The OPPS (Outpatient Prospective Payment System) update Federal Register appeared in examination form on July 7, 2016. Section X.A., Implementation of Section 603 of the Bipartisan Budget Act of 2015 Relating to Payment for Certain Items and Services furnished by Certain Off-Campus Departments of a Prover, addresses what The Centers for Medicare & Medicaid Services (CMS) believes Congress intended. Note the keyword believe that is littered throughout this Federal Register entry. In other words, CMS does not know what Congress intended, so they are apparently at complete liberty to believe any interpretation.

CMS is proposing rules that are highly restrictive, complex, and bureaucratic in nature. These are proposed rules that will need finalization. CMS also repeatedly asks for comments relative to a number of issues in this area.

Section 603 allows for grandfathering of existing off-campus provider-based clinics, that is, those clinics that were in place prior to enactment on Nov. 2, 2015. The question that immediately arises is, what if a hospital was right in the middle of establishing an off-campus provider-based operation? Sometimes is this referred to as the mid-build issue, which is short for middle of building. There are potentially many different situations where consideration must be given. For instance, as of Nov. 1, 2015, a hospital may have built a building (or leased space), hired physicians, purchased equipment, etc. with the intent to start the operation on Jan. 1, 2016. In this situation, should this operation be grandfathered?

Of course, what is needed are the criteria by which to ascertain whether grandfathering should occur. In this case CMS is proposing that the single criterion is that of billing. If the off-campus provider-based operation was not billing as of Nov. 1, 2015, then grandfathering would not be allowed. Obviously, for mid-build situations there would have been no billing even though everything may have been place. This could involve filing of attestations, updating enrollment information (e.g., the CMS-855 forms), hiring personnel, purchasing equipment, etc.

Assuming that a hospital has an off-campus provider-based operation that is grandfathered, what if there is a need to relocate the operation? CMS’ answer to this is that that if there is a geographical change, even just in address, then the grandfathering or exception status would be lost. This includes cases where an operation may need to move because of the termination of a lease or the fact that the hospital has built a new facility. Ostensibly, this would apply to an operation that changes suites in a medical office building.

What if a grandfathered off-campus provider-based operation wanted to expand its services? CMS’ proposals in this area provide a new level of complexity. If a new service line is established, then that new service line should not be grandfathered or excepted. In order to implement this concept, CMS has developed a set of Clinical Families. There are nineteen proposed clinical families delineated by APCs (Ambulatory Payment Classifications). This means that grandfathered off-campus operations will need to establish which service lines they are providing, perhaps through a modified CMS-855 process. This also means that if a given service line expands, then the billing will need to use the 1500 claim form for the new clinical families. How is this supposed to work?

Presuming that the operation is an off-campus provider-based clinic, what if there is a need to add additional physicians? In other words, will CMS allow the expansion of a grandfathered operation even if there is no increase in the service lines as delineated by the clinical families?

Additionally, if there are new services provided beyond those clinical families identified at the time of grandfathering, how will various rules and regulations be applied for the provision of services that will then be billed and paid only through professional billing? In other words, because this is a provider-based operation, but billing is only on the CMS-1500 for these non-excepted services, will incident-to billing be allowed for these non-excepted services? This takes us into the whole supervision issue that will need further clarification.

Note that certain types of services are excepted from Section 603 consideration. One type of service is that of emergency services or, in EMTALA (Emergency Medical Treatment and Labor Act) jargon, a Dedicated Emergency Department, or DED. What if a hospital has a freestanding urgent care clinic? Further assume that this urgent care clinic meets the one-third criterion[1] and is thus construed to be a DED. Now what should be done relative to coding and billing? In a case of this sort, the urgent care clinic would, apparently, become provider-based, but are all the necessary requirements being attained?

Yet another issue is that of how non-excepted, that is non-grandfathered, off-campus provider-based operations should be reimbursed. Section 603 itself refers to “under the applicable payment system.” CMS has determined that this refers primarily to MPFS (Medicare Physician Fee Schedule). This seems a logical decision. While there are peripheral situations, the bulk of any payment processes would be under MPFS. Exceptions might include situations such as a non-grandfathered off-campus provider-based ASC (Ambulatory Surgical Center) or possibly laboratory tests that would ordinarily be paid under the CLFS (Clinical Laboratory Fee Schedule).

Bottom-Line: CMS is taking a very restrictive view of the implementation of Section 603. The proposed rule will institute a new level of complexity and there are many questions that need explicit answering. Everyone involved with provider-based clinics and other provider-based operations should carefully read this Federal Register entry and then comment. The comment period ends on Sept. 6, 2016. Make your thoughts known to CMS. Even if you are not opposed to this increasing bureaucratic complexity, then make certain that CMS addresses all of these issues and questions in advance of implementation.

About the Author

Duane C. Abbey, PhD, CFP, is an educator, author and management consultant working in the healthcare field. He is president of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University.

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[1] See 42 CFR 489.24(b).

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