Summary

On July 6, 2016, the Centers for Medicare & Medicaid Services released the CY 2017 Outpatient Prospective Payment System (OPPS) Proposed Rule, which includes proposed regulations to implement Section 603 of the Bipartisan Budget Act of 2015. Effective January 1, 2017, Section 603 bars Medicare payments under the OPPS for items or services (other than services furnished by a dedicated emergency department) furnished at an off-campus provider-based department, unless the location was billing as an outpatient department of a hospital prior to November 2, 2015.

Background

On July 6, 2016, the Centers for Medicare & Medicaid Services (CMS) released the CY 2017 Outpatient Prospective Payment System (OPPS) Proposed Rule, which includes proposed regulations to implement Section 603 of the Bipartisan Budget Act of 2015. Effective January 1, 2017, Section 603 bars Medicare payments under the OPPS for items or services (other than services furnished by a dedicated emergency department) furnished at an off-campus provider-based department (PBD), unless the location was billing as an outpatient department of a hospital prior to November 2, 2015. Further discussion of Section 603 is available here and here.

The Proposed Rule comes shortly after the House Ways and Means Committee approved new legislation that would create broader exceptions under Section 603. Under the bill, which the Senate has not yet approved, an off-campus PBD could continue to be eligible for higher OPPS payments in 2017 if the host hospital submitted a voluntary provider-based attestation to CMS pursuant to 42 CFR § 413.65(b)(3) before December 2, 2015.

Effective January 1, 2017, Medicare will pay for such items and services under the applicable fee schedule rather than the OPPS. Payment under the OPPS can be considerably higher than payment under the Medicare Physician Fee Schedule (MPFS) or the Ambulatory Surgical Center (ASC) fee schedule, for example, for the same services, which has been a concern of Congress and the US Department of Health and Human Services Office of Inspector General (OIG), which last month released a report recommending elimination of the provider-based distinction (discussion of the OIG report is available here).

CMS estimates that the proposed implementation of Section 603 will reduce net OPPS payments by $500 million in 2017 and increase payments to physicians under the MPFS by $170 million, resulting in a reduction of Part B expenditures by $330 million.

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