August 15, 2018

CY 2019 OPPS Proposed Rule Extends Site Neutral Policies

Holland & Knight Healthcare Blog
Miranda A. Franco


On July 25, 2018, the Centers for Medicare & Medicaid Services (CMS) released proposed policy and payment updates affecting the Hospital Outpatient Prospective Payment System (OPPS) and the Ambulatory Surgical Center (ASC) Payment System for the calendar year (CY) 2019. Topping the list of significant policy changes are efforts by CMS to expand site-neutral payments. CMS is seeking to apply these lower payment rates at previously excepted off-campus HOPDs through two key proposals.

Specifically, CMS proposes: 1)  to require that services at excepted (grandfathered) off-campus provider based-department (PBDs) that are in new clinical families of services would be paid at 40 percent of the OPPS rate; and 2) to pay for clinic visit services (as described by HCPCS code G0463) at 40 percent of the OPPS rate at all off-campus PBDs. If finalized, Medicare would pay providers at outpatient departments the same as providers at doctor's offices for identical procedures, whereas they currently could be paid different rates for the same procedure. 

Notably, CMS’ proposed OPPS rule changes are not the first move towards site-neutral payment. The Bipartisan Budget Act of 2015 (BBA) required Medicare to pay for services delivered at newly established off-campus HOPDs using rates based on the Medicare Physician Fee Schedule (MFPS), rather than the OPPS. Under Section 603 of the BBA, Congress instructed CMS to pay certain, non-excepted, off-campus PBDs under a payment system other the OPPS.

CMS determined that these facilities should be paid under the MPFS at 40 percent of the OPPS payment rate. However, the final rule and the 21st Century Cures Act established certain exceptions to the provisions and exempted hospitals with on-campus PBDs, excepted (grandfathered) PBDs — those furnishing and billing services before November 2, 2015 (before enactment of the BBA) and services furnished by a dedicated emergency department. This means “non-excepted” PBDs are those new off-campus PBDs that do not meet one of the above exceptions and are no longer paid under OPPS.

Expansion of Clinical Families of Services at Excepted Off-Campus HOPDs

Given continued concerns by CMS, the agency is re-proposing a policy to eliminate facility-level "excepted status" and instead apply excepted status only to certain groups of services at facilities previously immune from HOPD payment reductions. As proposed, CMS would pay the site-neutral rate to an otherwise excepted off-campus HOPD for any groups of services not previously offered between Nov. 1, 2014, and Nov. 1, 2015.

Once again, CMS proposes creating 19 “clinical families of services,” which are defined by Ambulatory Payment Classification (APC). CMS proposes that, beginning in 2019, if an excepted PBD provides services from any clinical family as defined in the proposed rule that it did not provide and bill under the OPPS between Nov. 1, 2014, and Nov. 1, 2015, the service would be paid under the MPFS at 40 percent of the OPPS rate. If it did furnish service in the clinical family during that period, all services in such family would continue to be paid at the full OPPS rate.

CMS is seeking specific public comment on these proposals, including the lookback period for previously billed services, facilities to exclude from this policy and the makeup of clinical families.

Site Neutral Payments for Clinic Visits at Off-Campus PBDs

In 2017, CMS conducted an analysis establishing that a single procedure code (G0463: hospital outpatient clinic visit for assessment and management of a patient) accounted for more than half of all codes billed at off-campus HOPDs. It further determined these routine clinic visits could be suitably performed in a physician office setting, where the average reimbursed rate is 75 percent lower than the OPPS rate.

Accordingly, CMS is now proposing that these clinic visit services would be paid the same payment amount used to pay for services furnished by non-excepted off-campus provider-based outpatient departments. Notably, CMS proposes to apply this policy in a non-budget neutral fashion. Instead of paying $116 for each clinic visit under the G0463 code, CMS would pay $46 (approximately a 60 percent reduction). CMS based the proposal on its authority to restrict unnecessary increases in the volume of covered services.

CMS is soliciting comments on additional items and services paid under OPPS that may represent unnecessary increases in utilization.


If finalized, collectively, these proposals would have a significant financial impact on hospitals. Hospitals should analyze the impact of these proposed reductions in payment and submit comments to CMS by Sept. 24, 2018.

It is also clear that CMS is interested in further payment equalization between HOPDs and physician offices, increasing the likelihood of further reductions for off-campus HOPDs in the future.   

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