Section 603 of the Bipartisan Budget Act of 2015 (Act”), which became law on November 2, 2015 changes significantly the manner in which Medicare will pay for most hospital outpatient services delivered through an off-campus outpatient department.
Commencing January 1, 2017, an off-campus hospital outpatient department (“HOPD”) will no longer qualify for payment for non-emergency services under Medicare’s outpatient prospective payment system (“OPPS”) if the HOPD was not established by November 2, 2015.
Instead, these HOPDs will be reimbursed based on either the physician payment or ambulatory surgical center payment system. HOPDs currently billing under OPPS will be “grandfathered” and will not be impacted under this law, while HOPDs that are under development as of the date of the Act will not be eligible for OPPS reimbursement as of January 1, 2017. The Act also provides that administrative and judicial review are unavailable for agency determinations made under the relevant provisions.
You should also be aware of the Act’s potential impact on the 340B Drug Pricing Program (which allows qualified hospitals to purchase outpatient drugs at significant discounts).
340B discounts currently are available to a qualified hospital’s outpatient sites that are reported as Medicare-reimbursable outpatient locations on the hospital’s Medicare cost report. You should watch for whether or not the Act’s change to HOPD reimbursement will impact 340B eligibility for off-campus HOPDs established after November 2, 2015.
Two developments that you should monitor are:
- Whether the Centers for Medicare and Medicaid Services will change the way that the new off-campus HOPDs are reported on the Medicare cost report; and
- How the Health Resources and Services Administration, which administers the 340B Program, will consider such sites for purpose of 340B-eligiblility.
Hospitals considering (or in the process of) acquiring or developing new off-campus HOPDs should evaluate the impact of the payment change made by Section 603 of the Act on Medicare payment for such locations. Hospitals participating in the 340B Program should carefully monitor future guidance regarding potential impacts.