The Impact of the Bipartisan Budget Act on Hospital Parking

On November 2nd of last year, the Bipartisan Budget Act of 2015 became law in the United States, adding a layer of difficulty to many hospital expansion plans as it relates to new off-campus hospital outpatient departments (HOPDs). Specifically, Section 603 of the Act introduced a distinction between “off-campus” and “on-campus” facilities as it relates to Medicare reimbursements for outpatient treatments.

A hospital with a HOPD is normally eligible for two Medicare reimbursements: the Hospital Outpatient Prospective Payment System (OPPS) and the Medicare Physician Fee Schedule (MPFS) (a private physician is only eligible for the latter payment). In the past, the OPPS never excluded off-campus sites. However, Section 603, states that any HOPDs, established on or after November 2, 2015, not within 250 yards of the primary hospital campus will not be eligible for the facility fee under the OPPS. HOPDs established prior to November 2, 2015 will be exempt from this new “off-campus” stipulation and still receive the fee. An off-site location acting as an emergency room will also probably not be impacted by the legislative change.

What Does This Mean For Hospitals?

What does this newly passed law really mean for hospitals? Before I answer that question, let me begin by saying there are several reasons why a hospital may currently own, purchase, or desire to offer outpatient services at a facility not located on the physical campus of the hospital. A few of these reasons may be a lack of room for expansion on the current campus, the need to reduce campus congestion, market control/enhanced branding by expanding their geographical footprint or, quite simply, financial gain.

As previously stated, if a Medicare patient receives treatment at a private physician’s office (not part of a hospital), the physician will only receive an MPFS reimbursement for services rendered, as they always have. However, a physician operating in partnership with a hospital to offer outpatient services would have been able to collect from both the OPPS and MPFS.

This dual payment opportunity has, in the past, served as an extra incentive for the development of off-site partnerships. With the enactment of Section 603, the two-payment benefit for establishing off-site partnerships is stripped away. A physician and hospital creating a partnership or a hospital having an off-site sole-proprietorship may make less sense financially than in the past. We are now looking at a potential financial impact for hospitals that were planning off-site HOPDs to supplement income and grow their network. That is unless they can squeeze in the off-site services within 250 yards of the main campus.

How Does This Affect Hospital Parking?

Nothing I have outlined above is “breaking news” anymore, and most representatives of the healthcare industry are aware of the facts. But how does this new law impact hospital parking operations?

I liken hospitals to inner city areas: space is at a premium and there is a constant struggle to make a profit. This unique real estate shortage means that the only way for hospitals to realize growth is to purchase local property for construction, redesign current facilities, or expand through HOPDs. However, the cost-benefit analysis of these options has now changed as the benefits associated with establishing off-site HOPDs are reduced by the new law. As such, it is more likely that patient services will remain on campus in the future.

I feel that this change in the balance between growth strategies will create a potential parking concern because the number of transient parkers to the hospital will not be offset by off-campus HOPDs. On the other hand, it will also create an opportunity for increased revenue streams to the hospital through paid parking, which it perhaps would not get from an off-site outpatient facility. The reality is that these parking concerns could get out of hand, and opportunities could be missed if not addressed before the reimbursement changes go into effect on January 1, 2017.

My advice as a Certified Parking Professional (CPP) is to review your hospital’s plans for future off-site HOPDs, and ask yourself what the outlook will be for parking if these plans are cancelled or modified. Will you be able to properly manage the increase in parkers or appropriately generate excess revenue to offset the costs associated with the new regulations of off-campus hospital outpatient departments?

Has your facility considered the impact on parking operations as a result of the new Act and what measures are being taken?

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