It seems there’s always a surprise for healthcare providers hidden in the now-routine, end-of-the-year budget deals to avert a government shutdown. This year, it’s Section 603 of the Bipartisan Budget Act of 2015, signed into law by President Obama November 2.
Here’s the short of it: Services furnished in any off-campus outpatient hospital department (other than a dedicated emergency department) established after November 2 will be paid at Medicare Physician Fee Schedule (MPFS) or Ambulatory Surgery Center (ASC) rates beginning January 1, 2017. Those departments established prior to that date (as well as all on-campus departments, regardless of when established) will continue to be paid under the Outpatient Prospective Payment System (OPPS).
And here are just some of the questions the Centers for Medicare & Medicaid Services (CMS) will have to answer when it promulgates implementing regulations: (1) How will CMS distinguish between claims for services furnished in a pre-11/02/15 department and those furnished in a post-11/02/15 department? (2) If a hospital has an existing physician practice location billed as a hospital outpatient department, what happens if it adds more providers at that location? Is the answer different if new providers are replacing departing providers? (3) What happens if a hospital expands the scope of services offered at an existing location, e.g., installs new diagnostic testing equipment or begins performing new surgical procedures?
We anticipate CMS will begin answering these questions when it publishes the 2017 Hospital Outpatient Prospective Payment System proposed rule in the summer of 2016. (Then again, the agency may elect to publish a separate proposed rule on this specific matter earlier in the year.) Until we have those answers, however, hospitals are stuck in limbo.
Many hospital acquisitions and construction and expansion projects depend on provider-based reimbursement to make financial sense. Depending on how CMS interprets Section 603, many of these deals could be dead on arrival. Over the next year, hospitals must factor this risk into their analysis of any proposed deal or expansion project. At PYA, we now are building these factors into financial modeling performed for our clients.
Also, now that Congress has taken the first step to close the gap between hospital and non-hospital reimbursement rates, no one should be surprised to see similar measures tucked into upcoming legislation. Section 603 may very well be the first tree to fall in a changing healthcare landscape. Thus, our strategic planning team now takes a longer look at the impact of changing fee-for-service reimbursement, as well as new value-based payment models.
