CMS cuts payment rates to off-campus, provider-based departments

December 11, 2017

CMS will cut payments for certain services performed by off-campus provider based departments (PBD) by 20%, according to the 2018 OPPS final rule. The pay cut will affect PBDs established after November 2, 2015, or which do not meet other exemptions.

On January 1, 2017, in compliance with Section 603 of the Bipartisan Budget Act, CMS implemented a site-neutral payment policy for off-campus outpatient PBDs. Medicare paid for items and services furnished at PBDs under a modified fee schedule, based on the relationship between the Medicare Physician Fee Schedule (MPFS) and the OPPS. The modified fee schedule was set at 50% of the OPPS payment rates.  Hospitals with PBDs subject to the site-neutral policy were required to append HCPCS modifier -PN (non-excepted off-campus service) to non-excepted items and services, indicating that these services were to be paid at the fee schedule rate. 

Beginning in 2018, CMS will set payments at 40% of the OPPS rate, effectively cutting fees for services performed at PBDs by 20% of OPPS rates. This rate is down from 50% in 2017, but higher than CMS’s original proposal to cut payments by 25% of OPPS rates.  The reduced payments will make them comparable to the rates physicians receive for procedures in an office setting, according to CMS. The payment reduction is intended to remove the incentive for hospital-owned physician practices to convert to off-campus departments to receive higher payments for their services. 

As non-exempt PBDs are paid through the MPFS, they will not be subject to a new OPPS policy that cuts payments for drugs reimbursed under the government’s 340B program.