July 27, 2017

2018 OPPS Proposed Rule: Provider-Based Clinics

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    Provider-based clinics and associated operations have become very popular for hospitals because increased reimbursement results from filing both a facility and a professional claim. But all of that could change due to a potent storm that's gaining energy on the horizon. Once again, hospitals are at the storm's vortex.

Since the December 2015 passage of Section 603 of the Bipartisan Budget Act of 2015, dealing with new, off-campus, provider-based clinics/operations has become challenging. The basic idea of Section 603 is that these new off-campus clinics should be paid at a site-neutral level, which involves the Medicare Physician Fee Schedule (MPFS). Of course, the devil is in the details.

In particular, what does it mean for an off-campus clinic to be new? Basically, this goes back to the enactment of the Act. There have been some exceptions relative to establishing “newness,” particularly through the 21st Century Cures Act.

In reading and studying the rules and regulations in this area, the terminology can become confusing. An excepted off-campus clinic or service is one that is not subject to the site-neutral payment process. A nonexcepted off-campus clinic or service is one that is subject to that process. Perhaps better words would be exempted and nonexempted, but this is the terminology that the Centers for Medicare & Medicaid Services (CMS) uses.

In order to keep up with Medicare, look at both the Outpatient Prospective Payment System (OPPS) and Medicare Physician Fee Schedule (MPFS) proposed rules. Both of these are long Federal Register entries that require careful study. For our purposes, two aspects will be considered:

  1. Expansion of services for off-campus clinics/operations; and
  2. Payment process for nonexcepted clinics/services.

The first issue, at least in theory, applies to all off-campus, provider-based clinics. This issue is discussed in the OPPS Federal Register edition of July 20, 2017 (Section X.A.).

Back in 2016, CMS developed a “family of services” concept. These families delineate or categorize certain types of services. CMS indicated that if an off-campus clinic was providing certain services prior to the enactment of the aforementioned Act, and then decided to expand the clinic’s service lines, the new services would be subject to the site-neutral payment process if said services moved into a new category.

Luckily, for 2017 CMS backed off of implementing this concept. For 2018, CMS is still not going to attempt to implement this. At some point in the future, this concept will probably be implemented, but delay is appropriate until CMS can determine exactly how to handle the site-neutral payments.

An associated issue that has not been addressed by CMS is this: what happens if an excepted off-campus, provider-based clinic/operation expands its number of providers, but does not move into any new families of services? For instance, say a clinic with three physicians is suddenly expanded to six physicians. No new types of services are being provided. Should these new providers be subject to the site-neutral payment process? Be watchful for changes in this area in coming years.

The second issue is outlined in the Federal Register published July 21, 2017 (Section II.G.), which centers on the site-neutral payment process. CMS has maintained that it is impossible to adjudicate professional services that appear on the UB-04. While this is not strictly true, the development of site-neutral payment is a challenge. For instance, in the MPFS, add-on codes are generally paid separately, while in Ambulatory Payment Classifications (APCs), the add-on codes are often bundled and there is no separate payment. Hospitals may have their chargemasters set up to indicate that the add-on codes are never codes and not separately charged. Another example is the hospital clinic visit code G0463, which replaces 99201-99215 on the physician side. CMS clearly has much work to do to properly establish a site-neutral payment process.

CMS is currently using 50 percent of the APC payment as a proxy for the site-of-service reduction that occurs for professional services provided in a facility setting. This is referred to as the PFS relativity adjuster, and CMS is proposing to change it from 50 to 25 percent. This would be a major change, and the discussion in the Federal Register is not particularly compelling, from a rigorous statistical analysis perspective. CMS continues to gather data, so there may be a more rigorous analysis forthcoming. For those of you filing claims and receiving payment under this presumably interim payment mechanism, determining whether you are being properly paid is difficult.

CMS has not discussed the general future of provider-based clinics, particularly off-campus, provider-based clinics. However, anticipate that in the coming years (if not decades), all off-campus clinics and operations will be subject to site-neutral payment.

Hospitals have until Sept. 11, 2017 to make comments for both of these Federal Register entries. This is a very complex topic that requires careful study. 

Duane Abbey, PhD, CFP

Duane C. Abbey, Ph.D., CFP, is an educator, author and management consultant working in the healthcare field. He is president of Abbey & Abbey Consultants, Inc., which specializes in healthcare consulting and related areas. His firm is based in Ames, Iowa. Dr. Abbey earned his graduate degrees at the University of Notre Dame and Iowa State University.

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