New ID Requirement for HOPDs Passes House Committee

In response to concerns over inaccurate billing practices and hidden fees at hospitals, the House Committee on Education and the Workforce advanced the Transparency in Billing Act on July 12. If passed into law, starting Jan. 1, 2024, claims for items and services furnished in off-campus outpatient departments will not be paid unless there’s a unique health identifier for the off-campus location.

Hospital-based outpatient departments (HOPDs) can be both on-campus and off-campus and still qualify for provider-based status, allowing them to receive higher reimbursement rates than ambulatory surgery center and physician practices. Under the new bill, each off-campus department, defined as a department of a provider that is not located on the provider’s main campus or within 250 yards of a remote location of a hospital facility, must obtain a unique health identifier to qualify for HOPD payment by group health plans or commercial insurers.

The stated goal of this bill is to prevent HOPD rates from being paid for services rendered in free-standing physician offices or other settings that should be reimbursed at a lower cost. There is also speculation the bill might be the first step in a larger reimbursement model overhaul aimed at aligning HOPD reimbursement rates with those of ASCs and physician practices.

In a statement by the American Hospital Association, Executive Vice President Stacey Hughes calls out the misplaced focus of these efforts. She explains  “the scrutiny over acquisitions of physician offices wrongly focuses on hospitals as the primary drivers of this practice. The fact is, over the last five years, entities like private equity firms and commercial insurers, including UnitedHealthcare and Humana, are responsible for the overwhelming majority of physician acquisitions. Together, they are behind a whopping 75% of all acquisitions while hospitals and health systems only account for 6%. These numbers leave no room for confusion on who should be the focus of the committee’s investigation into this and its impacts to patients and consumers.”

If signed into law, providers will have to take the following steps to ensure compliance beginning on Jan. 1, 2024:

  1. Obtain Unique Identifier: Hospitals must secure a separate unique health identifier for all “off-campus outpatient departments” meeting the defined criteria.

  2. Include Identifier in Claims: All submitted claims for services provided in off-campus outpatient departments must include the designated unique health identifier.

Violations of these requirements may lead to civil monetary penalties for providers. Immediate implications for hospitals will be the administrative burden and costs associated with obtaining a separate and unique identifier for each off-campus outpatient department and ensuring these identifiers are included on each claim.

These materials are for general informational purposes only. These materials do not, and are not intended to, constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials. Neither Ensemble Health Partners, nor any of its employees, are your lawyers. Please consult with your own legal counsel or compliance professional regarding specific legal or compliance questions you have.