HOPD/Site Neutrality

Sign on Hospital Building

Effective as of January 2017, medical services administered at off-campus hospital departments that had not been billed as a hospital outpatient department (HOPD) prior to Nov. 2, 2015 will not receive increased Medicare payments. This “site neutrality” provision of the 2017 CMS Physician Fee Schedule aims to offset hospitals’ incentive to acquire ambulatory surgery centers for conversion to HOPDs in order to secure boosted Medicare payouts.

AMSURG General Counsel Clint Cromwell explained that the legislation effectively minimizes the advantages of billing as an off-site HOPD. “The Government now has narrowed the rules on who is allowed to bill as an HOPD,” Cromwell said. “Under the old requirements, if the facility was 100 percent owned by a hospital and was 30 miles away, it could be billed as an HOPD. Now it has to be no more than 250 yards away from the hospital.”

As the Final Rule on the 1314 Bipartisan Budget Act of 2015, this provision prevents new and “non-grandfathered” HOPDs from reimbursement under the Medicare Outpatient Prospective Payment System (OPPS) and off-site facilities will receive an estimated less than 50 percent of the previous OPPS rate, effectively shrinking the financial advantage of holding provider-based status at off-site facilities.

By eliminating the financial advantage of holding provider-based status at off-site facilities, this legislation places a hefty burden on health systems to recoup financial costs for their off-site facilities while keeping those off-site facilities well-maintained.

Exemptions to the site neutrality rules include HOPDs that are located within 250 yards of a hospital campus or remote location. Also exempt are off-campus facilities that change ownership, as long as new owners agree to existing Medicare provider agreements.

Cromwell anticipates that while it might not have a big impact on hospitals, this provision emphasizes a broader shift to efficient healthcare practices. “The playing field is becoming level,” Cromwell said. “The healthcare landscape is pivoting to emphasize the type of efficiency that makes up the AMSURG business model. Hospitals’ reliance on our services will continue to grow in the coming years.”