In 2017, CMS implemented a site-neutral payment provision to reduce payment discrepancies between identical services performed at hospital outpatient departments (HOPDs) and provider-based sites.
Over the years, higher reimbursement rates at HOPD sites, along with physician employment and provider consolidation, led to disproportionate growth in HOPD volumes. This led Congress to address the matter in the Bipartisan Budget Act of 2016.
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The policy mandates that new HOPDs (opened or acquired after Nov. 1, 2015) farther than 250 yards from a hospital's campus must be paid at a substantially lower rate, which in CY 2018 equaled 40% of the standard OPPS. In the CY 2019 final rule, the agency maintained this 40% rate.
Read on to find answers to five important questions on site-neutral payments:
1. What sites are affected?
Sites were affected by site-neutral payments as of Jan. 1, 2017 if they were:
- Designated as "off-campus," provider-based sites;
- Located at least 250 yards from hospital's campus; and
- Acquired or built after Nov. 1, 2015, unless the exempted facility is part of a health system merger
In addition to new sites, existing HOPDs can be shifted to site-neutral payment as a result of facility relocation or remodeling. Any change in the address of an off-campus HOPD, including changes as small as a unit or suite number, will cause a facility to move onto the physician fee schedule. This includes both full relocation and an extensive remodeling. However, off-campus HOPDs that must relocate due to "extraordinary circumstances," such as natural disasters, are permitted to keep their billing status.
Additionally, a change of ownership results in loss of excepted status. If an off-campus HOPD is acquired directly by another facility, it will lose its ability to bill on the higher HOPPS rate. If the off-campus HOPD is acquired as a result of the acquisition of the HOPD's parent entity (i.e. health system), it may remain on the higher fee schedule.
2. How are site-neutral payments being implemented?
Under site-neutral payments, impacted HOPDs can no longer bill and be paid on the HOPPS fee schedule, but many HOPDs do not yet have the infrastructure to bill on MPFS. As a result, CMS allows impacted sites to continue using the HOPPS schedule for billing while using a special "PN" modifier on claims. However, the agency reimburses them at a special rate, called the "non-facility MPFS rate," which is set to be equivalent to 40% of the HOPPS rate.
In a major update to the site-neutral policy in the 2019 final rule, CMS will now reimburse at the site-neutral rate for G0463, hospital outpatient clinic visits, across all HOPDS, even those that are otherwise exempt from site-neutral payments. Effectively, this service will now receive the site-neutral 40% of HOPPS at any HOPD facility, regardless of status. This change will be rolled out over a two-year period: a 30% cut in 2019 and a full reduction to 40% of HOPPS in 2020. The national average payment rate will go down from $116 per visit to just $46.
3. I'm planning to expand my services and am currently excepted from site-neutral payments. Will I be able to continue to bill at the higher HOPPS rate?
Off-campus HOPDs that were billing for any service on HOPPS prior to Nov. 1, 2015 can also bill at the higher HOPPS rate for any services added after that date. Programs should be aware that in the 2019 proposed rule, CMS explored policies to require otherwise excepted sites to bill on the reduced site-neutral rate for expanded services. While this proposal did not make it into the final rule, this is the second time that the agency has floated this change, which signals that expanded services are a clear area of interest for CMS.
4. Will site-neutral payments affect freestanding EDs?
CMS continues to pay all services furnished at existing and future EDs under HOPPS, regardless of whether a given service is emergent in nature. In the 2019 rule, CMS introduced a new modifier (ER) for services furnished by off-campus EDs. This modifier will enable CMS to monitor how services are shifting to freestanding and off-campus EDs, which are currently exempt from the site-neutral payment policy. CMS is concerned about this shift, and the creation of the modifier may be a first step towards reducing the payment gap in the future.
5. How can hospitals mitigate the effects of SNPs?
Identify whether any of your sites will be affected by site-neutral payments. If you are unsure as to whether a given site is affected, contact your CMS regional office.
If any sites are impacted:
- Adjust billing processes. CMS is requiring impacted sites to add the modifier "PN" to all claims.
- Assess the revenue impact and make budgetary adjustments. Impacted sites should consider margin management strategy in preparation for reduced reimbursement under site-neutral payment.
- Rethink acquisition strategy. Historically, acquiring a freestanding imaging site was seen as an opportunity to transition it to an HOPD for the higher reimbursement rate. Now that it is no longer a viable strategy, hospitals and independent physician groups must reconsider their approach to clinic acquisition.
Expect to hear more about site-neutral payments in the coming years as CMS still has the option to modify and expand the policy through rulemaking. There are three major areas where the agency has demonstrated interest in expanding the policy:
- Expanded services at excepted sites;
- High-volume procedures (e.g. clinic visits) at excepted sites; and
- Services at freestanding and off-campus EDs.
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