Hospitals With Off-Campus Hospital Outpatient Departments Beware: New NPIs and Provider-Based Attestations Required Before Jan. 1, 2028

Within the latest round of federal budget legislation there is a provision that will change the landscape of off-campus hospital outpatient departments (“Off-campus HOPDs”) and billing procedures. Section 6225 of the Consolidation Appropriations Act (“CAA”) amends Section 1833(t) of the Social Security Act to impose a new, mandatory identification and attestation regime on hospital Off-campus HOPDs. If found to be out of compliance with the new regulations, there are hefty payment consequences. The enforcement of the new regulation will begin January 1, 2028, and non-compliance can risk losing Medicare reimbursement entirely for services furnished at these Off-campus HOPDs. Hospitals and other healthcare providers should begin the preparation now to avoid the consequences coming.

Many hospital systems have expanded their footprint in recent years by acquiring or establishing outpatient clinics, specialty offices, and other care sites located away from the main hospital campus. Under existing CMS regulations (42 C.F.R. §413.65), a hospital can bill services furnished at these off-campus locations as if the off-campus locations were part of the hospital itself if that location qualified for “provider-based status.” Provider-based billing carries a significant financial advantage: these locations become eligible for higher, hospital-level reimbursement under the Outpatient Prospective Payment System (OPPS), rather than the lower rates paid for services furnished in a freestanding physician office.

Prior to the CAA, a hospital had the option of submitting a provider-based attestation to CMS showing that the hospital’s Off-campus HOPD met the licensure, financial integration and other provider-based status requirements. The provider-based attestation was voluntary and a separate identification number for each Off-campus HOPD was not required. These arrangements, however, have come under scrutiny. Section 6225 now requires hospitals to obtain unique National Provider Identifiers (NPI) for each Off-campus HOPD and affirmatively attest, and periodically re-attest, that their Off-campus HOPDs still meet the substantive integration requirements that justify provider-based billing.

New Requirement: Unique NPI and Ongoing Attestation

For items and services furnished on or after January 1, 2028, no Medicare payment will be made for services furnished at an Off-campus HOPD unless the following three conditions are satisfied:

    1. A separate National Provider Identifier (NPI). The Off-campus HOPD must obtain its own NPI, which is distinct from the main provider’s NPI, and all items and services furnished there must be billed under that separate number. This is a structural change, as CMS will now be able to isolate off-campus billing activity rather than having it comingled with the main hospital’s claims.

    2. An Initial Attestation. During the two-year period preceding the date services are furnished, the provider must submit an initial attestation confirming that the department complies with the provider-based status requirements of 42 C.F.R. §413.65. This means each Off-campus HOPD must submit an initial attestation on or after January 1, 2026 and before January 1, 2028.

    3. Subsequent, Ongoing Attestations. Compliance, under the new regulations, is not a one-time event. Rather after making the initial attestation, the provider must continue submitting subsequent attestations on a schedule to be established by CMS.

Which locations count as an “Off-Campus Outpatient Department”?

Under the statute, an off-campus outpatient department is defined by referencing to 42 C.F.R. §413.65. A department is considered off-campus, and therefore subject to the new attestation rules, unless it is located:

    - On the campus of the provider; generally, the area immediately adjacent to the provider’s main buildings, plus other areas within 250 yards, plus any additional area CMS’s regional office determines to be part of the campus on a case-by-case basis. OR

    - Within the applicable distance of a remote location of a hospital.

Notably, the statute excludes Rural Health Clinics and Federally Qualified Health Centers from the definition of “department of a provider,” with limited exceptions, respectively. Therefore, it is likely that these locations are not subject to the new regulations.

The Provider-Based Status Test

The new law requires an attestation that is directly tied to compliance with 42 C.F.R. §413.65, which requires satisfying a multi-factor, fact-sensitive integration test:

    - Licensure: The off-campus location generally must operate under the same license as the main provider.

    - Clinical Integration

            o Professional staff at the off-campus site holding clinical privileges at the main provider;

            o The same monitoring and oversight the main provider applies to its other departments;

            o A reporting relationship between the site’s medical director and the main provider’s chief medical officer that mirrors the accountability structure of an on-campus department;

            o Shared medical staff committees responsible for quality assurance and utilization review;

            o Integrated medical records systems; and

            o Seamless referral pathways between the site and the main provider’s inpatient and outpatient services.

    - Financial Integration: The site’s financial operations must be fully folded into the main provider’s financial system. This would be achieved through shared income and expenses, cost reporting through the provider’s cost centers, and incorporation into the main provider’s trial balance.

    - Public Awareness: Patients must be able to tell when they walk in the door, that they are entering a part of the main hospital, and expect to be billed accordingly.

    - Ownership and Control: The site must be 100% owned by the main provider, share the same governing body and organizational documents, and the main provider must retain final authority over contracts, personnel actions, and medical staff appointments.

    - Administration and Supervision: Administrative functions, including billing, records, Human Resources, payroll, benefits, and purchasing, must be integrated with the main provider’s, 

    - Location: For most facilities, the site must be located within 35 miles of the main provider’s campus, subject to several narrow exceptions.

Practical Takeaways for Hospitals

With less than two years before this law starts being enforced, hospitals have a window of time to get ahead of this requirement to stay in compliance and avoid having their Medicare payments reduced. In addition, gathering the necessary documentation and completing the required filings can be a time-intensive process that may take up to a full year. The following are recommended action plans to undergo in the meantime:

    - Inventory every off-campus location and account for compliance with section 413.65 criteria above.

    - Start the process of obtaining separate NPIs well before January 2028 and confirm that the billing systems are configured to route claims under the correct, location-specific identifier.

    - Begin preparing provider based attestation for each Off-campus HOPD now, understanding that provider-based attestations are time-intensive undertakings, with the final product being hundreds of pages.

    - Keep an eye on CMS’s forthcoming rulemaking regarding the process and timelines for submitting subsequent attestations.

Compliance with these new requirements is paramount for hospitals. Failure to comply with the attestation and unique NPI requirements by January 1, 2028 will make the Off-campus HOPD ineligible for Medicare OPPS payments.