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It’s the  End of Off-Campus Provider-Based It’s the  End of Off-Campus Provider-Based

It’s the End of Off-Campus Provider-Based - PowerPoint Presentation

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It’s the End of Off-Campus Provider-Based - PPT Presentation

Locations As We Know It But MidBuilds Feel Fine 1 Daniel Dan J Hettich Partner King amp Spalding Washington DC Agenda P roviderbased 101 Backdrop for 603 How ID: 685652

campus services cms provider services campus provider cms grandfathered based 2015 department furnished excepted status opps 603 payment hospital

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Slide1

It’s the End of Off-Campus Provider-Based Locations As We Know It (But Mid-Builds Feel Fine)

1

Daniel (Dan) J. HettichPartnerKing & Spalding Washington, DCSlide2

Agenda

Provider-based 101Backdrop for § 603 – How Did We Get Here Anyway?What the statute saysFacilities that are excepted or excluded (grandfathered) including mid-buildsRetaining grandfathered status Is any of this reviewable? New payment system for non-excepted servicesEffect on 340B eligibility for non-excepted sites

2Slide3

“Provider-Based” 101

3Slide4

Pros and Cons of Provider-Based Status

Pros:Medicare/Medicaid payment amounts340B drug discount program eligibilityCons:Duplicate coinsurancePhysician dissatisfactionSlide5

Qualifying ForProvider-Based Status

Common LicensureClinical IntegrationCommon medical staff privilegesReporting to chief medical officerUnified medical recordsFinancial IntegrationProper location on the cost reportConsolidated revenues and expensesPublic AwarenessHeld out as part of the provider to public and third partiesSlide6

Qualifying ForProvider-Based Status

(cont.)Additional Requirements for Off-Campus EntitiesOwnership and controlHospital owns 100% of the business enterpriseCommon governing documentsAdministrative IntegrationReporting to the chief administrative officerThe provider-based site obtains the following services from the hospital: billing; records; human resources; payroll; employee benefit package; salary structure; and purchasingSlide7

Backdrop

to BBA § 603 -How Did We Get Here?7Slide8

Backdrop for BBA § 603

While Section 603 came as a surprise to many, momentum was building for several years with the following influential entities advocating for “site-neutral” payments in one form or another:Medicare Payment Advisory Commission (MedPAC)Office of Inspector General (OIG)Government Accountability Office (GAO), and

OthersPresident’s budget has included site neutral payment recommendationsSlide9

Backdrop for BBA § 603 - CMS

Most notably, CMS begins to get in on the action in limiting provider-based:CY 2014 OPPS final rule, CMS required submission of data on services furnished in off-campus provider-based departments.Effective 2016, hospital outpatient claims for services furnished in off-campus outpatient departments must include HCPCS modifier –PO; claims for physician services must include POS 19 (off-campus) or 22 (on-campus)9Slide10

Momentum Comes to A Head

Building momentum comes to a climax:Balance Budget Act of (BBA) 2015 signed into law on 11/2/2015 and makes two amendments to the Medicare statutory provisions for prospective payment for hospital outpatient department services (42 USC 1395l(t)).Slide11

BBA 2015

§ 603: What Does the Statute Say?11Slide12

What Does the Statute Say? BBA 2015 §

603First, amended 1833(t)(1)(B) by adding a new clause (v) which excludes from the definition of “covered OPD services” applicable items and services (defined in paragraph (21)(A) of such section) that are furnished on or after January 1, 2017 by an off-campus PBD, as defined in paragraph (21)(B) of such section.12Slide13

What Does the Statute Say? BBA 2015 § 603

Second, amended 1833(t) of the Act by adding a new paragraph (21), which defines the terms “applicable items and services” and “off-campus outpatient department of a provider,” requires payments for to off-campus PBD be made under “an applicable payment system” (other than OPPS), Requires hospitals to report information as needed for implementation of the provision, and Precludes administrative and judicial review on certain determinations for applicable items and services

13Slide14

What Does the Statute Say? BBA 2015 § 603

In sum, Section 603 directs CMS to no longer pay hospitals the OPPS rate for services furnished in off-campus PBDs beginning January 1, 2017 with a few exceptions if the PBD:Is a dedicated emergency department (42 CFR 489.24), Is on-campus or located within 250 yards of a remote I/P hospital campus, or

Had been billing covered outpatient department services under OPPS prior to November 2, 2015.Critical access hospitals and rural health clinics also exempted.$9.3 billion projected savings over 10 years14Slide15

What Does the Statute Say? BBA 2015 § 603

Miscellaneous provisions:Hospitals are required to provide to the Secretary information deemed appropriate to implement Section 603, including codes/modifiers on claim forms and information about off-campus outpatient departments on Medicare enrollment forms.Preclusion of administrative or judicial review over:Items/services subject to general rule;Other applicable payment systems;Determination that a department of a provider is “off-campus;” andInformation hospitals are required to provide for implementation.

15Slide16

What Constitutes “On-Campus”?

16Slide17

Excluded/Excepted Locations—“On Campus”

Per statute, an “off-campus outpatient department of a provider” means a department of a provider that is not located on a hospital’s “campus” (as defined in the provider-based regulations) or within 250 yards from a remote location of a hospital (also as defined in the provider-based regulations).17Slide18

Excluded/Excepted Locations—“On Campus”

What constitutes “on-campus”?

CMS does not change its existing regulatory definition: Campus means the physical area immediately adjacent to the provider’s main buildings, other areas and structures that are not strictly contiguous to the main buildings but are located within 250 yards of the main buildings, and any other areas determined on an individual case basis, by the CMS regional office, to be part of the provider’s campus.Slide19

Excluded/Excepted Locations—“On Campus”

Although c

ommenters asked CMS to further define what qualifies as a hospital’s “main building”, CMS declined in final ruleWill continue to defer to CMS Regional Offices to make case-by-case determinations of what constitutes a main campus. CMS stated that this degree of flexibility is necessary to reflect the differences in hospital campus composition. Slide20

Excluded/Excepted Locations—“On Campus”

CMS did state that an

off-campus PBD located within a straight-line distance of 250 yards from “any point of the physical facility that serves as the site of services of the remote location to any point in the PBD” will be excepted. Confirms CMS’s longstanding practice of measuring from any exterior point and not necessarily the front door of a hospital facility. Same logic presumably applies to on-campus of main provider (though what constitutes a “main building” still vague) Slide21

What Constitutes Billing Under OPPS as of November 2, 2015?

21Slide22

Billing Under OPPS As Of Nov. 2, 2015

CMS clarified in the final rule that an off-campus PBD will be considered excepted if it furnished any covered OPPS service prior to November 2, 2015 – even if such service was billed after November 2.The service, however, must have been paid in order to be considered “covered.” 22Slide23

Relief for “Mid-builds”

Commenters requested relief from CMS for off-campus locations in “mid-build” (i.e., under construction) prior to November 2, 2015CMS stated that it did not have the authority to grant such relief and refused to delay implementation pending congressional action Section 16001 of the 21st Cures Act (12/13/16) says “mid-builds” can continue to bill under OPPS: (1) during 2017, if the hospital submitted an attestation to CMS before December 2, 2015; or

(2) beginning in 2018, if the hospital had a “binding written agreement with an outside unrelated party for the actual construction of such department” on 11/2/2015 (when the BBA of 2015 was enacted).Slide24

Billing Under OPPS As Of Nov. 2, 2015

To attest or not to attest?What if CMS rejects the provider-based attestation?Will CMS conclude that the facility was not properly billing under OPPS “with respect to covered outpatient department services furnished prior to the date of the enactment” of Section 603 and, consequently, revoke grandfathered status?24Slide25

Dedicated Emergency Departments (EDs)

25Slide26

Dedicated ED

CMS finalized policy that

all services – whether emergent or not – furnished by a dedicated ED are exceptedStatute defines ED based on EMTALA regulation – 42 C.F.R. § 489.24(b). ED is:Licensed by state as an emergency department;Held out to the public as providing unscheduled emergency services; orDuring prior calendar year, at least one-third of ED’s services were for emergency medical conditionsSlide27

What Can Trigger Loss of Grandfathered Status?

27Slide28

What Can Trigger Loss of Grandfathered Status?

Will a grandfathered off-campus provider-based department lose its grandfathered status in any of the following situations:Relocations? Expand existing services and/or add new services? Change of ownership?

28Slide29

Can a Grandfathered Facility Relocate?

29Slide30

Relocations

Per CMS, grandfathered locations basically can’t relocate (concerned providers could relocate to larger spaces and bring in new physicians)CMS purports to base its policy on the definition of “department,” which incorporates the physical facilityBut, CMS said it “would make determinations [of what constituted a “department of a provider”] with respect to entities considered in their role as sources of health care services and not simply as physical locations.” 67 FR 50080 (8/1/02)Slide31

Relocations

Must remain at site listed on 855Specific down to the suite number (great importance for location identified in PECOS on 11/1/15)CMS did not cap square footage, howeverException for “natural disasters, significant seismic building code requirements, or significant public health and public safety issues.”Any exception request must be rec’d by RO within 30 days of event occurring (not relocation)Slide32

Relocations (cont.)

Practical implications:Doesn’t hurt to ask the CMS RO if a relocation is acceptable whenever necessaryExpansions should be acceptable if they do not entail changing the site’s addressCan always relocate to the campus of a main provider or a remote locationRemember, provider-based status is still available for relocated sites, just won’t be excepted, i.e., won’t be paid O/P ratesSlide33

Grandfathered Facilities and CHOWs

33Slide34

Ciao for CHOWs? (Not Quite)

CMS finalized policy of only permitting a grandfathered off-campus

PBD to retain its status after a change in ownership if:The entire hospital to which the PBD is provider-based is purchased by the same new owner; The new owner accepts assignment of the acquired hospital’s Medicare provider agreement.Slide35

Can a Grandfathered Facility Expand Its Services?

35Slide36

Grandfathered facilities can expand its services

Under CMS’s

proposed rule, only the “clinical families of services” furnished by an excepted PBD as of November 1, 2015 would be eligible for provider-based payment.CMS argued that this restriction was necessary to avoid gaming and adhere to statute’s intent of limiting the expansion of off-campus provider-based servicesSlide37

Grandfathered facilities can expand its services

Commenters argued that CMS’s proposal was contrary to the statute and CMS precedent.

BBA15 exception states that “off-campus outpatient department of a provider shall not include a department of a provider (as so defined) that was billing under this subsection with respect to covered OPD services furnished prior to the date of enactment of this paragraph.”CMS policy since 2002 (67 FR 50088):“[W]e emphasize that the provider-based rules do not apply to specific services; rather, these rules apply to facilities as a whole. That is, the facility in its entirety must be a subordinate and integrated part of the main provider.”Finally, current regulation does not consider changes in service mix as “material” to provider-based status requiring CMS notificationSlide38

Grandfathered facilities can expand its services

Although CMS stated it believes it

has the authority to limit both the type and volume of services furnished in off-campus PBDs, it relented on its proposal. Recognized the operational difficulties associated with tracking and properly billing services furnished in the same encounter and potentially same patient under different payment systemsCMS will make full OPPS payment for all services furnished in an otherwise excepted PBD. Slide39

Grandfathered facilities can expand its services

But

, CMS said it will monitor services billed with the “PO” modifier (off-campus PBD) to determine whether hospitals are evading Section 603 by, for example, purchasing additional physician practices and relocating them to excepted off-campus PBDs.Slide40

Is Any of This Reviewable?

40Slide41

Appeal Rights

No administrative or judicial review of:Whether the services furnished are services of a dedicated emergency department Whether a provider-based clinic is off-campus or on-campus Whether a provider-based clinic benefits from grandfathered statusShould still be able to appeal whether a site qualifies, and has always qualified, as provider-basedRemote locations have different appeal rights, depending upon the reason they are denied remote location statusSlide42

New Payment System for Non-Excepted Services

42Slide43

Payments for Non-Grandfathered Sites

Ability to qualify for provider-based status has never been in question – only question is paymentOriginally proposed that physicians would bill for services at non-grandfathered sitesCMS recognized this wouldn’t work due to Stark/AKS/anti-reassignment rulesNow propose to have hospitals bill under a new systemUse the 1450, not the 1500Physicians still bill for the professional fee on the 1500Non-grandfathered sites are to use the modifier “PN”Grandfathered off-campus sites are to use the modifier “PO”Two copays will continue to be generatedSlide44

Payments for Non-Grandfathered Sites (cont.)

Will generally pay at 50% of the OPPS rateBased on a “relativity” analysis using claims identified with the “PO” modifierWill apply the same packaging rules as applied under OPPSExceptions forOT/PT/STSeparately payable drugsPreventive servicesCoding rules for radiation therapy delivery and imaging will follow the MPFSNo outlier payments, but silent as to bad debtComments were due 12/31/16 (happy New Year!)Slide45

Interaction with 340B Drug Discounts

45Slide46

340B Implications

Non-grandfathered sites will still qualify as provider-basedThey will be identified on a reimbursable line on the cost reportThey will have charges associated with services furnished at their locationThe patients will be registered as outpatientsThere are still questions as to whether it is absolutely necessary for hospitals to bill under the new OPPS “lite” fee schedule in order for the site to qualify as a child siteSlide47

Questions?

47

Daniel (Dan) J. HettichPartnerKing & Spalding Washington, DC