The good news this week from Washington is that Congressional leaders, in a rare show of bipartisanship, agreed upon a proposed budget deal that will prevent a shut-down of the federal government next week and prevent a sharp spike in Medicare Part B premiums. The bad news for hospitals, however, is that one of the proposals to pay for the deal is to significantly alter how hospitals are reimbursed for services furnished at off-site, provider-based outpatient facilities. The proposed deal would prohibit new off-campus facilities that are bought or established by a hospital from being paid by Medicare under its outpatient prospective payment system (“OPPS”). Instead, such facilities will only be eligible for reimbursement under the Medicare physician fee schedule or the ambulatory surgical center payment system. Existing provider-based outpatient departments would be grandfathered under the proposed budget deal and will continue to be paid under OPPS. To be eligible for this favorable treatment, the off-campus outpatient department must have been "billing” prior to the date of enactment of the bill.

The proposal most likely would result in large financial losses for hospital provider-based facilities, and could dissuade hospitals from pursuing the development of further off-campus facilities. There are further concerns that the proposed deal might adversely impact an off-site facility’s eligibility to qualify as a "child site” under the 340B drug discount pricing program.

The bill has passed the House and is at the Senate, where approval is expected shortly, after which it will be presented to the President for signing. Therefore, the time window is extremely short for hospitals to qualify a new off-campus facility under the grandfathering exception and to be eligible for payment under the Medicare OPPS. Any hospital that is in the final stages of establishing such a facility is well-advised to expedite its process and drop a bill as soon as possible to avoid the unfavorable payment implications.