The Centers for Medicare & Medicaid Services (CMS) Nov. 1 revised its site-neutral payment policy for off-campus provider-based hospital outpatient departments (HOPD). The agency said new services at existing off-campus HOPDs, as well as services at off-campus HOPDs that relocate, will be reimbursed at an interim physician fee schedule (PFS) rate, rather than not being paid at all as CMS first proposed.

The modification came in the agency’s final outpatient PPS/ambulatory surgical center rule for 2017. The final rule updates hospitals’ outpatient prospective payment system (PPS) rates by 1.65% next year.

The rule implements the site-neutral provisions of Section 603 of the 2015 Bipartisan Budget Act. With the exception of dedicated emergency department services, the section requires services furnished in off-campus HOPDs that began billing under outpatient PPS on or after Nov. 2, 2015 to no longer be paid under outpatient PPS rates.

Instead these services would be paid under other applicable Part B payment systems beginning on Jan. 1. Under the final rule, hospitals will be paid under the PFS at newly established rates for these services. For 2017, the payment rate for these services will generally be 50% of the outpatient PPS rate.

CMS said any existing off-campus HOPD that relocates after Nov. 2 would lose its excepted status and be subject to site-neutral payments, except in extraordinary circumstances beyond the hospital’s control. For example, if an off-site facility had to move because of a natural disaster, significant seismic building codes or public health and safety issues.

In sticking to its earlier proposal, CMS said an off-campus HOPD can maintain its excepted status only if its hospital has a change of ownership and the new owner accepts the existing Medicare provider agreement from the prior owner. However, individual excepted off-campus HOPDs will not be permitted to be transferred from one hospital to another and maintain their excepted status

The AHA is pleased that the final rule “appropriately recognizes that providing no payment to new off-campus hospital clinics for the services they provide to patients was an untenable policy.” And it appreciates that CMS provided some flexibility for off-campus HOPDs, particularly by not limiting existing departments’ ability to adapt services to meet changing community needs and to relocate after extraordinary events. The association said it will evaluate the new payment level to “ensure that it is fair and reasonable” and that the agency can implement it for 2017.

In a statement following release of the rule, AHA Executive Vice President Tom Nickels also expressed “alarm that CMS continues to ignore the need for hospitals to modernize existing facilities so that they can provide the most up-to-date, high-quality services to their patients. We continue to be concerned that such ‘site-neutral’ policies and CMS’s implementation of them could impede patients’ access to care, especially in the most vulnerable communities.”      


Quality reporting. For the 2020 outpatient quality reporting program, CMS adopts seven new measures, including five measures derived from a new Outpatient and Ambulatory Surgical Center Consumer Assessment of Healthcare Providers and Systems survey. 


Medicare EHR Incentive Program.The final rule also sets the requirements for eligible hospitals and critical access hospitals (CAH) to attest to meaningful use of electronic health records in the coming years.

The rule finalizes a 90-day reporting period in 2016 and 2017, eliminates two objectives and measures beginning in 2017 and reduces the thresholds for some objectives and measures. For example, CMS revises the threshold for the View, Download or Transmit measure to at least one patient for Modified Stage 2 and Stage 3.

CMS retains Stage 3 requirements to use new functionality, such as application programming interfaces, and new reporting requirements, such as clinical information reconciliation. CMS also retains the all-or-nothing approach that requires hospitals and CAHs to attest to all of the objectives and measures, and starts Stage 3 in 2018 with a full-year reporting period.

“We are pleased to see some greater flexibility on the Meaningful Use program as hospitals work to optimize health information technology that facilitates high-quality care for patients,” said Ashley Thompson, the AHA’s senior vice president for public policy analysis and development. She cited the final rule’s inclusion of a 90-day reporting period for 2016 and 2017 and an adjustment in some of the reporting requirements.

But she added that the changes do not sufficiently align the hospital requirements with those that physicians will face under the Medicare Quality Reporting Program.

“We are disappointed that CMS finalized a mandatory start of Stage 3 in 2018.” she said. Thompson added that the AHA “remains concerned about requirements for providers to provide third-party access to their systems through application program interfaces without evidence that a relevant standard is ready for nationwide use and despite concerns that this will create security risks.”