2019 Changes to Provider Based Departments

Simply put, a provider based department is a location where hospitals provide services to their patients that is outside of the traditional main hospital. This year, there are a few changes to how these departments are defined and billed as prescribed in the CY19 Medicare Physician Fee Schedule Final Rule.

The 4 types of Provider Based Departments (PBDs) remain unchanged.

  1. On Campus – Less than 250 yards from main hospital
  2. Off Campus – More than 250 yards from main hospital
  3. Remote Hospital Locations – Remote building created or acquired by hospital to provide inpatient services under the name, ownership, and financial and administrative control of the main hospital (i.e. multi-campus)
  4. Satellite Hospital Facilities – Part of hospital that provides inpatient services in a building also used by another hospital, or in one or more entire buildings located on the same campus as buildings used by another hospital

But a few things are changing this year. 

First off, in order to see how much Outpatient Prospective Payment System (OPPS) services are shifting to off campus, provider based emergency departments, The Centers for Medicare & Medicaid Services (CMS) will collect data on the types of services furnished in off campus emergency departments. These services are exempt from the site-neutral payment reductions affecting in non-excepted PBDs.  Hospitals should utilize the new modifier ER to identify these services for every claim line of the UB-04. While there are no payment adjustments specified for this change yet, there could be in the future.

Second, the CMS is concerned about the shift in services from freestanding physician offices to hospital outpatient department settings, and the financial effect on beneficiaries. To address this, reduced Medicare Physician Fee Schedule (MPFS) facility payment rates for clinic visits to all off campus PBDs will be extended, even if they’re excepted under Section 603 of the Bipartisan Budget Act of 2015. The CMS estimates a savings of $380 million from this change, with beneficiaries saving approximately $80 million of that total in the form of lower copayments.

Although it is unclear if the CMS has the authority to make these payment cuts in a non-budget neutral manner, hospitals should monitor their change in payments. These site-neutral payments will gradually phase in between 2019 and 2020.

Next, the CMS expressed a concern that a difference in payment amounts for 340B acquired drugs provided by hospital outpatient departments creates an incentive for hospitals to move drug administration services to non-excepted PBDs, rather than excepted, to receive higher payment. The CMS’ basis for this change is if drugs are being purchased at a reduced rate, providers should also be reimbursed at a discount, regardless of the PBD status or location. To address this, Part B drug payment methodology for separately payable 340B drugs billed by non-excepted, off campus PBDs will be changed to the same formula applied to excepted, off campus PBDs – which is: ASP – 22.5% instead of ASP + 6%.

In addition, the payment amount for status indicator (SI) “K” (non-pass through drugs and biologicals, therapeutic radiopharmaceuticals, brachytherapy sources, and blood/blood products), purchased through the 340B program in non-excepted PBDs will decrease by -28.5%. SI “K” drugs not purchased through the 340B program, but billed by non-excepted off campus PBDs will continue to be paid ASP + 6%.  Non-excepted PBDs are required to append modifier JG to the same claim line as the drug or biological HCPCS code to indicate it was acquired by the 340B drug pricing program discount.

As in previous years, the CMS once again proposed excepted off campus PBDs should be paid the same adjusted MPFS rate as non-excepted locations; specifically, for any new services not furnished at that location 12-months prior to the Bipartisan Budget Act of 2015. The concern is additional physician practices could be purchased and operated under the existing excepted off campus PBD umbrella, resulting in higher OPPS payment. The CMS believed Congress did not intend for new service lines in excepted locations to be paid OPPS rates so this proposal is an attempt to limit service line expansion for higher payment.

This service line expansion proposal hasn’t yet been finalized due to the CMS’ concerns that the implementation of this policy is operationally complex and could create administrative burdens for hospitals. Instead, the following actions were put into place for 1/1/19:

  • Off Campus PBDs will continue to receive full payment under OPPS as long as it remains excepted, not including clinic visit services.
  • The CMS will continue to monitor the expansion and volume of services in off campus PBDs in the interim.

To talk to one of our consultants about what this might mean for your hospital, give us a call at 888.779.5663.

Comments (0)

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

%d bloggers like this: