Mid-Atlantic Health Law TOPICS

The Centers for Medicare & Medicaid Services (CMS) issued an Interim Final Rule (the Rule), which implements Section 603 of the Bipartisan Budget Act of 2015. Section 603 provides that certain items and services furnished by certain off-campus, provider-based hospital departments (off-campus PBDs) will not be considered covered outpatient department services for purposes of the hospital Outpatient Prospective Payment System (OPPS), which system governs how hospitals outside of Maryland are paid. The Rule, therefore, limits payment for items and services furnished in those facilities.

A. Section 603

Historically, off-campus PBDs could bill under the OPPS, which reimburses at higher rates than other payment systems. For example, services provided in these facilities were reimbursed at higher rates than the same services provided in physician offices, which could not bill under the OPPS. 

Section 603 of the Bipartisan Budget Act, which was signed into law on November 2, 2015, however, disallows certain off-campus PBDs from getting paid under the OPPS, creating a “site-neutral” payment policy. These facilities will now be paid under another “applicable payment system”, such as the Medicare Physician Fee Schedule, which reimburses at rates roughly 50% of the OPPS rates for 2017.

B. Excepted Facilities

Certain off-campus PBDs and certain items and services are “excepted,” meaning they will continue to be paid under the OPPS. These “excepted” items and services are those offered: (1) by a dedicated emergency department; (2) by an off-campus PBD that was billing for covered services prior to November 2, 2015; or (3) in a provider-based department that is “on the campus” or within 250 yards of the hospital or a remote location of the hospital. As of January 1, 2017, all other off-campus PBDs are subject to the Rule, and will no longer be paid under the OPPS.

C. Parallel Maryland Regulation

In conformance with this newly enacted federal law, the Maryland Health Services Cost Review Commission (HSCRC) added a regulation to Maryland’s Rate Application and Approval Procedures. The new regulation, which went into effect on January 16, 2017, requires that:

1. Freestanding medical facilities must charge HSCRC rates for outpatient services considered “hospital services”;
2. Facilities must obtain HSCRC approval before charging an HSCRC-approved rate for an off-campus hospital service other than emergency or observation and related ancillary services; and
3. Facilities seeking to open a new hospital outpatient service, relocate an existing hospital service, or convert an existing service from regulated or unregulated status, must obtain a prior determination from the HSCRC as to whether the service constitutes a hospital service subject to HSCRC  rate regulation.

Barry Rosen
410-576-4224 • brosen@gfrlaw.com