President Obama signed the law. CMS included the change as part of its proposed 2017 hospital outpatient prospective payment system (OPPS) rule (
CMS-1656-P).
“This payment differential has encouraged hospitals to acquire physician offices in order to receive the higher rates,” the agency contended in a release issued with the rule. As well as Congress, the Medicare Payment Advisory Commission (MedPAC) and
the HHS Office of Inspector General (OIG) have also had concerns about provider-based billing arrangements, the agency noted. CMS estimated that deleting the policy could save the Medicare program $500 million a year.
Instead of paying non-exempt POS 19 centers under OPPS, CMS is proposing to pay them under the Medicare physician fee schedule, at the non-facility (physician office) rate, at least in 2017.
POS 19 centers set up before Nov. 2 would be exempt from the change, except:
- Any new items and services these centers added after Nov. 2 would be paid under the physician fee schedule, not the OPPS and
- It has to remain in the same off-campus location where it was on Nov. 2. If it moves, the POS 19 center will lose its provider-based billing status (CMS is requesting comment on whether it should allow exceptions to this rule for extraordinary circumstances outside the hospital’s control).
CMS also proposed that if an exempted center changes ownership, it can retain its provider-based billing status, so long as the new owner accepts the existing Medicare provider agreement from the prior owner.
Other exempted situations include “all items and services furnished in a dedicated emergency department” as well as “items and services furnished in a hospital department within 250 yards of a remote location of the hospital,” the agency stated.
Starting in 2018, CMS would be open to allowing off-campus outpatient centers to be paid under an alternate Medicare Part B payment system, for example as ambulatory surgery centers or group practices, provided they “can meet all federal and other requirements.”