Polsinelli's Reimbursement Institute presents a special 2-part webinar series, in which it will provide an in-depth analysis of the provider-based changes enacted in the Bipartisan Budget Act of 2015 (Act) and CMS' proposed rules implementing those changes. Virtually overnight, Section 603 of that Act imposed sweeping changes that effectively shut down the development and implementation of new off-campus provider-based hospital outpatient departments.
To implement Section 603, CMS is issuing changes to Medicare's provider-based regulations as part of the CY 2017 Hospital Outpatient Prospective Payment System proposed rule – the first such changes since 2003. This webinar will review the newly proposed regulatory changes, address the practical implications of the proposed rule, and present ideas on how to operationalize CMS's proposals, should they be finalized. This webinar will also highlight potential comment areas that stakeholders should consider.
On our agenda:
-Practical and operational implications flowing from CMS' proposed rule
-Review of hypothetical scenarios impacted by CMS' proposed rule and those that remain unsolved, including relocation of existing facilities, facilities in development, service line expansions, adding services to an otherwise exempt emergency department, space-sharing, and time-sharing
-Review of potential 340B implications
-Overview of critical comment areas
Back to the Future... Will CMS' Proposed Provider-Based Rules Reshape the Future? Or Will They Rewrite the Past?: Part II
1. Presenters:
• Colleen M. Faddick, Shareholder, Polsinelli, PC
• Ross E. Sallade, Shareholder, Polsinelli, PC
• Kyle A. Vasquez, Counsel, Polsinelli, PC
Part II: Back to the Future … Will CMS’
Proposed Provider-Based Rules Reshape the
Future? Or Will They Rewrite the Past?
July 28, 2016
Polsinelli
Reimbursement Institute
2. Polsinelli Reimbursement Institute
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http://www.polsinelliri.com/
2
3. Today’s Roadmap
Part I – Where we are today (Tuesday, July 19)
Part II – Where we are headed in 2017
Brief background
Practical implications of Proposed Rule
Review scenarios impacted by Proposed Rule
Review potential 340B implications
Overview of critical comment areas
3
5. Section 603 of the BBA of 2015
Effective Nov. 2, 2015; amended Social Security
Act Section 1833(t)
As of Jan. 1, 2017, no OPPS payment for items
and services furnished in off-campus provider-
based hospital outpatient departments; paid
under the applicable Medicare payment system
Exceptions to locations and services
5
6. Proposed Rule Implementing
Section 603
CY 2017 Hospital Outpatient Prospective
Payment System Proposed Rule
– 81 Fed. Reg. 45604, 45681 (July 14, 2016)
– Narrow interpretation of Section 603
– CMS solicited comments in specific areas
• Comments due Sept. 6, 2016
• Not precluded from commenting beyond CMS’
request
6
7. Proposed Rule Terminology
Certain off-campus provider-based hospital
outpatient departments (“PBDs”) items and services
will be “excepted”
– “Excepted” = (i) PBDs existing and billing OPPS on /
before Nov. 2, 2015; (ii) dedicated emergency
departments; (iii) on-campus PBDs
• May continue to bill under the OPPS
– “Non-excepted” = PBDs did not bill under OPPS on /
before Nov. 2, 2015
• Subject to Section 603, no OPPS payment after Jan. 1, 2017
7
9. Excepted Items and Services:
Dedicated EDs
All items and services (emergent or not) furnished
in a dedicated emergency department (“DED”)
excepted
– On- and off-campus DEDs exempt
– Must meet qualify as DED under EMTALA by
meeting one of three criteria:
• Licensed by state as an emergency department
• Held out to public as providing care for emergency
medical conditions on an unscheduled, urgent basis
• During the prior calendar year, provided at least 1/3 of
visits for treatment of emergency medical condition
– Exception includes both emergency and non-
emergency services
– Urgent care centers not excepted
9
10. Excepted Items and Services:
Dedicated EDs
Scenarios:
– Existing DED; hospital moves other scheduled,
non-emergent outpatient services into the DED
– Existing DED; hospital completes an addition to
accommodate additional non-emergent services
– Existing non-DED retrofitted to classify as DED
– New DED built after Nov. 2, 2015; provides non-
emergent outpatient services
10
11. Excepted Items and Services:
Dedicated EDs
Key DED considerations:
– Compliance with state laws (hours of operation,
staffing, physical plant), certificate of need, life
safety code, etc.
– Compliance with EMTALA
11
12. Excepted Items and Services:
Clinical Family of Services
CMS proposal
– No expansion of the types of services offered from
excepted off-campus PBDs
– Excepted off-campus PBDs continue to be paid at
OPPS rates for added items and services if in the
same “clinical families of services”
– 19 “clinical families of services” defined by HCPCS
codes mapped to APCs
– Services beyond clinical families of services are non-
excepted services (i.e., not payable under the OPPS)
and must be billed under the MPFS, if at all
– No limit on volume of services furnished within
clinical family billed prior to Nov. 2, 2015
12
13. Excepted Items and Services:
Clinical Family of Services
Scenario:
– Nov. 2, 2015, Hospital operates rad onc practice as
PBD
– In 2016, Hospital purchases ENT practice and seeks
to add to rad onc PBD
CMS soliciting comments
– Historic view of PBD as physical location vs. items
and services furnished in physical location
– Specific timeframe the excepted PBD had to bill
clinical family of services prior to November 2, 2015
– Categories of the clinical family of services
– Whether volume of services within a clinical family
should be limited
13
14. Excepted Items and Services:
On-Campus / Remote Location
On-campus locations excepted
No proposal to change or clarify the definition of
“campus”
Section 603 also includes as “on-campus” those
PBDs within 250 yards of remote locations
Commentary:
– Measurement of the 250 yards should be done in a
straight line by use of surveyor reports or other
appropriate documentation from any point of a
remote location
14
15. Excepted Items and Services:
On-Campus / Remote Location
Measuring 250 yards
– How will MAC/RO discretion be applied?
– Nothing in the actual PB regulation changed
Critical Comment Area, but consider whether
bright line rules will be useful
15
16. Hospital PBD II
Main Hospital
Hospital PBD I
Hospital
PBD III
Remote
Hospital
Location
Parking Lot248 yards
5 miles
240 yards
Measuring 250 Yards
17. Relocation Recap
CMS proposal
– Freeze excepted off-campus PBDs as they existed on
Nov. 2, 2015
– Prohibit relocation of excepted off-campus PBDs
under any circumstance
– Excepted status determined by location currently
listed on CMS-855A, including both address and
suite number;
– Attempted relocation would mean loss of excepted
status
CMS considering exception for natural disasters
and circumstances beyond the provider’s control
17
18. Relocation Scenarios
Excepted PBD moves from one suite/unit in same
building to another suite/unit is same building
Excepted PBD expands its suite/unit to encompass
another, but maintains existing street address and
suite number
Hospital demolishes existing building housing
excepted PBD and rebuilds (or building destroyed)
– In the same location?
– To different specs?
– To the same specs?
– To the same specs with the exact addresses?
18
19. Relocation Comments to Consider
Allow relocation for excepted off-campus PBDs
– Operated substantially similar to status as of
Nov. 2, 2015
– In the event of natural disaster
– In the event building demolished and
reconstructed
– To allow for temporary relocation to allow for
renovation of space
CMS previously considered PBD relocations as a
“material change”
19
20. Alternative Payment System
Section 603 requires non-excepted items and
services to be paid under other applicable [non-
OPPS] payment systems
CMS delaying implementation until CY 2018; cannot
develop an “alternative payment system” by Jan. 1,
2017 (1 year temporary solution)
CMS proposal:
– Non-excepted items and services paid under MPFS at
non-facility rate (i.e., includes overhead)
20
21. Payment for Non-Excepted PBDs
If paid the non-facility MPFS rate, what are the
hospital’s options?
1. Don’t bill – Hospitals would forego payment
for facility/technical/ancillary services
2. Enter into an arrangement with physicians –
Physicians would bill and then pay Hospital for
facility/technical/ancillary services
3. Enroll and submit claims as another
freestanding supplier type (e.g., physician
clinic, ASC, IDTF, other)
21
22. Payment for Non-Excepted PBDs
Both [revenue] options create practical and
legal issues
CMS acknowledges that Option 2 may be
limited by AKS, Stark, reassignment, anti-
markup and other payment rules
– CMS soliciting comments on these limitations
Option 2 requires hospitals to enter into
agreements with physicians for physicians to
bill Medicare for hospital’s services
22
23. Payment for Non-Excepted PBDs
Option 2 – Physician bills for hospital services
Pre-Section 603 common structure:
– As infusion PBD, hospital contracts with
unrelated physician group to staff PBD
– Hospital bills Medicare for drugs, facility under
OPPS
– Physicians bill Medicare for E&M (if
performed) under MPFS
23
24. Payment for Non-Excepted PBDs
Option 2 – Physician bills for hospital services
Post-Section 603 structure:
– Hospital enters into agreement with physician
group for physician group to bill Medicare for
drugs and physician group “turns over”
collections for drugs to hospital (less billing fee?)
– Threshold question: still hospital services
furnished to registered hospital outpatients?
• Proposed Rule seems to suggest so
24
25. Payment for Non-Excepted PBDs
Option 2 – Physician bills for hospital services
Post-Section 603 issues:
– Stark: must meet an exception as physician refers
DHS to hospital (personal services?)
– AKS: could conform generally to a safe harbor
– Reassignment: non-professional services (drugs)?
– Prohibition against unbundling: if still a hospital
outpatient service, only the hospital may bill?
– Prohibition against using another provider number
– What if a diagnostic test subject to anti-markup?
25
26. Payment for Non-Excepted PBDs
Option 3 – Hospital enrolls PBD as clinic:
– Hospital must make this choice now –or soon
– If hospital enrolls as something else, it is no longer
a PBD (consider loss and timing of 340B eligibility)
– To avoid delays in approval and payment, must
enroll very soon so that effective date can be Jan.
1, 2017
– Final rule won’t be published until November
26
27. Change of Ownership (CHOW) - Recap
Excepted status for off-campus PBD transfers to
new owners only if
– Ownership of main provider is also transferred
and
– New owners accept existing provider agreement
(i.e., agree to successor liability)
Individual off-campus PBDs could not be
transferred from one hospital to another
27
28. Change of Ownership (CHOW) -
Scenarios
Scenarios:
– Reject CHOW; enroll anew
– Reject CHOW; open as remote location of a
hospital
– Asset purchase vs. stock purchase
– Merger with another hospital
CMS soliciting specific comments
28
29. 340B Program Implications
Current state of 340B eligibility
– “Child site” must be a reimburseable cost center
that appears on Worksheets A/C; Lines 50-118 of a
filed cost Medicare cost report (i.e., a hospital
department)
– HRSA historically focused on ensuring the hospital
provides care , maintains the record of care, and
remains responsible for the care provided
Future state
– HRSA revisiting child site eligibility in its Omnibus
Guidance (proposed Aug. 28, 2015)
29
30. 340B Program Implications
Fate of 340B-eligibility for non-excepted sites
rests with HRSA
Proposed Rule recognizes that Section 603 still
considers non-excepted sites as PBDs of the
hospital
If non-excepted site remains a PBD, hospital would
maintain a record of care and remain responsible
for the patient’s care, consistent with 340B patient
definition
If finalized as-is, Proposed Rule could continue
340B eligibility of non-excepted PBDs
30
31. 340B Program Implications
Hospitals should carefully consider cost of lost
340B opportunity by enrolling as a clinic (or
other supplier)
Consider timing of conversion to a clinic (or
other supplier) as it relates to cost report
31
32. 340B Program Implications
Scenarios:
– Existing excepted site loses exemption from Section 603
– Hospital builds a new, non-excepted location
– Hospitals adds scheduled services to an excepted DED
Critical comment area
– Comment on processes that ensure that non-excepted
sites remain PBDs, including billing and cost reporting
mechanisms; balance with the cost of complying with
COPs and other hospital standards
– Advocate that HRSA re-opens comments on child site
eligibility to adapt to CMS’s final rule expected in Nov.
2016
– DEA/Distributor issues if physicians bill for drugs?
32
33. Space-Sharing / Co-Location
& Time-Sharing
Not addressed in the proposed rule
CMS has indicated it will be addressed in
forthcoming revisions to Ch. 2 of the Medicare
State Operations Manual
CMS interpretation of the prohibition – moving
target
CMS enforcement trends
– CMS State Agency; accreditation organization
training
– Increased denial activity
33
34. Space-Sharing / Co-Location
& Time-Sharing
Space-Sharing: Hospital and physician office
share common hallways, waiting rooms,
reception areas, staff, bathrooms, etc.
– Options when discovered?
Time-Sharing: Hospital uses a provider-based
space M, W, F; Physician uses same space as
physician office space T and Th
– Possible softening of CMS’ position on time
sharing to come?
Critical comment area??
34
35. Under Development Locations
Mid-Build = off-campus provider-based departments under
development prior to Nov. 2, 2015 but had not yet billed
for any services under OPPS
H.R. 5273 “Helping Hospitals Improve Patient Care Act of
2016” - Section 201 “Mid-build exception”
– Would restore hospital outpatient reimbursement 1/1/18
– Requires a binding written agreement with an outside unrelated party
for actual construction by 11/2/15
– Requires provider-based attestation by 12/31/16 (timing may vary),
certification of binding agreement, and Medicare enrollment
House Approved; stalled with Senate Fin. Comm.; unclear if
Senate will act prior to the election
35
36. Comment Solicitation
In addition to areas previously highlighted, CMS
seeks comments on the following topics:
– Information needed to identify non-excepted
PBDs
– Data collection
– Changes to enrollment forms, claims forms,
hospital cost reports, and hospital operations
– Billing for items and services from a non-
excepted PBD on the CMS-1500
36
RES
[NOTES FROM BRAGG’S PART 1 SLIDE]
Today’s webinar is part of Polsinelli’s Reimbursement Institute. The Reimbursement Institute is made up advisors from Polsinelli, as well as a number of client representatives, all of whom specialize in health care reimbursement. The Reimbursement Institute Website is listed on the PowerPoint slide and is a great resource for e-Alerts, Webinars, News from D.C., links to guidance, as well as a list of our advisors. Please check out the website and please let us know if you have interest in participating on the Advisory Board.
RES
Recording of Part I available, Part II will also be available.
Colleen
Colleen
Dedicated emergency departments;
Items and services billed prior to November 2, 2015;
Remote hospital campus locations;
On-campus PBDs – extended to include those within 250 yards of a remote location of the hospital;
Same “clinical family of services”;
Provider based entities (RHC);
Critical Access Hospitals; and
Satellite facilities
Colleen
Colleen
Kyle
(Kyle)
(Kyle)
(Colleen)
(Colleen)
(Collen)
(Collen)
(Ross)
(Ross)
(Colleen)
No alternate payment system? Can’t pay hospital under MPFS if billed on UB?
-outpatient therapy?
-kidney disease patient education?
-vaccines?
(Colleen)
(Colleen)
(Colleen)
(Colleen)
Colleen’s notes:
Page 45688 (midway, 3d column): “the Act does not specify that the off-campus outpatient departments of a provider are no longer considered a PBD part of the hospital.”
(Colleen)
Colleen’s notes:
Prohibition against unbundling outpatient services: 410.42 (CMS could change reg for this, but also statutory – 1862(a)(14) [1395y]
-AMR – probably will apply b/c “performing supplier” is hospital, billing supplier is physician and hospital does not furnish 75% of its services through the physician group nor does it furnish the diagnostic test in the physician group’s office (it is a hospital outpatient department)
RIPE FOR COMMENT!
(Colleen)
Does new clinic drop off the hospital’s cost report? If so, when? Likely no termination of child site until filed cost report. Will timing be such that CMS fixes its billing issues (allowing a non-excepted PBD to bill Medicare on a UB but be paid under MPFS) so that PBD can go back to true PBD/OPPS status and remain 340B eligible?
Colleen’s notes:
Prohibition against unbundling outpatient services: 410.42 (CMS could change reg for this, but also statutory – 1862(a)(14) [1395y]
-AMR – probably will apply b/c “performing supplier” is hospital, billing supplier is physician and hospital does not furnish 75% of its services through the physician group nor does it furnish the diagnostic test in the physician group’s office (it is a hospital outpatient department)
RIPE FOR COMMENT!
(Ross)
(Ross)
(Kyle)
(Kyle)
(Kyle)
(Kyle) – other considerations – if billed under doc MPFS, can the facility really distribute drugs
HRSA enrollment pulls from CMS cost report electronically; need a fix