July 27, 2022

As stated in last week’s alert, we will be providing further details arising from the 2023 OPPS Proposed Rule (PR) that was recently released to the public.  In this week’s alert, the focus will be on proposals applicable to rural and critical access hospitals.  The following represents our summary of these proposals gleaned from the fact sheet provided by the Centers for Medicare and Medicaid Services (CMS) relative to the 2023 OPPS PR.

REH Payment Policies

As we’ve previously published, Section 125 of the Consolidated Appropriations Act, 2021 (CAA) established a new Medicare provider type called Rural Emergency Hospitals (REHs), effective January 1, 2023.  REHs are facilities that convert from either a critical access hospital (CAH) or a rural hospital (or one treated as such under section 1886(d)(8)(E) of the Social Security Act) with less than 50 beds, and that do not provide acute care inpatient services, with the exception of skilled nursing facility services furnished in a distinct part unit. 

On June 30, 2022, CMS published a rule proposing the “Conditions of Participation (CoPs) for Rural Emergency Hospitals.”  In this rule, CMS outlined the provider enrollment procedures and payment rates that would apply to REHs.  Together, the policies in these proposed rules will allow rural hospitals to seek this new designation and provide continued access to emergency services, observation care, and additional medical and outpatient services.

By statute, REH services include emergency department services, observation care, and may include other outpatient medical and health services as specified by the head of the U.S. Department of Health and Human Services (HHS), i.e., “the Secretary.”  Covered outpatient department services provided by REHs will receive an additional 5 percent payment for each service.  Beneficiaries will not be charged coinsurance on the additional 5 percent payment. REHs will also receive a monthly facility payment.  After the initial payment is established in CY 2023, the payment amount will increase in subsequent years by the hospital market basket percentage increase.

To improve access to all types of care in rural settings, CMS is proposing to consider all covered outpatient department services (that is, services that would otherwise be paid under the OPPS) as REH services.  REHs would be paid for furnishing REH services at a rate that is equal to the OPPS payment rate for the equivalent covered outpatient department service increased by 5 percent. 

CMS is also proposing that REHs may provide outpatient services that are not otherwise paid under the OPPS (such as services paid under the Clinical Lab Fee Schedule) as well as post-hospital extended care services furnished in a unit of the facility that is a distinct part of the facility licensed as a skilled nursing facility.  These services, however, will not be considered REH services and, therefore, will be paid under the applicable fee schedule for such services and will not receive the additional 5 percent payment increase that CMS proposes to apply to REH services.

REH Provider Enrollment

This PR would update the existing Medicare provider enrollment regulations in 42 CFR Part 424, subpart P, to address enrollment requirements for REHs.  One of the most important REH enrollment provision proposals is that the facility may submit a Form CMS-855A change of information application (rather than an initial enrollment application) in order to convert from a CAH to an REH.  This is expected to help expedite the CAH-to-REH conversion.

REH Self-Referral Issue

The physician self-referral law, commonly known as the “Stark Law,” includes the following provisions:

• Prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, unless the requirements of an applicable exception are satisfied; and
• Prohibits the entity from filing claims with Medicare (or billing another individual, entity, or third-party payer) for any improperly referred designated health services.  A financial relationship may be an ownership or investment interest in the entity or a compensation arrangement with the entity.  The statute establishes a number of specific exceptions and grants the Secretary the authority to create regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse.

With that background, the 2023 OPPS PR provides updates to the physician self-referral law for the new REH provider type.  Specifically, CMS is proposing: (a) a new exception for ownership or investment interests in an REH, and (b) revisions to certain existing exceptions to make them applicable to compensation arrangements to which an REH is a party.

Rural Sole Community Hospitals

By way of background, CMS currently pays an equivalent of the physician fee schedule (PFS) payment rate for a clinic visit when provided at an “excepted” off-campus provider-based department (PBD) that is paid under OPPS.  The PFS equivalent payment rate is approximately 40 percent of the OPPS payment rate, and the clinic visit is the most frequently billed service under the OPPS.

To better maintain access to care in rural areas, CMS is proposing to exempt Rural Sole Community Hospitals (SCHs) from this policy and pay for clinic visits furnished in excepted off-campus PBDs of these hospitals at the full OPPS rate.  CMS believes that implementing this exemption would help to maintain access to care in rural areas by ensuring rural providers are paid for clinic visit services provided at off-campus PBDs at rates comparable to those paid by on-campus departments.  This proposed exemption for rural SCHs is in keeping with prior CMS policies to provide rural SCHs a 7.1 percent add-on payment for OPPS services, to account for their higher costs compared to other hospitals and to exempt rural SCHs from the 340B payment adjustment policy.

To see the CMS fact sheet on the 2023 OPPS PR, click on the following link: CY 2023 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Proposed Rule (CMS 1772-P) | CMS.  To contact us here at MiraMed Global Services, please go to info@miramedgs.com.