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Association Urges CMS to Minimize Adverse Effects of Site Neutral Law

The Centers for Medicare & Medicaid Services (CMS) should use its rulemaking authority to minimize the adverse effects of cuts to hospital outpatient payments on essential hospitals and vulnerable patients, America’s Essential Hospitals said in a March 30 letter to the agency.

Section 603 of the Bipartisan Budget Act (BBA) of 2015, enacted Nov. 2, 2015, reduces Medicare reimbursement for new, off-campus hospital outpatient departments (HOPDs) that were not billing for services provided before the date of enactment. Section 603 requires CMS to pay new off-campus HOPDs at a lower rate beginning Jan. 1, 2017, instead of paying under the Outpatient Prospective Payment System (OPPS). CMS is tasked with implementing the law through the rulemaking process, which is expected to occur as part of the annual OPPS proposed rule this summer.

The letter serves as a follow-up to a meeting of America’s Essential Hospitals staff with CMS officials, in which the association raised issues of concern with the BBA. In the letter, America’s Essential Hospitals

  • highlighted the important role that HOPDs of essential hospitals play in expanding access to comprehensive services for vulnerable patients;
  • called on CMS to consider as grandfathered HOPDs that change ownership or relocate after the date of enactment;
  • pointed to the stark difference in reimbursement under the OPPS and other payment systems, urging CMS to ensure HOPDs are reimbursed adequately to cover the high cost of treating complex patients; and
  • urged CMS to maintain the status quo with regard to hospital billing and cost reporting processes to avoid disruption to hospital billing systems and 340B Drug Pricing Program eligibility.

We will closely follow regulatory developments and continue to keep our members updated. Contact Director of Policy Erin O’Malley at or 202.585.0127 with questions.


About the Author

Shahid Zaman is a senior policy analyst at America's Essential Hospitals.

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