United States: Congress Considers Broader Hospital Site-Neutral Payment Exceptions and Other Payments Changes

Summary

New legislation would create broader exceptions under much maligned legislation enacted in 2015 that will equalize Medicare payments furnished in new off-campus outpatient facilities.

In Depth

The House Ways and Means Committee next week is expected to consider and approve the Helping Hospitals Improve Patient Care Act of 2016, legislation that would create broader exceptions under much maligned legislation enacted in 2015 that will equalize Medicare payments furnished in new outpatient facilities not on a hospital's campus beginning in 2017. The legislation, if enacted, would provide much needed and sought after relief for hospitals that were caught by surprise by the 2015 legislation. Although the future of the legislation is uncertain, hospitals affected by the 2015 legislation should consider taking steps now to protect potentially affected interests. Hospitals and other providers not affected by the 2015 legislation also should examine the bill because it proposes to make nearly a dozen other payment and regulatory changes that could be relevant.

Site-Neutral Payments for Off-Campus Provider-based Hospital Services

Section 603 of the Bipartisan Budget Act of 2015, enacted November 2, 2015, limits Medicare payments for items or services (other than services furnished by a dedicated emergency department) furnished at an off-campus outpatient department of a hospital, unless that location was billing as an outpatient department of a hospital prior to the date of enactment. Beginning January 1, 2017, Medicare will pay for such items and services under either the Medicare Physician Fee Schedule (MPFS) or Ambulatory Surgical Center (ASC) fee schedule, as applicable to the service provided, instead of under the Hospital Outpatient Prospective Payment System (OPPS). Payment rates under OPPS typically provide the hospital with a considerably higher payment amount than when services are paid under MPFS or the ASC fee schedule.

Almost immediately after that legislation was approved, hospitals besieged Congress with complaints about projects—some requiring substantial capital investment—that were already underway, and that were undertaken with the expectation of higher Medicare payments under the OPPS. Many of these hospitals complained that implementation of Section 603, as enacted, would disrupt long-standing plans and result in discontinued services.

The legislation that likely will be considered next week extends grandfather protection to some of these projects. Under the original legislation, a project would not be subject to the site-neutral payment policy if the hospital was billing Medicare for services furnished at that off-campus outpatient department location on or before November 2, 2015. Under the new bill, an off-campus outpatient department also could continue to be eligible for higher OPPS payments in 2017 if the host hospital submitted a voluntary provider-based attestation to the Centers for Medicare and Medicaid Services (CMS) pursuant to 42 C.F.R. § 413.65(b)(3) before December 2, 2015. Under guidance from CMS governing submission of provider-based attestations, for a hospital to have taken this step, the construction of the new off-campus outpatient department would have had to be complete and accepting or poised to accept patients.

While this new exception would affect only a few hospitals with complete projects that fell just short of the billing deadline, another exception may apply to more facilities. For services furnished on or after January 1, 2018, the proposed legislation would except from the site-neutral policy off-campus outpatient department locations that had a "binding written agreement with an outside unrelated party for the actual construction" of the new off-campus outpatient department before November 2, 2015. To be eligible under this alternative exception, the host hospital must also: (1) file a provider-based attestation for the new off-campus outpatient department before July 1, 2016; (2) submit a certification to CMS before July 1, 2016, that the hospital had a binding written construction agreement; and (3) add the off-campus outpatient department to the host hospital's Medicare enrollment form.

Whereas the narrower relief for off-campus outpatient departments with provider-based attestations filed before December 2, 2015 would be applicable only for 2017, the broader relief for off-campus outpatient departments with construction agreements in place as of November 2, 2015 (which would include hospitals eligible for the 2017 exception) would not be available until January 1, 2018. This means that hospitals able to take advantage of only the broader relief would not be eligible for OPPS payments during 2017, and would be subject to lower MPFS or ASC payments until January 1, 2018. The proposed legislation also would provide an exemption for off-campus outpatient departments of certain cancer hospitals that file provider-based attestations within 60 days of the date of enactment of the legislation (for departments meeting provider-based requirements between November 2, 2015 and the date of enactment) or within 60 days of the date of meeting provider-based requirements.

Notably, the legislation does not seek to provide CMS with further direction or clarification on other questions hospitals have raised about the original bill, such as how and whether the site-neutral payments would apply when a grandfathered off-campus department relocates or expands services, or undergoes a change in ownership. CMS is expected to publish proposed regulations to implement the original bill in coming weeks.

Of course, this relief will be available only if this legislation is approved by Congress and signed by the president. While approval by the House Ways and Means Committee is an important and notable step in that direction, it is but one step in a long, difficult process. Nonetheless, hospitals that were caught unaware and disadvantaged by the 2015 legislation, and that had a binding written agreement with an outside unrelated party for the actual construction of a facility before November 2, 2015, and that proceeded with the project, should consider whether to submit an attestation to the CMS pursuant to 42 C.F.R. § 413.65(b)(3) before July 1, 2016.

Additional Provisions

In addition to the proposed revisions to the Section 603 site-neutral payment policy, the legislation includes provisions that would make a variety of other important Medicare payment changes, including the following.

Rural Community Hospital Demonstration Program

The Rural Community Hospital Demonstration Program (RCH Demo) provides Medicare cost-based reimbursement to certain small rural hospitals that do not quality for cost-based reimbursement under the Critical Access Hospital designation. The legislation would extend the RCH Demo for an additional five years (through the end of calendar year 2021) and reopen the application process to hospitals in any state, but giving priority to hospitals in low population density states.

Long Term Care Hospital Moratorium and High Cost Outliers

The legislation would provide an exception to the current moratorium on new long term care hospitals (LTCHs) to allow for an expansion in the number of LTCHs beds at existing LTCHs and LTCH satellite facilities with expansion projects in place as of April 1, 2014. The legislation would also increase the cost threshold necessary for LTCHs to receive high cost outlier payments.

Hospital Inpatient Short-stays

Policymakers have in recent years wrestled with how to respond to an increased frequency of one-day inpatient admissions and extended observation stays in outpatient cases. This legislation takes an important step toward eliminating the financial incentives that drive these trends. Specifically, the legislation requires CMS to develop HCPCS codes (used to code outpatient services) associated with 10 surgical MS-DRGs that commonly have a one-day length of stay. While not stated expressly in the legislation, the purpose of establishing these HCPCS codes is to facilitate a crosswalk that will better connect inpatient and outpatient coding and payment systems for hospitals with the goal of identifying surgeries appropriate for site-neutral payment between inpatient and outpatient settings.

Ambulatory Surgical Centers and the Meaningful Use Program

Under the Medicare Meaningful Use program, physicians must conduct a threshold amount of patient encounters in settings with Certified Electronic Health Record Technology to meet program requirements. Patient encounters in the Ambulatory Surgical Center setting are included to determine whether the physician's threshold is met, but because ASCs were not included in the original Meaningful Use program, there is no CEHRT option available in the ASC setting. As such, in these instances, the physician adds to the denominator without adding to the numerator of the ratio. The ASC community has argued that this dynamic discourages physicians from furnishing Medicare cases in ASCs.

The legislation before the House Ways and Means Committee would prohibit CMS from penalizing physicians under the current Meaningful Use program or its equivalent under the new Merit-Based Incentive Payment System. This protection will be available to eligible professionals who furnish "substantially all" of their Medicare covered professional services in an ASC. The protection will be available until such time as CMS certifies an EHR system for ASCs.

Congress Considers Broader Hospital Site-Neutral Payment Exceptions and Other Payments Changes

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.