United States: "Site Neutrality" For Off-Campus Outpatient Departments: Proposed Rule Is Worse Than You Expected!

Please note, Cheryl Storey, CPA with Moss Adams LLP is also a co-author of this post.

CMS issued its Outpatient Prospective Payment System ("OPPS") Proposed Rule for 2017 (the "Proposed Rule") on July 6, 2016. The Proposed Rule will be published in the Federal Register on July 14, 2016. One highly-anticipated section of the Proposed Rule is the implementation of legislations known as Section 603 of the Bipartisan Budget Act of 2015 ("BiBA 603"), which imposed "site neutrality" on new off-campus outpatient departments of hospital providers ("OCODPs"). Essentially, in BiBA 603, Congress said that new OCODPs would not be eligible for payment under the Medicare OPPS after January 1, 2017 (but rather would be paid as would freestanding sites, hence the "site neutrality" imposed by the legislation). But many unanswered questions were left by Congress for CMS or the Courts to answer. To view prior alerts which discuss these issues, click here.

CMS has now proposed its own answers to many of those open questions – and the hospital community will not like them. Here is a short summary of the key business issues arising from the Proposed Rule in connection with BiBA 603.

  • Grandfathered (now referred to by CMS as "excepted") OCODPs will not be able to relocate, even to other units within an existing medical office building.
  • Grandfathered OCODPs will not be able to expand the services they offer beyond the same "families of clinical services" that the specific OCODP offered prior to November 2, 2015 and have them paid under OPPS. OCODPs will be frozen in time as they were in 2015.
  • 340B drug pricing appears to be intact in non-exempt OCODPs. CMS made a point to state that the non-exempt OCODPs are still provider-based to the hospital and was careful to say that this was a payment rule change only. While CMS was silent on the specific application to 340B Drug Pricing Program eligibility, these clarifications should allow (both exempt and non-exempt) OCODPs for 340B participating hospitals to meet current 340B standards.
  • Hospitals will find that some services ("exempted services") within a grandfathered OCODP will continue to be billable under OPPS, on a UB-04, while other services ("non-exempted services") in the same facility will need to be billed under an alternate method, and that method will be the Medicare Physician Fee Schedule, as a free-standing entity, for 2017 at least.
  • Dedicated Emergency Departments will be entirely exempt and all services (even non-emergency services) will be exempt from site-neutrality payment provisions.
  • In 2017 (and maybe for a longer period of time), services (1) furnished in a non-grandfathered/non-excepted facility or (2) services that are non-exempted will need to be billed by the physician or non-physician practitioner (at the non-facility rate), and the hospital will need to figure out whether and how to collect its portion of the fee from the physicians. Alternatively, under reassignment, the hospital would bill on the CMS 1500 claim form for all services and reimburse the physician or non-physician practitioner for their services.
  • Assuming the Proposed Rule goes into effect as proposed, this will result in a flurry of contracting with myriad independent medical groups during the 4th quarter of the year if hospitals are going to be prepared FOR the physicians to do the billing as of January 1, 2017.
  • A hospital may not sell an excepted OCODP (they are not medallions), but if provider is sold or merges in its entirety, an OCODP's grandfathered status "generally transfers" to new ownership as long as no "material change" of PB status and the new owner accepts the prior hospital's provider agreement and all its liabilities.
  • Billing for non-exempt services will be confusing, including the potential impact of the hospital deductible to services that will in the future be billed under the MPFS.

Next Steps

While many hospitals and trade associations already offered specific comments – many directly opposed to the implementation proposed by CMS, we note that formal comments are being accepted on this proposal (CMS-1656-P) by September 6, 2016. We urge interested parties to assess the impact of these proposals on their operations and offer comments.

The U.S. House of Representatives recently passed legislation that would exclude cancer hospitals in off-campus outpatient departments from the new payment methodology and extend the date by which mid-build outpatient departments had to attest to a binding written agreement with an outside party for construction. However, it is unclear whether the U.S. Senate will take up the measure or propose alternate legislation. In May, dozens of federal legislators sent a bipartisan letter to CMS available here urging the agency to be flexible in its interpretation of the law in order to ensure access to quality care for Medicare patients. It is anticipated that a similar effort will occur prior to the final rule being issued. Congress is scheduled to recess later this week until September. Stay tuned…

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.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions