On November 1, CMS published its final rule regarding the Hospital Outpatient Prospective Payment System (OPPS), including much-anticipated changes to the rules regarding provider-based billing. CMS’s goal is to limit the expansion of provider-based billing, and the final rule specifically addresses both the location of off-campus provider-based departments (PBDs) and the services furnished at these locations.

As of January 1, 2017, certain items and services furnished by certain off-campus outpatient departments will not be considered CMS-covered outpatient services for purposes of payment under the OPPS, and will instead be paid under the applicable payment system under Medicare Part B. However, an off-campus PBD that provided covered services under the OPPS prior to November 2, 2015 will have “excepted” status and may continue to bill for such services under the OPPS after the new year. Dedicated emergency departments and a PBD located “on campus” or within 250 yards of a hospital or remote location of a hospital will also have excepted status.

This alert addresses three of the more important parts of the final rule regarding off-campus PBDs: the relocation of an excepted off-campus PBD, the specific services that may furnished at each PBD, and change of ownership.

Relocation of an Excepted PBD

CMS originally proposed that excepted off-campus PBDs would no longer be excepted if the department moves or relocates from the physical address that was listed on the provider’s hospital enrollment form as of November 1, 2015. In the final rule, CMS adopted a limited exception to the original proposal regarding relocation: an excepted off-campus PBD can relocate 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, without losing its excepted status. Exceptions will be evaluated and approved or denied on a case-by-case basis by the appropriate CMS Regional Office. CMS noted that such exceptions will be both “limited and rare” due to its goal of limiting the growth and expansion of excepted off-campus PBDs. CMS will issue further guidance on this “extraordinary circumstances” exception later.

Expansion of Services

CMS originally proposed that if an excepted off-campus PBD furnished and billed for any specific service within one of the nineteen defined clinical family of services prior to November 2, 2015, such clinical family of services would be excepted and eligible to receive continued reimbursement under the OPPS. This original proposal had stated that services added and billed for after November 2, 2015 would not be eligible for payment under the OPPS. However, in the final rule, CMS did not finalize this limitation on the expansion of service lines. An excepted off-campus PBD will continue to receive payments under the OPPS for all applicable items and services, regardless of whether it furnished such items and services prior to November 2, 2015. The excepted off-campus PBD must simply retain its excepted status through its location. CMS stated that it still intends to monitor the expansion of service lines, so it is possible that CMS will revisit its original proposal in the future.

Change of Ownership

CMS finalized its proposal to allow an off-campus PBD to maintain its excepted status if a hospital has a change of ownership and the new owners accept the existing Medicare provider agreement from the prior owner. Note, however, that individual off-campus PBDs cannot change ownership and maintain their excepted status.

The limitation regarding relocation is bad news for providers, especially those off-campus PBDs in leased spaces. The good news is that CMS has not yet restricted reimbursement under the OPPS for an off-campus PBD’s service lines, but the limitation on relocation directly affects a provider’s ability to expand its service lines. The only certainty is that CMS will continue to limit reimbursement under the OPPS for off-campus PBDs in the future.