Provider Alert: New Hospital Off-Campus Outpatient Provider-Based Department Requirements

Buried within recent federal funding legislation is a provision which creates considerable changes to the enforcement of Medicare provider-based requirements. It is another move by Congress to increase transparency and site neutrality of Medicare payments for services rendered at hospital outpatient departments. Specifically, Section 6225 of the Consolidated Appropriations Act, 2026, (“CAA 2026”) added a new paragraph to Social Security Act § 1833(t) (42 U.S.C. § 1395I(t)), which enumerates two additional criteria for hospitals to claim provider-based status for its subordinate facilities:

• Hospitals must obtain and bill under a separate NPI for each offsite outpatient department for which the hospital claims provider-based status under 42 C.F.R. § 413.65; and
• Hospitals must comply with a new mandatory attestation process.

Failure to comply with these requirements will result in loss of provider-based reimbursement for services rendered at such sites of service. CMS discussed the new statutory criteria and proposed regulatory revisions implementing the criteria in its CY 2027 Outpatient Prospective Payment System Proposed Rule (See 91 Fed. Reg. 41734, 41980-41984,  July 7, 2026).

Background

Medicare provider-based rules allow hospitals to designate subordinate facilities as having provider-based status if such facilities are treated as part of the main hospital provider. The underlying purpose of the provider-based requirements is to ensure that the hospital maintains financial and administrative control over the operations of its subordinate facilities and that such facilities truly function as fully-integrated departments of the hospital.  In other words, departments of the hospital that are outside of the main hospital building should operationally function just as any other hospital department inside the main building. Benefits of provider-based status include operational efficiencies, higher reimbursement rates and eligibility for some federal programs, such as the 340B Drug Discount Program. In order to benefit from this designation, providers must adhere to the criteria enumerated in 42 C.F.R. § 413.65. Although compliance with the criteria is mandatory, historically payment for provider-based services has not been conditioned on verification of such compliance.

The new provider-based requirements under CAA 2026 alter that in a significant shift in enforcement. The new requirements will apply to off-campus outpatient departments of a provider, defined as a department of a provider that is not located on the campus of the main provider (as defined in 42 C.F.R. § 413.65) or within 250 yards of a remote location of a hospital (also defined in 42 C.F.R. § 413.65).

Separate NPI Required for Each Off-Campus Outpatient Department

Currently, hospitals have the flexibility to choose whether they bill for services provided at an off-campus, outpatient department under the hospital’s main NPI or a separate NPI. Under the new statute, hospitals are now required to obtain a separate NPI for each off-campus outpatient department and must bill under the  separate NPIs for services furnished on or after January 1, 2028.

Mandatory Attestation Process

Prior to enactment of Section 6225 of the CAA 2026, the provider-based attestation process was voluntary. A hospital could choose to submit a voluntary attestation to its Medicare Administrative Contractor (“MAC”) for review and CMS determination that a particular location met provider-based criteria as set forth in 42 C.F.R. 413.65, which afforded certain financial advantages should the location ever be determined to be non-compliant. Under the newly-enacted Section 6225 of the CAA 2026, however, the attestation process becomes mandatory. Hospital main providers must now submit an initial attestation affirming compliance, as well as a subsequent attestation at a time interval specified by CMS. The initial attestation must be filed within the 2-year period prior to furnishing services billed as provider-based. For off-campus outpatient departments providing services on or before January 1, 2028, CMS proposes the hospital must file the initial attestation between January 1, 2026 and December 31, 2027. For hospitals adding provider-based departments after January 1, 2028, CMS proposes the hospital must file the initial attestation within the 2-year period prior to when the billed provider-based services are delivered. Additionally, providers must submit a subsequent attestation within a timeframe specified by CMS, at an interval no later than five years thereafter.

In CY 2027 OPPS Proposed Rule, CMS seeks comment on the initial attestation process for those providers who previously submitted attestations and received a determination of provider-based status prior to January 1, 2026. In such cases, CMS is considering an attestation wherein an Authorized Official of the hospital would attest to compliance with a letter to CMS documenting evidence of such determination, as well as affirmation of continued compliance with 42 C.F.R. § 413.65.

Typically, the provider-based attestation is a voluminous submission, consisting of supporting documentation evidencing compliance with each of the requirements set forth in 42 C.F.R. § 413.65. Prior to Section 6225 of the CAA 2026, voluntary attestations were submitted to a provider’s MAC, who conducted an initial review and submitted to CMS for final determination of provider-based status. Accordingly, attestation templates and submission requirements could vary slightly across the MACs. Under the new mandatory attestation process, CMS is proposing a standardized attestation form submitted through a centralized electronic system to ensure consistency across all MAC jurisdictions.

Under this new process as proposed by CMS, MACs will have the authority to make initial determinations of provider-based status and will no longer rely on CMS for a final determination. In order to ensure a standardized process, CMS will create systematic review, validation and risk-based screening procedures for MACs to utilize to make the initial determination. Until such time as CMS implements the new standardized attestation process, providers may submit attestations pursuant to the existing process set forth in CMS guidance.

Recommendations for Hospitals

Hospitals should begin reviewing the scope of their provider-based services and how such services are currently being billed. For those off-campus outpatient locations billing as provider-based under the hospital’s NPI, hospitals should begin the process of obtaining separate NPIs for each such location and ensure that all billing systems and payors are set up to bill under the separate NPI. Additionally, hospitals should begin gathering and reviewing supporting documentation to confirm compliance with each of the requirements set forth in 42 C.F.R. 413.65. Documentation should be maintained and updated by the hospital in the event changes occur which affect provider-based status. Lastly, hospitals should continue to monitor provider alerts, bulletins and other guidance for further information in the upcoming months.

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Written by  Lauren Ambler