NPI Requirements Changing For Off-Campus Outpatient Hospital Departments

Medicare billing rules for hospitals will change in 2028 under new federal legislation, potentially affecting hospital-employed physicians and practice owners affiliated with hospital systems.

The federal budget bill signed into law on Feb. 3 includes updates to the Outpatient Prospective Payment System (OPPS), the payment structure the Centers for Medicare & Medicaid Services (CMS) uses for hospital outpatient services.

Beginning Jan. 1, 2028, each off-campus outpatient hospital department must obtain and use its own National Provider Identifier (NPI), separate from the main hospital’s NPI. To secure a new NPI, hospitals must demonstrate compliance with federal provider-based requirements by Dec. 31, 2027. Facilities that fail to obtain separate NPIs may experience payment delays not only from Medicare, but also from other CMS programs and commercial insurers that rely on the same billing identifiers.

Texas Medical Association (TMA) staff indicate the immediate operational burden will fall on hospitals and facilities operating away from their main campuses, including ambulatory surgical centers. Administrators are encouraged to begin the attestation process—referred to by CMS as “attestation of provider-based compliance”—well in advance of the 2027 deadline.

“Hospital-employed physicians and independent physicians considering hospital partnerships or acquisitions should pay close attention to how these changes could affect compensation structures,” cautions Kimberly Monday, MD, chair of the TMA Board of Trustees.

If hospitals acquired physician practices based on higher reimbursement rates for services performed in outpatient hospital settings, and those payment differentials are later reduced, contract renegotiations could become problematic. Physicians, she emphasizes, should proactively safeguard their financial interests.

NPIs were established under the Health Insurance Portability and Accountability Act (HIPAA) to standardize billing across the health care system. They may be assigned to both facilities and individual providers. CMS requires all covered health care providers, health plans, and clearinghouses to use NPIs in HIPAA-governed administrative and financial transactions.

“CMS’s move to require separate NPIs could pave the way for future payment adjustments in off-campus settings,” said Rick Snyder, MD, former TMA president (2023–24) and past Board of Trustees chair. “Separate NPIs would allow CMS to more easily track billing patterns and compare costs by site of service.”

However, increased transparency could also shape discussions around “site neutrality,” the concept that reimbursement should not vary based on where a service is delivered. A 2023 Ellis Health Policy study estimates that implementing site-neutral Medicare payment policies could save $471 billion over 10 years, including approximately $107 billion in reduced private insurance premiums.

“While potential system-wide savings are significant, policymakers must consider how payment reforms would affect physician reimbursement and practice sustainability,” stressed Dr. Snyder. “I urge organized medicine to advocate at the state, federal, and regulatory levels to ensure that any savings generated by site-neutral policies are appropriately reflected in the physician fee schedule.”

Source: Texas Medical Association