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Bipartisan Budget Act Means Big Changes for New Off-Campus HOPDs

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The highly publicized Bipartisan Budget Act of 2015, approved by the Senate on the morning of October 30, will do more than just raise the nation’s debt ceiling. It also will exclude newly acquired, off-campus hospital outpatient departments (HOPDs) from receiving reimbursement under Medicare’s outpatient hospital prospective payment system (OPPS). Instead, after January 1, 2017, these new off-campus locations would be reimbursed under the Ambulatory Surgical Center Prospective Payment System (ASC PPS) or the Medicare Physician Fee Schedule (PFS).

According to the bill passed by the House and Senate, only off-campus HOPDs that are billing for applicable services on the date of enactment can continue to receive Medicare payment under OPPS after January 1, 2017.

Important Details

  • On-campus departments are not affected by this legislation
  • The definition of an on-campus outpatient department has changed slightly to be within 250 yards from the main campus or within 250 yards from a remote location (i.e., a facility providing inpatient services under the name and control of the main provider)
  • Facilities under construction or soon to be acquired will not be grandfathered; only those sites that are billing as an HOPD by the date of enactment will continue being reimbursed under OPPS
  • Off-campus emergency departments are excluded from this change (i.e., off-campus emergency departments will still be paid as HOPDs)
  • This legislation does not affect commercial reimbursement

What This Means to You

Many hospitals have used the enhanced reimbursement that would result from converting physician practices and ancillary services to provider-based status to inform the financial case for the acquisitions. This has been especially true for cardiology transactions, since reimbursement for imaging and procedures is significantly enhanced under provider-based status, as well as for oncology transactions, which have enabled some hospitals to use the 340B Drug Pricing Program to sharply reduce chemotherapy drug costs when administered at a provider-based setting.

The exclusion of new off-campus clinics from OPPS reimbursement will require creative thinking about the services hospitals provide in these settings and the cost structure of their off-campus facilities. The table below provides guidance for those affected by this legislation.

Situation

Considerations

You currently operate off-campus provider-based clinics.This legislation does not affect your existing clinics, but it should be taken as a sign that Congress is heeding the advice of the Medicare Payment and Access Commission (MEDPAC) and the Office of Inspector General of the Department of Health and Human Services (OIG) to reduce differences in payment rates between HOPDs and physician offices.
You will be opening an off-campus provider-based clinic in the immediate future. Get the facility operational immediately and begin billing for services. If the facility fails to be grandfathered, the financial and operations plan will need to be updated. You may determine that plans for the services to be provided at the new site need to be revisited.
You are planning future off-campus clinics. Update your plans to reflect reimbursement and costs as a freestanding facility rather than an HOPD. If you are planning a major ambulatory facility, payor and service mix will need to be considered in off-campus facilities. Certain services may need to be moved off campus and others brought on campus to manage cost structures.

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