Fact Sheet: Changes to Site-neutral Payment Provisions in CMS's Physician Fee Schedule Proposed Rule

Section 603 of the Bipartisan Budget Act of 2015 (BiBA) requires that, with the exception of emergency department (ED) services,1 services furnished in off-campus provider-based departments (PBDs) that began billing under the outpatient prospective payment system (OPPS) on or after Nov. 2, 2015 (referred to as “non excepted services”) are no longer paid under the OPPS. Instead, these services are covered and paid under “another applicable Part B payment system.” For calendar year (CY) 2017, the Centers for Medicare & Medicaid Services (CMS) finalized the physician fee schedule (PFS) as the applicable Part B payment system and set payment for most nonexcepted services at 50 percent of the OPPS rate. CMS refers to this 50 percent rate as the “PFS Relativity Adjuster.” In the CY 2018 PFS proposed rule, CMS proposes significant reductions to the site-neutral payment rates.

Specifically, for CY 2018, the agency proposes to pay hospitals at 25 percent, rather than 50 percent, of the OPPS rate for non excepted services. CMS arrives at this proposed payment rate based solely on a comparison of the payment rate for a hospital outpatient clinic visit to the payment rates for similar outpatient visit services under the PFS. The agency estimates that its proposed change would save Medicare Part B $25 million in 2018. CMS does not propose to make any other changes to its site-neutral policy in CY 2018, including to its problematic policy that the relocation of an existing (referred to as “excepted”) PBD would result in it losing its excepted status and being paid at the site-neutral rate, except in extraordinary circumstances.