June 17, 2016

Bill Expands SiteNeutral Payment Exemptions

The House of Representatives passed via voice vote an expansive, bipartisan hospital health care reform bill on June 7 that would, among other things, exempt certain newly constructed “off-campus” hospital outpatient departments from recently enacted site neutral payment reforms.

Introduced by Ways and Means Health Subcommittee Chairman Pat Tiberi (R-OH) and Ranking Member Jim McDermott (D-WA), H.R. 5273, the Helping Hospitals Improve Patient Care Act, would allow off-campus hospital outpatient departments that are certified to have been under construction by Nov. 2, 2015 to resume billing for services under the more profitable Hospital Outpatient Prospective Payment System (HOPPS), effective Jan. 1, 2018. Off-campus hospital outpatient departments are defined as structures that are located more than 250 yards from the main hospital building but not more than 35 miles from the main hospital campus.

In Medicare, payment rates for the same service vary based on setting. Services provided in a physician’s office are paid a single fee from the Medicare Physician Fee Schedule (MPFS). For services provided in facilities, such as hospital outpatient departments or ambulatory surgery centers (ASC), Medicare pays the practitioner a fee from the MPFS, which is lower than the comparable fee in the physician office setting and a facility fee to either the hospital outpatient department or ASC. Generally, the total payment rate for services provided in facilities is higher than the rate for the same service provided in a physician’s office.

The Medicare Payment Advisory Commission (MEDPAC), Obama Administration, and numerous health care think tanks have recently developed various Medicare policy recommendations to address site-of-service payment differentials for health care procedures and services delivered in a hospital outpatient department. Typically referred to on Capitol Hill as “site-neutral payments,” these potential policies are designed to reduce Medicare’s HOPPS payment rates for certain outpatient services down to the amount that physician offices receive for the same services under the MPFS.

Congress recently imposed a form of site neutral payments through the enactment of the Balanced Budget Act of 2015. Under this bipartisan legislation, off-campus hospital outpatient departments in operation prior to Nov. 1, 2015 are permitted to continue to be reimbursed for services via the HOPPS. However, the legislation stipulated that health care services performed in newly constructed off-campus hospital outpatient departments would be paid via the MPFS.

Following the enactment of the Balanced Budget Act of 2015, both the American Hospital Association and Federation of American Hospitals claimed the legislation unfairly penalized hospital outpatient departments that were currently under construction. The Congressional Budget Office (CBO) claims that nearly 100 hospitals have identified themselves as having off-campus outpatient departments under construction on Nov. 2, 2015. As a result, Congress included this technical correction to permit additional hospital outpatient departments to resume billing under the HOPPS in 2018.

Although the legislation easily passed in the House, H.R. 5273 faces an uncertain pathway to enactment in the Senate. The American College of Radiology’s (ACR) Government Relations office will continue to monitor the Helping Hospitals Improve Patient Care Act and the larger issue of site-neutral payments. ACR members are encouraged to monitor the Advocacy in Action newsletter for additional updates.