Skip to main content

The Changing Calculus of Off-Campus Construction

News  |  By Philip Betbeze  
   August 30, 2017

A new site-neutral CMS outpatient rule will cut reimbursements sharply for new outpatient centers, forcing hospitals and health systems to rethink construction decisions.

This article first appeared in the September 2017 issue of HealthLeaders magazine.

Last fall, with one regulatory swipe, CMS may have changed the plans of countless hospitals and health systems that counted on higher billing rates for "hospital-based" services provided to Medicare beneficiaries by off-campus hospital-owned facilities.

The move wasn't a surprise—the regulatory changes come directly from the Bipartisan Budget Act of 2015, Section 603—but it essentially means that payments to provider-based departments that were not billing as a hospital department prior to November 2, 2015, will be cut in half. Those established after that date will be considered "site neutral" and, thus, will receive the lower reimbursement rate. 

Hospitals and health systems, for a variety of reasons, had been investing heavily in outpatient facilities, either by acquiring physician practices that owned them or by building off-campus facilities on their own.

One example is the proliferation of medical malls that combine a variety of outpatient services under one roof. Under the old rules, they could bill at the hospital rate. But those investments are now in question thanks, in large part, to this new rule. 

Philip Betbeze is the senior leadership editor at HealthLeaders.

Get the latest on healthcare leadership in your inbox.