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CY 2017 HOPD/ASC Rule Finalized – Further Guidance on Off campus, Provider based Departments

November 3, 2016

CMS issued the final rule for its calendar year 2017 payment policy for hospital outpatient departments (HOPD) and ASCs, and CMS backed off some of its proposals to limit higher payments for off-campus, provider-based departments.

To review, President Obama signed a budget bill on November 2, 2015 that ended higher payments for off-campus, provider-based departments that were not in place before November 2, 2015. We refer to this as a “site-neutral payment policy.” If a service can be provided in different types of settings, then all settings would be paid the lowest rate. A department would be paid under the Medicare Part B schedule instead of the higher OPPS rate.

Medicare has estimated that this policy will save the government $500 million. One major controversy surrounds the 250-yard radius of the hospital. The hospital lobby continues to express concerns regarding this number and would prefer to allow the CMS regional offices to determine “reasonable proximity” when determining whether a provider-based department is off campus.

In July 2016, CMS offered proposals regarding the site neutral payments. One policy would have eliminated the ability of the grandfathered departments to receive a higher payment for services that they did not offer prior to November 2, 2015. Per CMS: “However, in response to public comments on administrative burden and complexity and potential beneficiary access issues, CMS is not finalizing this proposal. CMS will monitor expansion of clinical service lines by off-campus PBDs and continue to consider whether a potential limitation on service line expansion should be adopted in the future.”

CMS proposed to eliminate the grandfather for “excepted off-campus PBDs” if they relocate. CMS finalized this proposal. However, it will allow for exceptions in cases of natural disasters and similar circumstances.

CMS will allow the grandfathers of off-campus facilities to continue if they change ownership. However, the new owners must accept the existing Mediare provider agreements.

Applicable Payment System 

According to CMS:

For CY 2017, CMS is finalizing the MPFS to be the “applicable payment system” for non-excepted items and services furnished in a nonexcepted off-campus PBD. In light of public comment on the proposals regarding hospital billing and payment, CMS is issuing an IFC to establish new interim final MPFS rates so that hospitals may be paid for these nonexcepted items and services in CY 2017.

CMS-1656-IFC— Establishment of Payment Rates under the MPFS for Nonexcepted Items and Services Furnished by an Off-Campus Provider-Based Department of a Hospital

In conjunction with issuing the CY 2017 OPPS and ASC final rule with comment period, CMS also issued an IFC. The changes implemented through this IFC are intended to provide a billing mechanism for hospitals to report and receive payment under the MPFS for nonexcepted items and services furnished by off-campus PBDs to Medicare beneficiaries in CY 2017. Physicians furnishing such services will continue to be paid on the professional claim and will be paid at the facility rate under the MPFS consistent with current payment policies for physicians practicing in an institutional setting.

Under this IFC, CMS is establishing interim final site-specific rates under the MPFS for the technical component of all nonexcepted items and services. Hospitals will be paid under the MPFS at these newly established MPFS rates for nonexcepted items and services, which will be billed on the institutional claim and must be billed with a new claim line modifier “PN” to indicate that an item or service is a nonexcepted item or service. For CY 2017, the payment rate for these services will generally be 50 percent of the OPPS rate (there are some exceptions that are spelled out in the IFC, including that payment for separately payable drugs will not be reduced). Packaging, and certain other OPPS policies, will continue to apply to such services. We are seeking public comments on the new payment mechanisms and rates detailed in the IFC and, based on these comments, will make adjustments as necessary to the payment mechanisms and rates through rulemaking that could be effective in CY 2017.

Inpatient Only List – Spine and Total Knees

“The Medicare inpatient-only (IPO) list includes procedures that are only paid under the IPPS. Each year, CMS uses established criteria to review the IPO list and determine whether or not any procedures should be removed from the list. For CY 2017, CMS is removing seven procedures from the IPO list. The procedures include five spine procedures as well as two laryngoplasty procedures. The CY 2017 OPPS/ASC final rule with comment period also includes responses to a comment solicitation regarding whether total knee arthroplasty (TKA) should be removed from the IPO list in a subsequent year. CMS will consider all of these comments in future policy making.”

TOA included the AAHKS and AAOS comments regarding the potential removal of TKA from the inpatient only list in the last eConnect. Click here to view the AAHKS response.

Issues in the July 2016 Proposal

Click here to access this link on our protected page to gain access this same article to review all of the issues that TOA followed when the proposal was released in July 2016.