NPI Requirements Changing for Off-Campus Outpatient Hospital Departments
By Phil West

Medicare billing for hospitals is set for a change in 2028 due to recent federal legislation, potentially impacting hospital-employed physicians once that change goes into effect.

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

As of Jan. 1, 2028, each outpatient off-campus hospital department will be required to use a National Provider Identifier (NPI) separate from the main hospital’s. In order to secure a new NPI for an outpatient off-campus department, a hospital will need to demonstrate, by Dec. 31, 2027, that it meets federal requirements. Hospitals that do not secure new NPIs for those departments could face delays in payment – not just for Medicare, but for other CMS programs and insurance companies that utilize them.

Texas Medical Association staff note that the immediate impact will be on hospitals and other facilities, like ambulatory surgical centers, that operate facilities separate from a main campus. Administrators should begin the process of declaring outpatient off-campus departments to be in line with federal requirements – which CMS terms “attestation of provider-based compliance” – to get ahead of the end-of-2027 deadline.

Current TMA Board of Trustees Chair Kimberly Monday, MD, says physicians employed by hospital systems, or practice owners who are considering partnering with or selling to hospitals, should be mindful as the policy takes effect.

“If the hospital came and bought your practice because they knew that you were a gastroenterologist, and you were going to perform endoscopies in their outpatient facilities, and get paid 60% more to do that, and then all of a sudden, that gets cut, when it comes time to renegotiate your contract, it's a real problem,” she said. “Physicians need to position themselves to protect themselves.”

According to CMS, NPIs were established per the Health Insurance Portability and Accountability Act (HIPAA) to simplify billing and can be assigned to facilities like hospitals as well as physician practices.

“Covered health care providers and all health plans and health care clearinghouses must use the NPIs in the administrative and financial transactions adopted under HIPAA,” CMS specifies.

Rick Snyder, MD, who served as TMA president in 2023-24 and as a prior TMA Board of Trustees chair, expressed concern that CMS preparations to track payment via separate NPIs could be a lead-in for changing payment rates for those off-campus settings in future fee schedules.

CMS “can track the billing, and then they can go ahead and start making policy decisions based on that billing,” he said, as those different NPI numbers make it easier to compare costs based on their corresponding sites of service. Yet he also points out that awareness of those cost differences could inform the dialogue around site neutrality: its proponents maintain that a service’s cost should not be impacted by the setting where it’s performed.

Dr. Snyder cites a 2023 study from Ellis Health Policy stating that “adopting site-neutral payment policies for Medicare would yield savings for the Medicare program, for private insurance premiums, and for enrollees’ out-of-pocket costs that sum to $471 billion over the next 10 years,” including lowering private health insurance premiums by about $107 billion in that time span.

He maintains that medicine should be vigilant about how such a policy change would impact physicians and practice viability.

“We need to make sure that we advocate at the state, federal, and regulatory level about capturing those dollars [saved by adopting site-neutral payment policies] for physicians and the physician fee schedule,” he said.

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