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Hospital Groups Criticize New CMS Rule

Agency aims to reduce payments to hospital-owned outpatient facilities

Hospitals have reacted sharply to a proposed rule from the Centers for Medicare and Medicaid Services (CMS) to remove most Medicare nonemergency off-campus health services from the Outpatient Prospective Payment System (OPPS). The rule would implement Section 603 of the Bipartisan Budget Act of 2015 and is expected to save approximately $500 million a year, according to the CMS. The change would take effect on January 1, 2017.

The agency is proposing to pay the nonfacility or office Medicare Physician Fee Schedule (MPFS) amount to the performing/supervising physician and to preclude hospitals from billing on a UB-04 form or receiving OPPS payment for services performed at these locations for 2017.

Physicians would be paid at the higher nonfacility rate of the MPFS, but only hospitals that have employed or contracted physicians that reassign their billing to the hospital would get paid under the MPFS for these services.

Hospitals would be able to bill claims on CMS-1500 forms for physicians who have already reassigned their billing to the hospital, as in the case of employed physicians. Otherwise, hospitals would have the option of enrolling the location as the type of provider or supplier it wishes to bill to meet the requirements of that payment system (e.g., ambulatory surgery center or group practice).

The CMS would allow certain items and services to continue to be billed under the OPPS:

  • All items and services furnished in a dedicated emergency department
  • Items and services furnished in a hospital department within 250 yards of a remote location of the hospital and within 250 yards of the main hospital (i.e., on-campus)
  • Items and services that were furnished and billed by an off-campus provider-based department (PBD) before November 2, 2015

Hospitals could also continue to bill for services at these facilities that are not paid under the OPPS, such as laboratory services.

In a statement, American Hospital Association Executive Vice President Tom Nickels said that he was “extremely dismayed by the short-sighted policies in [the] proposed rule.”

“Hospitals and health systems and more than half of the House and the Senate requested that CMS provide reasonable flexibility when implementing Section 603 of the Balanced Budget Act of 2015 in order to ensure that patients have continued access to hospital care,” he said. “Instead, the agency is actually proposing to provide no funding support for outpatient departments for the services they provide to patients. This does not reflect the reality of how hospitals strive to serve the needs of their communities.”

Bruce Siegel, MD, president and CEO of America’s Essential Hospitals, echoed those sentiments. According to Siegel, the proposed rule “threatens to reduce access to badly needed health care services in the nation’s most underserved communities.”

“Hospital systems that otherwise would seek to enhance access by establishing new clinics in underserved areas will not do so, as this damaging payment policy makes new outpatient centers economically unsustainable,” he warned.

Sources: HealthLeaders Media; July 8, 2016; HealthLeaders Media; July 7, 2016; and CMS; July 6, 2016.

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