CMS Finalizes Site-Neutral Payment Rule

omniMD-twitterBy OmniMD
Twitter: @omnimd

In a final rule that changes the way off-campus facilities are reimbursed, the CMS was flexible in grandfathering some hospitals that had to relocate their buildings because of natural disasters.

CMS released a final rule that stops paying hospital off-campus facilities the same as hospital-based outpatient departments if they started billing Medicare after Nov. 2, 2015. The change will make it difficult for health systems to recoup capital or operational costs for off-site facilities, even though they are responsible for continuing to equip and maintain the off-campus offices.

Hospital groups and even Congress had been concerned that the draft rule did not protect recently-relocated off-site facilities that had to move because of environmental issues such as being located on an earthquake fault line or a flood plain, having a lease expire, or becoming too small because of population shifts and increased patient loads.

In response, the CMS is allowing exceptions for extraordinary circumstances. The agency warns, however, that they will be rare and unusual.

The site-neutral policy was adopted by Congress in response to a 2013 Medicare Payment Advisory Commission report that found Medicare was paying 141% more for a Level 2 echocardiogram in an outpatient setting than the program paid for one performed in a physician’s office. The ability to acquire higher rates is, in part, what’s led to hospitals acquiring physician offices at a rapid clip.

The CMS’ actuary has estimated that so-called site-neutral payments for ambulatory care, which Congress called for a 2015 spending bill, would save Medicare about $500 million in 2017.

Also protected in the final rule are off-campus facilities that change ownership, if the new owners accept existing Medicare provider agreements.

The draft rule identified off-campus hospital outpatient departments as those located more than 250 yards from a hospital campus or a remote location of a hospital.

Industry stakeholders argued that a strict interpretation of the 250-yard criterion would affect hospitals that have natural or man-made barriers on their campuses including rivers, wetlands and highways; those located in densely populated urban areas; or those located on landlocked university campuses.

In these instances, they urged the CMS to instruct its regional offices to use the rule of “reasonable proximity” when making on-campus determinations and to evaluate on-campus status within the context of the hospital and its surrounding geography.

The CMS said this move was unnecessary. “CMS Regional Offices have been making on-campus and off-campus provider-based determinations for many years, with relatively few instances where there has not been consensus as to whether a facility was on-campus or off-campus,” the agency says in the final rule.

Overall, hospitals will see a 1.6% or $773 increase in payments for outpatient services, and ambulatory surgical centers will see an increase of 1.9%, or $63 million, in 2017 compared with 2016.

This article was originally published on OmniMD and is republished here with permission.