As part of the CY 2017 proposed Hospital Outpatient Prospective Payment System rules (OPPS) the Centers for Medicare and Medicaid Services (CMS) released the long awaited proposed payment changes for items and services furnished from off-campus provider-based hospital outpatient departments (Proposed Rule). CMS’ Proposed Rule can be found here.

These proposed payment changes were necessitated by Congress’s passage of Section 603 of the Bipartisan Budget Act of 2015 (Section 603) last fall and evince CMS’ exceptionally narrow interpretation of that provision and threaten the ability of hospital providers to continue growing and expanding existing outpatient service capabilities, thereby constraining the services available to Medicare beneficiaries. Reshaping the Proposed Rule will take a concerted stakeholder effort, so we encourage all hospitals and interested stakeholders to submit comments to CMS. Moreover, to the extent you have any projects under development that would be impacted by the Proposed Rule, if finalized, or projects that are on hold as a result of Section 603, we strongly encourage you to reach out to Polsinelli so that we may assist you in developing a strategy to approach CMS and/or Congressional representatives to ensure your concerns are heard.

The Proposed Rule focuses on the implementation of Section 603 and does not address other downstream implications flowing from the Proposed Rule (e.g., impact on 340B status, cost reporting, etc.) or other areas of long-standing uncertainty, such as space and time-sharing. Within the confines of the Proposed Rule, CMS focused its efforts on developing and explaining its rationale for the proposed regulations surrounding the provision and billing of items and services from excepted and nonexcepted provider-based hospital outpatient departments (PBDs). An excepted PBD includes those off-campus PBDs in existence and billing for services prior to November 2, 2015, or otherwise exempted from Section 603 (e.g., dedicated emergency departments), while a nonexcepted PBD includes those off-campus PBDs that came into existence and billed for services on or after November 2, 2015.