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January 23, 2017

CMS Issues Guidance on Billing to Newly Excepted Off-Campus Hospital Outpatient Departments

This Client Alert updates our last publication regarding the impact of the 21st Century Cures Act (the “Act”) on reimbursement to some off-campus hospital outpatient departments (“HOPDs”).

As we previously noted, Section 16001 of the Act provides for two new exceptions to the site neutrality requirements under Section 603 of the Bipartisan Budget Act of 2015. The new exceptions provide temporary grandfather status to certain off-campus HOPDs that filed voluntary attestations before December 2, 2015, and permanent but delayed grandfather status to HOPDs that were in “mid-build” at the time Section 603 was enacted.1 The Centers for Medicare & Medicaid Services (CMS) recently published preliminary guidance on its payment policy for these two newly excepted HOPDs that directs the newly excepted off-campus HOPDs on how to report their services for payment.2

2017 OPPS Payments for Services Furnished by HOPDs That Met Voluntary Attestation Deadline

Under the first new exception, so long as the HOPD furnished services under the Outpatient Prospective Payment System (OPPS) as of November 2, 2015, and the hospital submitted a voluntary attestation representing that their HOPD was a provider-based department of the hospital in accordance with 42 C.F.R. Section 413.65(b)(3) before December 2, 2015, the HOPD is permitted to bill under OPPS in 2017.3 This exception provides OPPS reimbursement only for 2017. CMS instructs these HOPDs to continue to report the “PO” modifier, as appropriate, and steers HOPDs away from using the “PN” modifier which would trigger payment under the less favorable Medicare Physician Fee Schedule.4

2018 OPPS Payments for Services furnished by Mid-Build HOPDs

The second new exception provides OPPS reimbursement to HOPDs for items or services furnished on or after January 1, 2018, for which the hospital had a written agreement with an outside unrelated party for the actual construction of the HOPD before November 2, 2015 (the “mid-build requirement”).5 HOPDs that fall within this exception must use the “PN” modifier when submitting bills in 2017.6 To benefit from this exception in 2018, CMS directs hospitals to submit the following materials to their Medicare Administrative Contractors such that they are received no later than February 13, 2017:

  • An attestation that such mid-build HOPD met the requirements of a department of a provider as specified in 42 C.F.R. Section 413.65(b)(3);
  • Include the HOPD as part of the main provider in its enrollment form in accordance with the enrollment process under Section 1866(j) of the Social Security Act. Therefore, if providers use PECOS, such PECOS file must be updated to include this HOPD as a provider location of the hospital; and
  • A written certification by the CEO or COO that the HOPD met the mid-build requirement. Email submissions are acceptable.7

CMS plans to issue additional guidance at a later, unspecified date. If you have any questions about the implications of the Act and CMS’s guidance, please contact any member of Drinker Biddle’s Health Care team.

1 H.R. 34, 114th Cong., §16001(a)(1)(B)(iii)-(iv).

2 Centers for Medicare & Medicaid Services, Note Regarding Implementation of Sections 16001 and 16002 of the 21st Century Cures Act, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/Sections-16001-16002.pdf.

3 H.R. 34, 114th Cong., §16001(a)(1)(B)(iii).

4 Centers for Medicare & Medicaid Services, supra note 2.

5 H.R. 34, 114th Cong., §16001(a)(1)(B)(iv)-(v).

6 Centers for Medicare & Medicaid Services, supra note 2.

7 Centers for Medicare & Medicaid Services, supra note 2; H.R. 34, 114th Cong., §16001(a)(1)(B)(iv)-(v).

The material contained in this communication is informational, general in nature and does not constitute legal advice. The material contained in this communication should not be relied upon or used without consulting a lawyer to consider your specific circumstances. This communication was published on the date specified and may not include any changes in the topics, laws, rules or regulations covered. Receipt of this communication does not establish an attorney-client relationship. In some jurisdictions, this communication may be considered attorney advertising.

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