House committee approves bill requiring national provider identifiers for off-campus outpatient departments

A bill with widespread support in Congress would affect hospital billing procedures at off-campus outpatient departments if it becomes law.

The House Committee on Education and the Workforce on July 12 unanimously approved legislation called the Transparency in Billing Act, which states that starting in 2024, hospital claims for items and services furnished in off-campus outpatient departments would not be payable by group health plans or other issuers of group health insurance unless the claim includes a “separate unique health identifier for the department” (i.e., a national provider identifier).

The bill, which would modify the Employee Retirement Income Security Act (ERISA), is designed to promote site-neutral payment in the commercial insurance market just as Congress also is seeking to do in Medicare. Provider compliance would help insurers clarify whether a hospital off-campus facility is an outpatient department or, for all intents and purposes, a physician’s office that should be billing at a lower rate.

The bill was sponsored on a bipartisan basis by the leaders of the Education and Workforce Committee: Reps. Virginia Foxx (R-N.C.), the committee chair, and Bobby Scott (D-Va.), the ranking member. The committee vote on the bill was 39-0, giving the legislation a strong push as it heads to a potential floor vote in the House.

In Washington, D.C., “Everybody wants in on the healthcare transparency business right now,” said Andrew Donahue, MHA, CPA, director of healthcare finance policy with HFMA. “Politically, it’s just a winning issue.”

The objectives of the bill

During the July 12 hearing to mark up the Transparency in Billing Act and three other bills on healthcare transparency, Foxx said the legislation “ensures hospitals account for their charges correctly and prevents them from tacking on hidden facility fees and upcharges. It forces them to have in place policies and procedures to ensure accurate billing practices.”

She added that her committee “has a duty to ensure that hospitals are holding up their end of the bargain when working with commercial plans.”

In his comments, Scott said he hoped the bill would remove incentives for hospitals to buy physician practices and bill for services at those locations using hospital-based outpatient department (HOPD) rates.

“HOPDs are able to charge a facility fee and receive a higher reimbursement [rate] than freestanding physician’s offices or other lower-cost settings, even when the care provided may be essentially identical,” he said. “While it may be appropriate and necessary for care provided in certain settings to receive higher reimbursement based on a variety of factors, this is not true across the board.”

In the eyes of committee members, Donahue said, there’s no change in the quality or intensity of care provided at an HOPD that previously had been a physician’s office.

Hospitals are perceived to be “just changing the sign on the door and slipping it into commercial health plans to get paid at a higher level,” he said. “That’s the problem [committee members] think they’re solving.”

Hospital reaction to the bill

In a statement, the American Hospital Association (AHA) said the concern over billing practices at off-campus outpatient departments is misplaced.

“Hospitals and health systems bill according to federal regulations, which require them to bill all payers using codes that indicate the location of where the service is provided,” said the statement by Stacey Hughes, AHA executive vice president.

“All hospital outpatient departments bill using a code that identifies them as a hospital outpatient department, regardless of location. This is not ‘dishonest billing’ — it is simply following current payment policies that take into account fundamental differences between hospital outpatient departments and other outpatient care settings.”

She said insurers and private-equity firms account for 75% of physician practice acquisitions, compared with 6% by hospitals and health systems. That means concerns about consolidation would not be alleviated by legislation to encourage site-neutral payment.

A bigger picture for HOPDs

The Education and Workforce Committee is not the first House committee to take aim at HOPD billing practices in recent months.

As part of a comprehensive bill on price transparency, the Energy and Commerce Committee unanimously passed language that would require site-neutral payment in Medicare for drug administration services beginning in 2025.

In a clause similar to the Transparency in Billing Act, the Energy and Commerce bill also would prevent Medicare from making payments for items and services furnished in an off-campus outpatient department starting in 2026 unless the department has obtained a unique national provider identifier (NPI). Hospitals and health systems also would have to attest every two years that their off-campus departments meet regulatory requirements to be recognized as providers.

The Congressional Budget Office issued a report that found the NPI clause would save $403 million in federal expenditures over the next 10 years. Site-neutral payment for drug administration services would save more than $3.8 billion.

During the August congressional recess, committee staffs likely will work together to align the language in the different bills, Donahue said. The House Ways and Means Committee also could add a site-neutral payment bill to the mix, potentially going further than the legislation that has been drafted thus far, he noted.

Regardless of whether the Transparency in Billing Act heads to a vote as stand-alone legislation or part of a larger package, the underlying trend should be apparent, Donahue added.

“It’s a small bill, but it shows us just how fast and aggressively Congress is moving on healthcare transparency writ large,” he said. “The speed at which transparency is going to hit our industry is faster than we even realize.”