Congress and Obama Administration Agree on Two-Year Budget Deal

Late Monday evening, Congressional leaders and the Obama administration announced a bipartisan agreement on legislation that funds the federal government for two years, raises the nation’s debt ceiling and staves off Medicare premium increases for beneficiaries, among other things. The final legislation, which responds to a number of quickly approaching fiscal deadlines and to upcoming leadership changes in the House that might have impacted the ability to strike such a deal, was passed by the House on Wednesday and is expected to pass in the Senate. President Obama has stated that he will sign the legislation into law.

Of great interest to ASCs is a site-neutral provision that stops the practice of hospitals purchasing off-campus facilities, such as ASCs and physician offices, and then charging the Medicare program and beneficiaries the higher hospital rates. The provision will apply to any outpatient department/physician practice acquired or established and wholly owned by a hospital after the enactment of the legislation.

As drafted, on January 1, 2017, Medicare will begin paying hospital-owned facilities bought or built after the bill is signed into law according to the ‘applicable payment system’ – the physician fee schedule rate for office visits and the ASC rate for outpatient surgical procedures. Outpatient departments, ASCs, physician offices or other off-campus facilities that are currently operating will be exempted from the payment changes.

For ASCs, this means that a hospital purchase and conversion would not result in the hospital being reimbursed by Medicare beyond the current ASC rate. With regard to physician offices, this provision responds to the concerns of many that hospitals were buying up physician practices and limiting the ability of those physicians to refer patients outside the hospital.

ASCA will continue to monitor and update our members on this issue. For more information on the budget package, contact Heather Falen Ashby at