CMS OPPS Final Rule and the 21st Century Cure Act – And Their Impact on Provider-Based Payments

The Centers for Medicare & Medicaid Services (CMS) recently published its final Outpatient Prospective Payment System (OPPS) rule that addresses policies relating to off-campus provider-based entities (OCPBs). Before I discuss the changes, let’s refresh our memory and review the situations that were grandfathered in Section 603 of the Bipartisan Budget Act of 2015. Effective Jan. 1, 2017, the OPPS payment mechanism will continue to apply to dedicated emergency departments, on-campus departments that are within 250 yards of the main building or within 250 yards of a remote hospital location, and outpatient, provider-based, off-campus entities billing for services as of Nov. 2, 2015. 

In the final rule, emergency departments will continue to be paid for both emergency and nonemergency services provided within their location under the OPPS mechanism as promulgated previously in Section 603. 

Payments for non-excepted OCPBs had controversy written all over them in the proposed rule. CMS suggested that the physician would receive an all-inclusive amount and the provider-based hospital department would not receive a payment. Therefore, the physician likely would have to reimburse the hospital for costs associated with the use of the space. CMS considered many comments that highlighted potential violations of physician self-referral statutes and the anti-kickback statutes that could come into play. As a result, the final rule allows for a payment to the physician for his or her professional fee and a payment to the non-excepted OCPB for the technical component at 50 percent of the OPPS rate. This payment rate will be in effect for 2017 and 2018 until a new payment system can be developed. A modifier “PN” should be utilized to designate a non-excepted service. Finally, CMS will apply a geographic adjustment to the technical component rate based on the site location. 

As far as relocation of OCPBs is concerned, CMS adopted the proposed rule reading that an impermissible relocation will be considered a “new” OCPB. Therefore, the new entity will not be exempt from the new payment rules. So if the physical address that was listed on the provider’s hospital enrollment information with their Medicare Administrative Contractor (MAC) on Nov. 1, 2015 is now different, then the reduced payment for Medicare services will apply. CMS also adopted an exceptions process in the final rule whereby extraordinary circumstances such as natural disasters and significant public health and safety issues will be considered as it pertains to maintaining the old payment rules. Additional guidance will be issued by CMS in the future regarding this exceptions process.

CMS addressed a limitation of expansion of services in the proposed rule for existing OCPBs. However, in the final rule, the proposal to limit service line expansions was eliminated by CMS. Therefore, an excepted OCPB will receive payment under OPPS for all billed services, regardless of whether it furnished them prior to the passing of Section 603, as long as the OCPB remains excepted. 

On Dec. 13, 2016, the 21st Century Cures Act was enacted into law. Sections 16001 and 16002 provided additional criteria about which OCPBs will be “excepted” from payment under Section 1833 (t)(21)(C) of the Social Security Act.

The mid-build requirement states that before Nov. 2, 2015, if a provider had a binding written agreement with an outside unrelated party for the construction of the OCPB, then CMS would continue payment under OPPS for that entity. For 2017, CMS must have received an attestation in accordance with the regulations at 42 CFR 413.65 (b) (3) prior to Dec. 2, 2015 to be “excepted.” Billing instructions for OCPBs stipulate that the modifier “PN” should not be utilized on outpatient claims for items and services furnished in the 2017 calendar year. For 2018, the OCPBs will be “excepted if an attestation was received by CMS no later than Feb. 13, 2017. In addition, the hospital department must have met the requirements of a “department,” as specified in Section 413.65 of title 42 of the Code of Federal Regulations. The enrollment records must have been updated to reflect the mid-build department that is addressed in the attestation. Finally, the department must have met the mid-build requirement (as defined at section 1833 (t)(21)(B)(v) of the Social Security Act), and CMS received a written certification signed by the chief executive officer or chief operating officer of the main provider, no later than Feb. 13, 2017. The billing instruction to not use modifier “PN” for services furnished on or after Jan. 1, 2018 also applies. Section 16002 deals with OCPDs that are part of PPS-exempt cancer hospitals. These departments will also be excepted from payment under the new rules under section 1833 (t)(21)(C) if they met the provider-based requirements under 42 CFR 413.65 after Nov. 1, 2015 and before Dec. 13, 2016. They were also required to submit an attestation prior to Feb. 13, 2017 in accordance with the rules described previously. 

In conclusion, it appears that many aspects of the proposed Section 603 rules have been relaxed by CMS in the final rule. Proper documentation, as always with these submissions, is the key to a successful outcome.

Be on the lookout for additional guidance from CMS regarding this complicated process.



Stanley Sokolove, CPA, ALJ Emeritus

Stanley J Sokolove, CPA, is a former CFO technical compliance monitor for CMS. In that role, Mr. Sokolove provided oversight of the banking, finance and internal controls for CMS relating to NHIC, Corp., the DME MAC for Jurisdiction A. Prior to this position, Mr. Sokolove was an Administrative Law Judge, serving as a member of the Provider Reimbursement Review Board in Baltimore, Md. Mr. Sokolove is a member of the RACmonitor editorial board and makes frequent appearances on Monitor Mondays.

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