The recently enacted Bipartisan Budget Act (P. L. 114-74) included a provision that will significantly alter the future of hospital-based outpatient care.

The provision, Section 603, will exclude from Medicare’s outpatient hospital prospective payment system (“OPPS”) any new off-campus departments of a hospital, as determined by Medicare’s provider-based standards, unless it is a “dedicated emergency department” for EMTALA (the Emergency Medical Treatment and Labor Act) purposes.

Instead, those facilities will be reimbursed under a freestanding fee schedule, principally the Medicare physician fee schedule (PFS) or ambulatory surgical center prospective payment system (ASC PPS), which are generally lower than the OPPS. 

The purpose of Section 603 is to make Medicare reimbursement for ambulatory facilities “site neutral,” effectively banning OPPS reimbursement for many new off-campus provider-based departments.

The Congressional Budget Office (CBO) estimated that this provision will save the federal government $9.3 billion over 10 years by reducing Medicare reimbursements for many ambulatory services in hospital outpatient settings.