As we discussed last week, the Centers for Medicare and Medicaid Services (CMS) announced that it will start fixing calendar year 2019 underpayments made to hospitals for outpatient services at off-campus provider-based departments. CMS explained that it will be doing this in response to a court order invalidating CMS’s 30% payment cuts to such off-campus PBDs in CMS’s 2019 Outpatient Prospective Payment System (OPPS) rule. However, CMS has now appealed that court decision.

It may seem contradictory for CMS to throw in the towel on this issue for 2019 yet still appeal. But the hospital associations and hospitals challenging the 2019 decision also asked the court to extend its order to CMS’s 2020 OPPS rule, which doubles the payment cuts. So CMS’s appeal signals that the agency wants another shot at defending its site-neutral payment policy for 2020.

In fact, just yesterday, the court that invalidated the 2019 cuts said that by continuing with the even larger cuts in 2020 CMS has apparently “set the agency above the law.” The court opined that the 2020 cuts should suffer the same fate as the 2019 cuts, but that any invalidation must await another day after they go into effect.

CMS’s appeal of this OPPS provider-based pay-cut issue reinforces that affected hospitals should, as a precaution, consider taking measures to preserve their right to protest this payment issue.