CMS Outpatient Proposed Rule Includes Cuts to Grandfathered Off-Campus Clinics

August 8, 2018

The Outpatient Prospective Payment System (OPPS) proposed rule released last week by CMS includes provisions that would dramatically reduce Medicare payments for most off-campus hospital clinic services. The American Hospital Association estimates a reduction of about $30 million in payment to Washington hospitals for 2019, and $439 million over a ten-year period. These numbers do not include the effect of other provisions that would also reduce payment for any new services provided at existing off-campus sites. WSHA, along with AHA and other organizations, will be commenting on the proposed rule, with comments due September 24. Please let us know how the proposed changes will affect the provision of services in your community.

Under the proposed rule, in a dramatic change, CMS will apply the 60 percent payment reduction to office visits provided at all off-campus hospital-based locations, regardless of how long the visits have been provided and billed as hospital-based services. Since January 2017, CMS has applied a site-neutral reduction to off-campus hospital sites that were not operating and billing as hospital-based locations as of November 2, 2015. In 2018 the payment for these services was also a 60 percent reduction. In addition, CMS also proposes to extend the existing 340B payment reduction to additional hospital sites. Non-excepted off-campus hospital sites had been exempted from the January 2018 340B drug payment reduction to AWP minus 22.5 percent, but under the proposed rule, as of January 2019, non-excepted off-campus sites are subject to the same 340B payment reduction as excepted sites. The policy does not apply to rural sole community hospitals, children’s hospitals, or PPS exempt cancer hospitals.

WSHA will be sending its member hospitals detailed analyses of the proposed rule, which includes the impact of these and other proposed changes. (Andrew Busz,


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