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Client Alert

CMS invites scenarios and questions on provider-based status law changes

April 08, 2016

Centers for Medicare & Medicaid Services (CMS) recently published a Note to its Hospital Outpatient Prospective Payment System (PPS) website soliciting stakeholder scenarios concerns/questions regarding the implementation of Section 603 of the Bipartisan Budget Act of 2015.1 CMS plans to address the implementation of Section 603 in the CY 2017 Outpatient Prospective Payment System Proposed Rule, expected in June or July. The full Note states: 

Note Regarding Implementation of Section 603 of the Bipartisan Budget Act of 20152

CMS will be presenting our proposals for implementing
Section 603 of the Bipartisan Budget Act of 2015 through the CY 2017 Outpatient Prospective Payment System Proposed Rule. While we cannot provide guidance on Sec. 603 prior to the proposed rule, if there is a scenario regarding implementation of Sec. 603 that you are concerned about and want to call attention to it for the proposed rule, we have created a mailbox for the public to send these scenarios, which is

While we cannot guarantee that information or questions sent to this mailbox will be addressed in the proposed rule, this is the best way to alert us to a scenario. The public will have the opportunity to comment.

The Bipartisan Budget Act of 2015 (the Act) contained the first legislative action related to provider-based status that may leave many hospitals with negative financial consequences. In particular, the Act directs CMS, effective Jan. 1, 2017, to cease paying Hospital Outpatient Prospective Payment System rates for off-campus provider-based departments that begin billing as such on or after the date the Act was signed into law
(Nov. 2, 2015), with certain exceptions.

Provider uncertainty lingers as a strict reading of the Act suggests that facilities under development but not yet billing for services as hospital services prior to Nov. 2, 2015 would not qualify for grandfathered status. In the past, however, CMS extended similar types of grandfathered status to facilities or providers that were under development at the time a law changed. 

The Act also may impact a hospital’s ability to take advantage of 340B drug pricing in these off-campus departments/facilities that were not operational and billing as of Nov. 2, 2015. Thus the Act could have significant implications for any future or under-development cancer treatment programs with drug purchasing to occur under the 340B program. Access to care in many areas may be yet another casualty of this Act as many hospitals cannot afford to offer these services in off-campus locations without 340B pricing.

Another area of ambiguity is that the new exclusion in the Act applies to off-campus, outpatient hospital services, but appears to leave open the possibility of opening new outpatient hospital departments that are within 250 yards of a remote location (and an inpatient location of a hospital not on the hospital’s main campus – typically referred to as a multi-campus hospital). The proposed rule is anticipated to address this nuance as well. 

Godfrey & Kahn encourages our clients to submit any concerns or scenarios to CMS regarding the Act and provider-based status. If you have questions regarding the CMS Note, Section 603 of the Bipartisan Budget Act of 2015, provider-based requirements or need assistance with submissions to CMS, please contact a Godfrey & Kahn Health Care Team Member.



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