United States: Proposed 2017 Hospital OPPS Rule Would End Medicare Payments To Many Off Campus Facilities At The Same Levels As Hospital-Based Outpatient Departments

Last Updated: August 15 2016
Article by Wilson Hayman

Published on July 14, 2016, CMS's proposed 2017 Hospital Outpatient Prospective Payment System (OPPS) rule calls for site-neutral payments that would stop Medicare payments to many off-campus facilities at the same level as payments to hospital-based departments.

In its commentary to the proposed rule, CMS notes the dramatic trend in recent years toward hospital acquisition of physician practices and the integration of those practices into hospital departments has resulted in higher Medicare payments and beneficiary cost-sharing. The higher payments are due to Medicare's payment of two separate claims for services provided in an off-campus department of a hospital – one under the OPPS for institutional services, and one under the Medicare Physician Fee Schedule (MPFS) for professional services. In its news release, CMS indicated that these higher payments made to hospital-owned facilities have been a long-standing concern of HHS's Office of Inspector General, the Medicare Payment Advisory Commission, and members of Congress.

In the Bipartisan Budget Act of 2015 (the Budget Act), Congress amended the OPPS statute to provide that as of January 1, 2017, applicable items and services furnished by certain off-campus outpatient departments of a hospital will not be considered a covered hospital outpatient provider-based department (PBD) service for purposes of payment under the OPPS. Such items and services will instead be paid "under the applicable payment systems" under Medicare Part B. The Congressional Budget Office estimated program savings of approximately $9.3 billion over a ten year period due to this provision alone.

The Budget Act exempted from these new requirements any such off-campus outpatient departments existing prior to the Budget Act's enactment on November 2, 2015, but only for the same types of items and services they had furnished and billed under the OPPS prior to that date. In light of the perceived Congressional intent to curb hospitals' acquisition of physician practices, CMS has proposed in the new rule this exception only applies to existing off-campus departments as of that date, but not to any relocation to another location or even to another suite or unit in the same building.

Specifically, CMS proposes to exempt from this new rule off-campus outpatient departments items and services provided at one of these three locations, which would continue to be paid under OPPS: (1) a dedicated emergency department that meets one of several requirements; (2) on-campus locations, using the current definition of "campus;" and (3) departments at or within 250 yards of a "remote location" that have been recognized to have provider-based status. Further, CMS proposes to limit the exception for off-campus programs billed under OPPS to items and services part of one or more of 19 "clinical family of services" of hospital outpatient service types named in the rule (see 81 Fed. Reg. at 45685), if they have been furnished on site and billed prior to November 2, 2015. Consequently, a hospital under the proposed rule could not expand the services provided at excepted off-campus outpatient PBDs and continue to bill under OPPS.

CMS proposes that an off-campus hospital outpatient PBD may be transferred and continue to bill under OPPS only if the ownership of the main hospital or provider is also transferred and the Medicare provider agreement is accepted by the new owner. If the provider agreement is terminated, off-campus PBDs that bill under OPPS would no longer be excepted. Individual, excepted off-campus PBDs may not be transferred from one hospital to another (without transferring the main hospital) and retain their excepted status.

Because CMS does not currently have a mechanism to pay the off-campus PBD for nonexcepted items and services (other than OPPS), CMS proposes that for the year beginning January 1, 2017, nonexcepted items and services at off-campus PBDs will be paid under the MPFS at the nonfacility rate, and no separate facility payment will be made. CMS is soliciting public comments for a new payment system other than OPPS to be used by off-campus PBDs beginning January 1, 2018, to bill for nonexcepted items and services. This new system may or may not include a payment for facility services.

CMS's proposals have been met by sharp responses from hospital groups, who have criticized the limitations imposed on new off-campus hospital PBDs and on relocating or building new outpatient facilities. Critics believe these steps will seriously undermine hospitals' ability to provide care to underserved communities. CMS has solicited public comments on many elements of its proposals, including:

  • Whether it should adopt a limited relocation exception process for natural disasters and other specific, extraordinary circumstances beyond the hospital's control;
  • Whether it should require hospitals to separately self-report the items and services furnished by each off-campus outpatient PBD, the date it began billing for those services, and the clinical families of services provided there prior to that date;
  • The 19 proposed "clinical families of services" that may continue to be billed under OPPS, if other requirements are met;
  • Whether CMS should adopt a specific time period within which the prior items and services had to be billed in order to be exempted;
  • Whether CMS should also limit the volume of services furnished within a clinical family of services for which the hospital was billing prior to November 2, 2015;
  • The impact of other billing rules, fraud and abuse laws, and other statutes, rules and provisions on these proposals; and
  • The changes needed to enrollment forms, claim forms and hospital cost reports, among other operational changes.

The deadline for submitting comments to CMS on the draft rule is September 6, 2016.

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.

Wilson Hayman
In association with
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
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.


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.


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.


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.


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.


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.


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.