Congress has issued a letter to the Centers for Medicare & Medicaid Services (CMS) indicating that the agency should provide more flexibility in the implementation of the Section 603 provisions of the Bipartisan Budget Act of 2015.

CMS had proposed very restrictive rules in the July 14, 2016 Federal Register as a part of the Outpatient Prospective Payment System (OPPS) updating process for 2017. In the discussion of the proposed rules, CMS had indicated that there was no legislative history or guidance from Congress relative to the full intent of the legislation. As a result, CMS previously proposed very stringent interpretations of the language found in Section 603.

Technically, Congress has issued two such letters on this issue – one from the House of Representatives and one from the Senate. Each is two pages long, with additional pages for the signatories. There are some 235 members of the House and 51 senators that have signed.

Their basic concerns and issues they’d like address involve:

  • A definition of “new” provider-based clinics/operations
  • Middle-of-establishing a new provider-based clinic/operations
  • Additional services at an established provider-based clinic/operation
  • Proper interpretation of the 250-yard rule for the definition of “campus”
  • Change in ownership

Basically, Congress is indicating that there should be more flexibility in developing the rules. For example, if an established provider-based clinic needs to be relocated (due to a new lease, newly constructed building, change in suites, etc.), then this should not affect the exemption from applying Section 603. Similarly, adding services to an existing provider-based clinic should not affect grandfathering under Section 603.

While there is no suggestion for changing the 250-yard rule relative to establishing the boundaries for a hospital’s campus, Congress is at least indicating that the regional offices (ROs) be more liberal in establishing the definition of a hospital’s campus. With the advent of Section 603, this can be more important, because a newly established provider-based clinic/operation that is on the campus will not be affected by implementation of Section 603.

The big question is this: will CMS heed this guidance from Congress? The timing is tenuous because CMS is probably in the final stages of finalizing its rules in this area. The comment period for the July 14 Federal Register ended on Sept. 6. If CMS is to meet the Nov. 1 goal of issuing the final OPPS update, then there is really only a week or two to make any substantive changes. Possibly, CMS will decide to delay implementation even though Section 603 is a statutory requirement. Also note that CMS does not appear overly concerned about meeting statutory deadlines, so a delay may be in the cards.

Everyone should be watchful to see what CMS will or will not do. The fact that there may have been comments objecting to these restrictive proposed rules may not deter CMS from its highly restrictive approach. But now that Congress has become involved in providing additional guidance on the intent of the legislation, CMS should really take heed.

Timing is the key factor, and time will tell!

About the Author

Duane C. Abbey, Ph.D., 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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