Business Briefs: Pay Attention to 2017 Final Rule About On-Campus & Off-Campus Provider-Based HOPDs

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The June, July, and August 2016 editions of Business Briefs provided targeted information about:

• the difference between a  provider-based hospital outpatient department (HOPD), ambulatory surgical center (ASC), and provider-based outpatient surgery department of a hospital;
• the importance of reporting the correct outpatient site of care on claims submitted to Medicare;
• how to determine whether or not an HOPD qualifies for provider-based designation;
• how to determine if a provider-based HOPD is on campus or off campus; and
• the portion of the “proposed” Hospital Outpatient Prospective Payment System (OPPS) 2017 rule that pertains to off-campus provider-based departments. 

Many wound care professionals provided comments to the Centers for Medicare & Medicaid Services (CMS) about the proposed OPPS 2017 rule. CMS addressed all comments in the 2017 OPPS and ASC final rule that was released Nov.1. For those who may have forgotten, Section 603 of the Bipartisan Budget Act of 2015 requires certain items and services furnished by certain off-campus HOPDs will no longer be paid under the OPPS beginning Jan. 1, 2017. Currently, Medicare pays a higher rate for the same services provided in an HOPD than in a physician’s office. This payment differential has provided an incentive for hospitals to acquire physician offices in order to receive the higher rates. This acquisition trend and this difference in payment have been long-standing issues of concern by Congress, the Medicare Payment Advisory Commission, and the U.S. Department of Health & Human Services’ Office of Inspector General. This difference in payment also increases costs for the Medicare program and raises the cost-sharing liability for the Medicare beneficiaries. The 2017 OPPS final rule is very important to wound care professionals who implemented off-campus wound care programs after Nov. 2, 2015, or who are in the midst of opening an off-campus wound care program. The rule provides many intricate details about the new off-campus provider-based department (PBD) regulations (and can be found online: www.gpo.gov/fdsys/pkg/FR-2016-11-14/pdf/2016-26515.pdf). This is just the beginning of the off-campus PBD regulations. Therefore, wound care professionals should pay close attention to future off-campus PBD regulations. For now, let’s review some of highlights of the 2017 OPPS final rule that may affect off-campus PBDs. The 2017 OPPS final rule clearly distinguishes between the off-campus PBDs that will be paid under the OPPS and the off-campus PBDs that will be paid “under the applicable new payment system” beginning Jan. 1, 2017. First, let’s review the items and services that certain off-campus PBDs will be permitted to bill Medicare under the OPPS. Medicare refers to these as “excepted” off-campus PBDs and will pay for the “excepted” items and services when they are provided:

• by a dedicated emergency department;
• by an off-campus PBD that was billing for covered HOPD services furnished prior to Nov. 2, 2015, (ie, the date of enactment of Section 603 of the Bipartisan Budget Act) that has not relocated without CMS permission or changed ownership; or
• in a PBD that is “on the campus,” or within 250 yards of the hospital or a remote location of the hospital. 

NOTE: If an off-campus PBD was in development prior to Nov. 2, 2015, but did not furnish any services prior to Nov. 2, 2015, it will not be “excepted” and will not receive OPPS payments. The final rule clarifies the relocation of “excepted” off-campus PBDs by stating that items and services must continue to be furnished and billed at the same physical address of the off-campus PBD as was used as of Nov. 2, 2015. These “excepted” off-campus PBDs will only be allowed to relocate temporarily or permanently due to extraordinary circumstances outside of the hospital’s control, such as natural disasters, significant seismic building code requirements, or significant public health and public safety issues that necessitate moving to a new building (either temporarily or permanently). Exceptions for extraordinary circumstances will be evaluated and determined by the applicable CMS regional office and are expected to be rare and unusual. NOTE: If an off-campus PBD was billing Medicare and receiving OPPS payment prior to Nov. 2, 2015, and then moved to a different off-campus location, the new location will no longer receive OPPS payment. The final rule also clarifies the change of ownership of “excepted” off-campus PBDs by stating that if the hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner, the off-campus PBD will be permitted to maintain its “excepted” status. Additionally, the final rule reiterates that physicians and other qualified healthcare professionals (eg, medical doctors, doctors of osteopathic medicine, doctors of podiatric medicine, nurse practitioners, physician assistants, and clinical nurse specialists) who work in on-campus or off-campus “excepted” or “nonexcepted” PBDs will continue to submit professional claims and will be paid at the facility rate under the Medicare Physician Fee Schedule (MPFS). To address changes required by Section 603 of the Bipartisan Budget Act, the final rule established the MPFS as the “applicable payment system” for “nonexcepted” items and services furnished in “nonexcepted” off-campus PBDs. Due to concerns with the significant changes that would need to be made to complex Medicare billing and claims systems, CMS officials have stated they would not be able to operationalize a mechanism to make payment to the “nonexcepted” off-campus PBDs for “nonexcepted items and services” under a payment system other than the OPPS by Jan. 1, 2017.   

Therefore, CMS also issued an interim final rule with comment period (IFC) that sets a temporary, two-year payment rate for “nonexcepted“ items and services furnished in “nonexcepted” off-campus PBDs at 50% of the OPPS rate. NOTE: Some exceptions are spelled out in the IFC (eg, the payment for separately payable drugs will not be reduced). Packaging and certain other OPPS policies will continue to apply to the “nonexcepted” off-campus PBDs. For example, drugs and biologics (eg, cellular and/or tissue-based products for skin wounds) that are packaged into OPPS services are not separately paid under the current OPPS rates and will not be separately paid under the newly established temporary rates. See the Table on page 8 for a full range of exceptions and adjustments to the otherwise applicable OPPS payment rates being adopted as the new MPFS payment rate for “nonexcepted” off-campus PBDs. CMS is 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 calendar year 2017. 

“Nonexcepted” off-campus PBDs must report the “nonexcepted” items and services on an institutional claim form and must identify each line item with a new claims-processing modifier “PN” - nonexcepted service provided at an off-campus, outpatient, provider-based department of a hospital. Therapy services, preventative services, and separately payable drugs will continue to be paid at the MPFS rate. The “excepted” off-campus PBDs will continue to identify each claim line item with the modifier “PO.” The description of this modifier has been revised: excepted service provided at an off-campus, outpatient, PBD of a hospital. The supervision rules that apply to HOPDs will continue to apply for on-campus, “excepted” off-campus, and “nonexcepted” off-campus PBDs. The Bipartisan Budget Act did not change the status of these PBDs; it only changed the status of and payment mechanism for the services they furnish. This author has received multiple calls from people asking if a hospital that has a “nonexcepted” off-campus PBD can enroll the department as another type of provider. According to the 2017 OPPS final rule, “Provided it can meet all federal and other requirements, a hospital continues to have the option of enrolling the nonexcepted off-campus PBD as the type of provider/supplier for which it wishes to bill in order to meet the requirements of that payment system (such as an ASC or a group practice).”

Summary

Wound care professionals who in off-campus PBDs that did not provide services in that department prior to Nov. 2, 2015, or are in the midst of opening an off-campus PBD, or plan to open an off-campus PBD should read the 2017 OPPS final rule carefully and study the Table carefully. Be prepared for major changes to the Medicare payment system effective Jan. 1, 2017. In some situations, it may be better to convert the off-campus PBD to a group practice.