Proposed Reduction of Payment Rates for Non-excepted Off-campus Provider-Based Hospital Departments Paid Under the Medicare Physician Fee Schedule

Medical facilities owned by hospitals but located off-campus are facing new challenges on both the state and federal levels. CMS recently proposed a rule updating certain payment policies and rates for the Medicare Physician Fee Schedule (Proposed Rule). Among other provisions, the Proposed Rule slashes payment rates for non-excepted off-campus provider-based hospital departments that are now paid according to the Medicare Physician Fee Schedule. The Proposed Rule will be published in the Federal Register on July 21, 2017; the comment period will close on Sept. 11, 2017.

Implementation of Section 603 of the Bipartisan Budget Act of 2015 requires that certain items and services furnished by certain off-campus provider-based hospital departments are no longer paid under the Outpatient Prospective Payment System (OPPS), beginning January 2017. Instead, CMS finalized the Medicare Physician Fee Schedule as the applicable payment system for those items and services. CMS currently reimburses those services under the Medicare Physician Fee Schedule at 50 percent of the OPPS payment rate.

For calendar year 2018, CMS is proposing to reduce the current Medicare Physician Fee Schedule payment rates to twenty five percent of the current OPPS rate. The proposal would implement a fifty percent cut in the Physician Fee Schedule payment rates for non-excepted off-campus provider-based hospital departments for calendar year 2018. CMS believes that this 2018 adjustment will “encourage fairer competition between hospitals and physician practices by promoting greater payment alignment.”

New State Law Requiring Notice of Balance Billing from Healthcare Facilities, Including Off-campus Provider-Based Hospital Departments

Hospitals should already be familiar with the Louisiana law requiring written notice to patients regarding the possible provision of services by hospital-based providers who are out-of-network. The law was amended in Act No. 306 of the 2017 Regular Legislative Session in a way that impacts not only general hospital notices, but that is also significant for hospitals with offsite campuses, and particularly provider based clinics. The changes are effective Aug. 1, 2017.

With regard to the generally applicable provisions, a hospital’s written notice must inform patients that they may be responsible for all or part of the fees for out-of-network services provided by out-of-network, hospital-based practitioners. As originally drafted, if a hospital failed to provide the written notice, it was responsible for the portion of the out-of-network provider’s fee not covered by insurance. However, this strict penalty was removed from the legislation. Now, hospitals must notify patients that they will be responsible for charges by those out-of-network providers. The patients must also sign a copy of the balance billing notice, and the hospital must maintain a copy in the patient records.

There are significant, new notice requirements for hospitals with off-campus provider-based departments, designed to ensure patients know that they may be charged a facility fee. The hospital must disclose to a patient receiving services at such a department that the patient may be charged a fee for use of the facility that is not included in the healthcare provider’s bill, and that this fee may not be covered by the patient’s health insurance. Specifically, an off-campus provider-based department must disclose: (1) that the enrollee or insured is receiving services in a hospital-based outpatient facility where the facility provides the use of the facility, medical or technical equipment, supplies, staff and services; (2) that depending on the enrollee’s or insured’s health insurance benefit plan and the actual services furnished by the facility, the patient may receive a facility charge billed separately from the physician that covers the fees for the use of the facility, medical, or technical equipment, supplies, staff, and services.

Written by Rebecca Helveston and Catherine Moore