21st Century Cures Act offers array of holiday gifts to healthcare providers

Healthcare Alert


The 21st Century Cures Act, a rare beneficiary of broad bipartisan support, has been signed into law by President Barack Obama. 

The law has received much public acclaim for its $4.8 billion in new funding over the next ten years to support the National Institutes of Health and the pursuit of a “moonshot” cancer cure as well as the development of innovations in personalized medicine.

There are, however, many other components of the law that should not be overlooked and that will have a meaningful effect on hospitals, behavioral health providers, and many other types of providers.  Understanding these components of the law and their genesis will be critical for healthcare providers in the coming years.

Hospitals and health system off-campus facilities

The Cures Act provides relief for a narrow group of hospitals that claimed to be caught off-guard by Section 603 of the Bipartisan Budget Act of 2015 (BBA), which was passed into law last year. The BBA contained provisions intended to address concerns surrounding Medicare's payment of higher reimbursement rates for services provided by a hospital at an off-campus facility relative to the lower reimbursement paid for a virtually identical service when provided in a freestanding clinic, physician office or ambulatory surgery center.  A number of hospitals said the change would have a tremendous impact on the financial solvency of a off-campus hospital projects that had been in various stages of planning and development prior to Section 603’s passage.

Effective January 1, 2017, Section 603 of the BBA changes Medicare reimbursement for outpatient services furnished in off-campus provider-based departments (Off-Campus HOPDs) from the Hospital Outpatient Prospective Payment System (OPPS) to the lower rates set forth in the Medicare Physician Fee Schedule (MPFS) or the ambulatory surgery center (ASC) payment system. Importantly, Off-Campus HOPDs that provided outpatient services before or on November 2, 2015, were grandfathered in and will thus continue to be reimbursed under the OPPS after January 1, 2017.

Sections 16001 and 16002 of the Cures Act provide for two exceptions to grandfather in additional Off-Campus HOPDs which otherwise would fall under the reimbursement scheme of the Act.  First, hospitals that were already operating Off-Campus HOPDs on November 2, 2015 and which submitted provider-based attestations by December 2, 2015 will be eligible to receive payments under the OPPS effective January 1, 2017, provided that each hospital’s new Off-Campus HOPD has been completely constructed and the hospital is ready to accept or is already accepting patients in that Off-Campus HOPD.  Second, upon filing appropriate documentation (including an attestation, revisions to the hospital’s Medicare enrollment form, and CMS certification), Off-Campus HOPDs under a construction contract with an outside, unrelated party before or on November 2, 2015 would be eligible for reimbursement under OPPS effective January 1, 2018.

Off-campus dedicated emergency departments

The BBA did not apply to off-campus dedicated emergency departments.   Importantly, the Cures Act does not change the regulatory landscape of the BBA in the context of off-campus dedicated emergency departments of a hospital.  Therefore, in this respect, nothing has changed from the BBA under existing regulations.  Dedicated emergency departments of a hospital are still excluded from Section 603 payment provisions of the Act and may continue to receive reimbursement under OPPS.

In addition, Section 603 payment provisions did not apply to provider-based facilities located on the campus of a hospital or a "remote location" of a hospital (as defined under 42 C.F.R. 413.65) (On-Campus HOPDs). The Cures Act has not changed reimbursement for On-Campus HOPDs.  These On-Campus HOPDs will continue to be reimbursed for services under the OPPS after January 1, 2017.

Other notable Cures Act components

The Cures Act contains several other notable components that relate to (1) mental health and substance use treatment; (2) drugs, devices and research; (3) health information technology; (4) physical therapists; and (5) hospitals.  Summaries of each of these components are outlined below. 

Mental health and substance use treatment

One of the most significant components of the Cures Act is its impact on the US mental health care system.  The Cures Act arguably represents some of the most impactful federal legislation affecting mental health care that has been enacted in several decades.  Specifically, the Cures Act requires states to use at least 10 percent of their mental health block grants on early intervention for psychosis, using coordinated specialty care models.  It also establishes a $5 million grant program to provide assertive community treatment for helping people with serious mental illnesses, including schizophrenia.  A grant program for assisted outpatient treatment will be expanded and provide court-ordered care for people with serious mental illness who may not otherwise seek help.

The Cures Act also provides $1 billion in state grants over a two-year period to address opioid abuse and addiction, some of which would go to treatment facilities and some to fund research.  

Uniquely, the Cures Act  authorizes funding for community policing grants to train law enforcement to establish intervention teams for mental health purposes.  Since the passage of the Affordable Care Act and its parity laws, healthcare investors have been paying considerable attention to substance abuse and behavioral health platforms.  The Cures Act is likely to help fuel continued growth in  the substance abuse industry.   

Drugs, devices, and research

The Cures Act is expected to save pharmaceutical and medical device manufacturers significant dollars by allowing products to be brought to market more quickly through expedited Food and Drug Administration approvals.  Quicker market approvals would be achieved by creating expedited review for breakthrough devices, increased patient involvement in the drug approval process and a streamlined review process for combination products that are both a drug and device.

Health information technology

The Cures Act contains several provisions that seem to indicate a strong push for federal agencies and healthcare providers to transition to electronic health records (EHR) systems and to use improved technology capabilities as a means for collecting data in order to enhance research and treatment.  Specifically, under the Cures Act, there are greater incentives for physicians to transition to EHR, a prohibition on CMS to penalize physicians who furnish substantially all of their Medicare-covered professional services in an ASC setting, until CMS certifies an EHR system for ASCs and a requirement for the Office of Civil Rights (OCR) to provide further clarification on permitted uses and disclosures of Protected Health Information (PHI) under the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Physical therapists

Under the Medicare program, physical therapists were previously disallowed from being able to bring in another licensed physical therapist to their professional practice when they were temporarily absent in medically underserved areas.   An interesting change in Medicare rules pursuant to the Cures Act will now allow physical therapists to utilize locum tenens arrangements in Health Professional Shortage Areas (HPSAs).


Notable changes under the Cures Act affecting hospitals include a requirement for CMS to develop HCPCS outpatient codes for ten surgical MS-DRGs that have typically been associated with one-day lengths of stay.  In relation to the Hospital Readmissions Reduction Program, hospitals advocated that socioeconomic status can contribute to post-discharge non-compliance and related readmissions.  In response to these lobbying efforts, under the Cures Act CMS is required to make adjustments by accounting for patient background and socioeconomic status when calculating reductions in payments to hospitals under the Hospital Readmissions Reduction Program.


With respect to the Affordable Care Act, it appears very unlikely that Republican leaders in Congress will be ready with a replacement plan any time soon and, as a result, the vote in January may be to repeal, but to extend most of the existing program until a replacement plan is ready.  Providers and insurers have reached out to the President-elect to advise him that any effort to repeal parts of the ACA before a replacement plan is ready could cause disruption in the insurance markets and harm individuals.  For his part, the President-elect has said that he does not favor repealing the law until a replacement plan is simultaneously ready to be enacted.  

The future of the Affordable Care Act may be in question.  The Cures Act, however, appears to be strongly supported by both sides of the aisle.  Its focus on funding innovative areas of healthcare is likely to receive broad acclaim as providers, pharmaceutical companies, and government agencies search for the next blockbuster drug, and hospitals will find welcome relief in other aspects of the law.