November 2016
CMS recently finalized sweeping changes to the way Medicare pays hospitals for services furnished in “new” off-campus provider-based departments (referred to as “off-campus PBDs”).

CMS revealed the changes on November 1 with the publication of the CY 2017 OPPS Final Rule (the “Final Rule”), which implements Section 603 of the BBA. Section 603 included revisions to payment for off-campus PBDs developed on or after November 2, 2015. A copy of the Final Rule can be found here. Section 603 is discussed on pages 79699 – 79729.

While rulemaking is constrained by the requirements of Section 603, CMS seems to have heard the concerns of stakeholders and has reversed course on a number of problematic proposals contained in its Proposed Rule.  

Highlights of the Final Rule include:  
  • No Mid-Build/Under Development Grandfathering - Payment reductions will apply to nonexcepted items and services furnished in departments that did not bill OPPS or provide OPPS billable services prior to November 2, 2015.  CMS did not implement a mid-build or under development exception and deferred to pending legislation.
  • Broad Exemption for Dedicated Emergency Departments; On-Campus PBDs - Payment reductions do not apply to any items or services provided in dedicated emergency departments, on-campus locations (as determined by the CMS Regional Office), or PBDs within 250 yards of remote locations.
  • How to Measure 250 Yards - CMS reinforced that Regional Offices have discretion to determine what qualifies as on-campus, including the discretion to extend the campus beyond 250 yards. CMS also confirmed 250 yards should be measured from any point on the main hospital/remote location to any point on the provider-based site. 
  • Elimination of Clinical Family of Services - Grandfathered locations may expand services in existing locations and remain grandfathered for all services as CMS eliminated its clinical family of services proposal.
  • Limited Ability to Relocate Grandfathered PBDs - CMS finalized its proposal to limit the ability of grandfathered sites to relocate, except in circumstances beyond the main provider’s control. Otherwise changing a grandfathered site’s address or suite number without CMS’s prior approval will risk grandfathered status.
  • Institutional Claims and the New PN Modifier - CMS will not require hospitals to re-enroll off-campus PBDs as a different provider/supplier type and will not require physicians to bill Medicare for hospital services as CMS originally proposed. Rather, CMS issued an interim final rule providing that hospitals will bill nonexcepted items and services on an institutional/UB claim form using a new “PN” modifier—rendering the services reimbursable for cost reporting and 340B eligibility purposes.  
  • Medicare Physician Fee Schedule is CMS’s Payment System of Choice - CMS will establish new payment rates for nonexcepted items and services based on the MPFS (i.e., a reduced amount using 50% of the OPPS payment as a benchmark for many services).
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