The Centers for Medicare & Medicaid Services (CMS) in November published its final Medicare physician fee schedule rule for calendar year 2018, and clinic administrators, coders, financial analysts, compliance personnel, claims transaction personnel and charge masters involved in provider-based clinics need to pay close attention to these changes.
“The final rule further reduced payments to newly-acquired, provider-based, off-campus hospital outpatient departments (which CMS calls ‘off-campus provider-based departments’ or ‘off-campus PBDs,’” noted Health Industry Washington Watch.
Off-Site Clinics Subject to New Set of Payment Rules
The rule changes stem from the Bipartisan Budget Act of 2015, which resulted in the final 2017 Medicare hospital outpatient prospective payment system (OPPS), a site-neutral payment policy for off-site provider-based departments. Since January 1, 2017, off-campus PBDs have generally been paid under the physician fee schedule rather than the generally higher-paying OPPS.
“The 2017 rule set PFS rates for the technical component of such non-excepted off-campus PBD services at the OPPS rate scaled downward by 50% (called the PFS Relativity Adjuster),” Health Industry Washington Watch explained. “For CY 2018, CMS proposed to reduce the Relativity Adjuster to 25% of the OPPS rate. As a result of comments, CMS mitigated somewhat the additional reduction for these services. Specifically, CMS adopted a Relativity Adjuster of 40%, meaning that nonexcepted items and services furnished by nonexcepted off-campus PBDs will be paid a PFS rate that is 40% of the CY 2018 OPPS rate. CMS estimates that this change will cut Medicare Part B spending by $12 million for CY 2018.”
Other parts of the physician fee schedule upset hospital CEOs—particularly the $1.6 billion cut to Rule 340B, the federal drug discount program which was strongly supported by hospitals.
“The overall theme is that the one thing hospitals have to count on is that we’re going to have significantly lower revenue in the future,” William Ferniany, CEO of the University of Alabama at Birmingham Health System, told Modern Health Care.
“There’s a lack of predictability about what’s coming next, and that uncertainly hurts industry’s ability to truly innovate,” added Matthew Perry, CEO of Genesis HealthCare, based in Zanesville, Ohio.
Provider-Based Clinics Gaining Popularity
Provider-based clinics are becoming more popular around the United States, said Duane C. Abbey, a healthcare consultant who provides conferences for ProfEdOnDemand. Although hospitals can see greater revenue from provider-based clinics, a challenging maze of rules and regulations must also be navigated. And when it comes to provider-based clinics, there is also plenty of controversy around facility fees, which Medicare installed in 2000.
Becker’s Hospital Review gave a rundown of some of the issues:
- Facility fees are becoming increasingly common as more physician practices are sold to hospitals.
- Those fees remain controversial, as critics assert that they are simply a way for hospitals to generate more revenue without providing more benefits to patients.
- Facility fees have also attracted potentially damaging government oversight. A failed 2013 federal bill would have required providers to notify patients when they make appointments that facility fees would be charged and that there were alternative care sites that did not charge those fees. The bill died before making headway but its author has said it could be reintroduced.
- In 2015, President Obama signed a law that outlawed provider-based billing at outpatient facilities, thought facilities existing at the time the bill passed were exempt.