One large health system foresees impacts of the proposed rule on at least two facilities it operates.


Sept. 6—Planned cuts in Medicare payments for new off-campus outpatient departments drew calls this week for a one-year enforcement delay to ensure hospitals avoid kickback charges, among other serious potential problems.

The Centers for Medicare & Medicaid Services (CMS) proposed a rule in July to implement provisions of the Bipartisan Budget Act of 2015 (BBA), which required Medicare to reduce hospital outpatient rates to match physician fee schedule rates at off-campus hospital outpatient departments (HOPDs) that became active after Nov. 1, 2015.

Although CMS plans to begin the rate switch on Jan. 1, 2017, the agency has yet to develop a new payment system for those facilities. So CMS has opted to treat such HOPDs as physician-owned clinics, paying the physicians directly and at much higher rates commensurate with covering all of a facility’s costs.

The various options for hospitals to obtain any resulting Medicare payments from the physicians fall into legal gray areas and have raised a range of hospital concerns, including the potential for criminal charges if hospitals guess wrong about how to obtain them.

“If adopted, these ‘site-neutral’ payment rules would force some hospitals into new financial arrangements with referring physicians that present substantial compliance risk—and the very real potential for investigation or prosecution—under the federal fraud and abuse laws,” stated an assessment by the law firm  Hogan Lovells performed for the American Hospital Association (AHA).

The assessment was among the factors cited in AHA’s call for CMS to delay implementing the provisions for a year.

“Because CMS cannot finalize its proposal without forcing impacted hospitals to accept significant compliance risk, it must delay the implementation of the site-neutral policies in the proposed rule by at least one year,” Tom Nickels, executive vice president for AHA, wrote in a comment letter to CMS.

Although Congress required CMS to implement the BBA provisions by 2017, hospital advocates noted that CMS has repeatedly delayed implementing other provisions beyond their statutory deadlines.

Cost Impacts

Additionally, the lower physician-fee rates proposed in the BBA rules would cut revenue far beyond what Congress intended in the law, according to hospital advocates. The HOPD payment changes required by the law are estimated to save Medicare $9.3 billion over 10 years, according to the Congressional Budget Office. But safety-net hospitals, for example, would see payments for some services cut between 50 percent and 90 percent, noted America’s Essential Hospitals in a comment letter.

Geisinger Health System is bracing for a financial impact on at least two of its HOPDs, Brian Restivo, director of financial reporting and system reimbursement, said in an interview.

“The push over the last couple of years from CMS was to move things to the outpatient setting, build these campuses where patients could get all of their outpatient care in one location, where they don’t need to come to the hospital,” Restivo said. “Now it seems like they’ve changed their mind or [their thinking] has flipped to where they want that but don’t want to pay the hospital rates.”

Geisinger is pressing CMS to create exemptions for facilities forced to leave their grandfathered locations for reasons outside of the health system’s control. For instance, Geisinger anticipates that one of its medical oncology practices will soon need to move from one off-campus location after the hospital from which it leased space was bought by a competing health system. Geisinger was considering moving the services to another Geisinger off-campus location, but the new rules would preclude OPPS Medicare rates if it did that.

“It’s going to make more sense from now on to keep the high-reimbursed services on campus, as opposed to moving them off,” Restivo said. “Obviously, we have to look at what is best for patients as well, but from a pure reimbursement standpoint that would make the most sense.”

The proposed rule also would require each affected clinic to spend up to $45,000 to reconfigure its coding and revenue systems, according to an HFMA estimate.

Another large Geisinger HOPD at which construction began before enactment of the BBA may end up getting protection from pending legislation. A House-passed bill, The Helping Hospitals Improve Patient Care Act, would amend the timing of the required switch to physician-office rates for remote outpatient departments that are newly acquired or built by hospitals. The bill would change the start of the rate switch from November 2015 to 60 days after the measure is enacted. The Senate has yet to take up the bill.

Expanding Scope

Many hospital advocates also raised concerns that CMS moved beyond the scope of the law by starting to track the services provided at existing HOPDs and limiting payments for new services added at those provider-based departments (PBDs).

“The plain language of the statute, therefore, fully exempts PBDs billing under OPPS before November 2, 2015, from Section 603’s site neutrality rule, regardless of any change to the PBD’s service lines,” Chip Kahn, president and CEO of the Federation of American Hospitals, wrote in comments submitted to CMS.

Premier noted in its comments that a delay also would provide more time both for the agency to develop and test a system to gather from hospitals the additional information required by the rule and for hospitals to accurately and reliably report that data.

The final rule implementing the HOPD provisions of BBA is expected in early November.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Tuesday, September 06, 2016