CMS Changes To Off-Campus Provider-Based Status Requirements

Medicare-participating hospitals and their off-campus provider-based departments will soon face substantial new compliance obligations under the recently adopted Consolidated Appropriations Act of 2026 (“CAA”). Beginning January 1, 2028, Medicare will stop paying provider-based reimbursement for items or services provided at a hospital's off-campus departments unless the off-campus department satisfies three statutory requirements:

1. it must have its own National Provider Identifier (“NPI”);
2. it must meet provider-based criteria set forth in 42 C.F.R. 413.65. and
3. it must be identified in a compliant attestation timely submitted to the Centers for Medicare & Medicaid Services (“CMS”).¹

Any failure to meet any of the above requirements will result in a loss of Medicare provider-based status, as well as loss of reimbursement for items and services furnished at the non-compliant location. Further, for any hospitals participating in the federal 340B Drug Discount Program (the “340B Program”), any loss of provider-based status for an off-campus department will render that department ineligible to participate in the 340B Program.

CMS's new mandates represent a significant shift from long-standing regulatory practices. Historically, hospitals could choose whether to obtain separate NPIs for their off-campus locations, and provider-based attestations for off-campus hospital outpatient departments were, similarly, voluntary. However, the CAA eliminates this flexibility by making both the use of location-specific NPIs, and the submission of provider-based attestations, mandatory. Simply put, if a hospital intends to participate in Medicare and fully leverage the benefits of provider-based status it must comply with the CAA's new mandates. It is important to note that existing provider-based outpatient departments are not grandfathered and must also satisfy the new CAA requirements.

In addition to reframing how hospitals participate in Medicare, the CAA's mandates will also have implications across other payors. For example, hospitals will need to ensure all third-party payors are notified of new NPIs. Additionally, when a hospital updates its Medicare Enrollment records (Form CMS-855A) to meet the CAA's mandates, it must also ensure its billing systems are equipped to process claims using department-specific NPIs across Medicare, Medicaid and commercial payers. If a billing system is unable to process department-specific billing, the hospital will likely find itself in a tight reimbursement crunch.

The CAA's new requirements apply to all off-campus outpatient departments with provider-based status, defined as an outpatient department that is located more than 250 yards away from the main hospital campus or a remote location of the hospital.² Hospitals should begin identifying all departments that meet this definition, auditing their current compliance with provider-based requirements and implementing internal processes for enrollment updates, attestation preparation and system modifications. Hospitals should also expect increased CMS scrutiny, including potential site visits, audits and compliance reviews.

Footnotes

1. Consolidated Appropriations Act, 2026, Pub. L. No. 119-75, § 6225(a) (2026). 

2. 42 CFR 413.65(a)(2)

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