Yesterday, in response to a court victory by several hospital associations, the Centers for Medicare and Medicaid Services (CMS) announced it will begin fixing calendar year 2019 underpayments made to hospitals for outpatient services at grandfathered off-campus provider-based departments (off-campus PBDs). CMS states it has instructed Medicare contractors to “automatically reprocess” claims paid at the invalidly lower rate and that “no provider action needed.” While CMS’s action should correct these 2019 payments, in case they are not fully corrected, affected hospitals should consider including this issue as a protest item on their 2019 cost reports.
CMS lowers 2019 OPPS rates for all off-campus PBDs
CMS’s 2019 Outpatient Prospective Payment System (OPPS) rule lowered the payment rate for clinic-visit services at all off-campus PBDs by 30% as part of a two-year reduction to match the rate for similar services at physician offices, intending to shift patients towards the latter under its site-neutrality policy. Previously, those services were paid at higher OPPS rates to all off-campus PBDs. However, Congress authorized CMS to set alternative payment rates for off-campus PBDs that were new as of November 2, 2015. All other off-campus PBDs in existence or in mid-build as of that date were exempted from this treatment.
Court vacates CMS’s payment cuts, triggering CMS to announce it will reverse them
The American Hospital Association, along with the Association of American Medical Colleges and several hospitals, sued in federal court over CMS’s OPPS payment cuts to excepted off-campus PBDs. In September, the court ruled that CMS had exceeded its statutory authority and ordered CMS to vacate the cuts.
In a December 12, 2019 news release, CMS announced it will be implementing the court’s order and making whole the affected hospitals. CMS says it has just “installed a revised Hospital Outpatient Prospective Payment System Pricer to update the rates being applied to claim lines” and in early 2020 “the Medicare Administrative Contactors will automatically reprocess claims paid at the reduced rate; no provider action needed.”
Even though this issue looks like it is going to be resolved for 2019, affected hospitals should, as a precaution, consider taking measures to preserve their right to protest this issue. In addition, and despite its reversal for 2019, CMS still plans to continue with these site-neutrality cuts for 2020, which are already being challenged in court.