Health Care Alert: Budget Act to Significantly Reduce Hospital Provider-Based Reimbursement For New, Off Campus Sites

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The Bipartisan Budget Act of 2015 (the Act) was enacted just days ago.  When the Act takes effect, it will materially reduce reimbursement for new, off campus hospital outpatient departments (OPD), such as hospital-based clinics.  Currently, off campus provider-based OPDs are reimbursed under the Medicare Hospital Outpatient Prospective Payment System (OPPS).  Under the Act, beginning on January 1, 2017, most items and services furnished by a new, off campus OPD will no longer be paid under the OPPS, but rather the lower reimbursed Medicare Physician Fee Schedule or Ambulatory Surgical Center Prospective Payment System (assuming the site is properly enrolled in Medicare and otherwise meets the requirements to receive payments under these alternative reimbursement systems). 

There are important exceptions to this change:

Regulatory guidance is needed to explain multiple open issues and implications under the Act, and there is certainly time for the requirements of the Act to be revised or postponed going forward.  Regardless of what the future holds, the Act is clearly a big step toward reimbursement neutrality and away from site of service billing, likely in response to increased consolidation within the industry and increased implementation of off-campus provider-based sites in recent years. Consideration must also be given to how the Act could impact billing under Medicaid (to the extent the Medicaid program in a given state follows the Medicare provider-based standards, as in Ohio), as well as potential private payor arrangements. The Act may also impact 340B drug access (typically limited to provider-based sites), and we cannot say at this time whether the exceptions to the Act are actually permanent.

While the Act is understandably creating significant concern within the hospital community and elsewhere (including the real estate community), it also serves as a stark reminder to hospitals to periodically audit their existing provider-based sites to ensure continued compliance with Medicare’s many operational, financial, and administrative integration requirements. Vorys has developed several tools to audit provider-based compliance for existing sites and to design and implement new provider-based sites in compliance with current law.  A provider’s failure to engage in such a review, or its failure to return amounts which may have been paid in error due to incorrect site of service billing, could have very serious compliance consequences, including the potential loss of Medicare participation and staggering financial consequences under the federal False Claims Act.

Vorys will be hosting a webinar on the Act and the impact it will have on new OPDs on December 9, 2015 at 12pm. If you have any questions regarding the Act and its impact on provider-based billing, or provider-based compliance for existing sites, please contact Jolie Havens (614.464.5429) or Stephanie Angeloni (330.208.1136).