On October 28 and 30, 2015, the U.S. House of Representatives and U.S. Senate approved the Bipartisan Budget Act of 2015 (the Act)—a measure designed to raise the limit on Federal borrowing that would also have significant implications for healthcare providers.  In particular, the Act directs CMS, effective January 1, 2017, to cease paying Hospital Outpatient PPS rates for off-campus provider-based departments that begin billing as such on or after the date the Act is signed into law.  These new off-campus departments will instead be paid according to the Medicare Physician Fee Schedule or Ambulatory Surgical Center Payment System.  All provider-based off-campus departments that had billed Medicare for outpatient hospital services prior to the date of enactment will be exempt from the payment change.  President Obama signed the Act into law on November 2, 2015.  King & Spalding’s Client Alert summarizing in detail the Act’s changes to provider-based status is available below. 

While the Act will end the growth of off-campus provider-based departments, the Act’s payment changes do not apply to on-campus provider-based departments, dedicated emergency departments (even if off-campus), remote locations of a hospital (i.e., inpatient campuses of multi-campus hospitals), satellite facilities for excluded units, and provider-based entities such as rural health clinics.  These organizations that comply with the provider-based regulation at 42 C.F.R. § 413.65 will continue to receive payments based on the OPPS (or other applicable payment system) even if established or acquired after the Act is signed into law.

In addition, the Act expands the definition of an on-campus provider-based department to include departments located within 250 yards of either (i) the hospital’s main buildings or (ii) any remote location of a hospital.  Previously, CMS directed multi-campus hospitals to designate one main campus from which all provider-based departments are measured, even those located on the campus of a remote hospital location.
The Act also exempts services furnished in dedicated emergency departments from the payment change.  In an original version of the Act, Congress identified emergency department services by specific HCPCS codes.  In the version passed by the House and Senate, however, Congress has exempted all services furnished in a dedicated emergency department (as defined in 42 C.F.R. § 489.24(b)) from the payment change.

In addition to the changes to provider-based status, the Act will extend the two-percent Medicare sequestration cuts through FY 2025.  Congress previously extended the two-percent cut through FY 2023 and instituted a four-percent cut for the first six months of FY 2024.  The Act replaces this timetable with a flat two-percent reduction through FY 2025.

Many of these payment changes are intended to prevent an expected 52-percent spike in 2016 Medicare Part B beneficiary premiums.  Savings from the changes in hospital outpatient reimbursement and sequestration will enable CMS to increase Part B premiums by only 15 percent, and across a broader set of beneficiaries. 

The text of the as-passed Act is available here.

Reporter, Christopher Kenny, Washington, DC, +1 202 626 9253, ckenny@kslaw.com.