Blog Post

Your top questions on Medicare site-neutral payments—answered

February 23, 2017

    Editor's note: This post was first published in February 2017. It was updated in November 2017 and March 2019.

    In CY 2019, Medicare is paying a reduced rate for all Part B services at a small number of off-campus HOPDs, as well as a reduced rate for one specific E&M service at all off-campus HOPDs. These two provisions have been described as an initial step by Medicare toward 'site-neutral payments'—reduced rates for HOPDs that are more equivalent to the lower payments earned by physician offices that perform the same services.

    Since CMS first announced its plans to institute lower Medicare payment rates for some HOPDs in 2016, Advisory Board has received many questions from hospitals wondering how they will be impacted. Below we have compiled answers to your most frequently asked questions.

    The basics

    Which facilities are impacted by the 'site-neutral' provisions, and how much are they paid?

    • Lower rate for all services: The lower rate only applies to off-campus HOPDs that began furnishing services billable under HOPPS after November 1, 2015. All other HOPDs are excepted from the provision. Impacted ("non-excepted") HOPDs receive just 40% of the HOPPS rate for Medicare FFS Part B services.

    • Lower rate for clinic visit G0463: In CY 2019, all off-campus HOPDs are reimbursed at just 70% of the HOPPS rate for routine clinic visits identified by HCPCS code G0463.

    When did the provisions take effect?

    • Lower rate (40% of HOPPS rate) for all services: CMS first reduced payment for impacted off-campus HOPDs in CY 2017, and the lower rate (40% of the HOPPS rate) has continued in CY 2018 and 2019.
    • Lower rate (70% of HOPPS rate) for clinic visit G0463: All off-campus HOPDs receive just 70% of the full HOPPS rate for this service effective January 1, 2019. Starting on January 1, 2020, all off-campus HOPDs will receive an even lower rate for code G0463: just 40% of the HOPPS rate.

    Does either provision affect physician payment?

    No. Physician payment is not impacted by these provisions. In both excepted and non-excepted HOPDs, clinicians receive professional payment under Medicare Physician Fee Schedule (MPFS) at the facility rate.

    These provisions only impact off-campus HOPDs … what defines an "off-campus" HOPD?

    If any point of an HOPD is within 250 yards of any point of the hospital building, that HOPD is considered "on-campus" and is not impacted by any of the site-neutral provisions. If an HOPD is more than 250 yards from the hospital building, it's an "off-campus" HOPD and is potentially subject to the site-neutral provisions.

    More on the lower rate for service G0463 at off-campus HOPDs

    What is code G0463?

    G0463 is a general evaluation and management code indicating a clinic visit. The description for this code is, "hospital outpatient clinic visit for assessment and management of a patient." In the HOPD setting, G0463 replaced the previous set of evaluation and management codes 99201-99205 and 99211-99215, which used to describe different levels of E&M visits for new and established patients, respectively. These codes are still used in the Medicare Physician Fee Schedule, but in HOPPS they were condensed into the single G0463 outpatient visit code.

    Why did CMS decide to reduce payment for G0463 specifically?

    Historically, routine patient evaluations taking place in an HOPD have been reimbursed at a higher rate than the same patient evaluation taking place in a physician office. CMS has decided that low-acuity services like routine patient evaluations (code G0463) should be reimbursed similarly regardless of the setting in which they are furnished.

    CMS targeted code G0463 for lower reimbursement after analyzing the Medicare services billed most frequently by HOPDs in CY 2017. The review found that a single code, G0463, made up nearly a third of off-campus HOPD procedures. CMS decided that this high-volume and low-acuity service was an ideal target for payment equalization. 

    Do all HOPDs receive lower reimbursement for G0463 now?

    No. Only off-campus HOPDs are receiving lower reimbursement for G0463 in CY 2019 and CY 2020 (see above for the definition of "off-campus").

    To clarify: the payment rate for G0463 is decreasing in 2019 and is decreasing further in 2020?

    Yes. CMS is phasing in site-neutral payment for G0463 over two years. The scheduled rate reductions for G0463 are as follows:

    Is it possible that CMS will target other services with lower rates in the future?

    It's possible, although CMS has not provided any language about what other services it would target.

    More on the lower rate for non-excepted off-campus HOPDs

    How do I find out if my off-campus HOPD is receiving the lower rate for all services?

    CMS has not published a list of HOPDs that are receiving the site-neutral rate. You should contact your CMS Regional Office to find out if your off-campus HOPD is impacted.

    What is the reduced payment rate for non-excepted HOPDs?

    For the majority of Part B services, non-excepted HOPDs receive payment for their services at just 40% of the HOPPS rate in CY 2019.

    Why has the CY 2019 site-neutral rate been set at 40% of the HOPPS rate—and could this change?

    CMS set the rate after finding that, across the highest-volume off-campus hospital outpatient procedures, average physician office reimbursement was only 35% of the rates paid to off-campus HOPDs. Nonetheless, for 2019 CMS decided to set payment at the slightly more generous rate of 40% of the HOPPS rate. CMS may reassess payment in future years and may lower the rate further.

    Do non-excepted HOPDs bill Medicare using the facility (UB-04) claim type?

    Yes, non-excepted HOPDs should bill Part B services using the UB-04 claim. However, they must include a modifier "PN" on every line item, indicating that the HOPD is non-excepted (subject to the site-neutral rate).

    Is it possible for excepted off-campus HOPDs to lose their excepted status?

    Yes. Any change in location—even changing the suite number within the same building—may trigger loss of excepted status. When a location change is due to natural disaster or to other circumstances beyond providers' control, HOPDs may retain excepted status at the discretion of their Medicare Regional Office.

    Change of ownership can also trigger loss of status. For example, if an excepted HOPD is acquired directly by another hospital it will lose its excepted status. But if the excepted HOPD is acquired as a result of the acquisition of the HOPD's parent entity, it will not lose excepted status.

    If an excepted HOPD adds new service lines, will it continue to be paid at the previous rate for those new services?

    Yes. New service lines at excepted HOPDS are not affected by the rate reduction. It is possible that CMS will act in the future to limit expansion of service types or volumes at excepted facilities.

    Do site-neutral payments impact provider-based departments' eligibility for 340B discount drug pricing?

    No. Services provided at non-excepted HOPDs are still attributed to the main hospital in cost reports, so 340B eligibility shouldn't change.

    Do non-excepted off-campus HOPDs get paid at 40% of the HOPPS rate for code G0463, or do they receive 70% of the HOPPS rate like all other off-campus HOPDs?

    Non-excepted HOPDs receive 40% of the HOPPS rate for Part B services, including code G0463, in CY 2019.

    Will we see the payment rate for non-excepted providers continue to decrease?

    Advisory bodies like MedPAC have advocated for equalizing payments across the HOPD and physician office settings, and CMS has indicated that it may further reduce the payment differential between HOPDs and physician offices in the future – but it has not committed to complete payment equalization so far.

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