On Friday, November 1, the Centers for Medicare & Medicaid Services (CMS) released an anticipated Final Rule titled “CY 2025 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System Final Rule (CMS 1809-FC),” which includes three new exceptions for the federal “four walls” rule. At present, the “four walls” rule prohibits Medicaid payment for clinic services when both the practitioner and individual receiving service are outside of the “four walls” of the clinic unless the services are being provided to unhoused individuals (such as through street medicine). The new exception for Indian Health Services and Tribal Facilities is required nationally. The exceptions for Behavioral Health Clinics and Rural clinics are optional. States who determine that their Behavioral Health Clinic and/or Rural Health Clinic populations served meet the four criteria established by CMS (see page 1323 of the final rule) must submit a Medicaid State Plan Amendment (SPA) and receive approval from CMS for these exceptions to be in place for their state.
The Office of Mental Health and Substance Abuse Services (OMHSAS) had been working toward a short-term state level solution to the four walls issue for both Outpatient Psychiatric Clinics and Drug and Alcohol Clinics. However, now that a long-term federal option has been made available, the team in OMHSAS will be pivoting to pursue this newly available federal exception for Behavioral Health Clinics. While OMHSAS is still in the process of developing a timeline for the new State Plan Amendment, their team will be working on this as a top priority, with the goal of having a SPA in place in early 2025.
It has been confirmed that OMHSAS will not be shifting their current enforcement policy around the four walls while they work through getting this waiver in place. RCPA will continue its collaboration with OMHSAS on the process as this move forwards. If you have any questions, please contact RCPA COO and Mental Health Policy Director Jim Sharp.
For additional information, please see the following:
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