CMS to Follow Court Guidance and Reimburse Hospitals

CMS has relented and will repay hospitals across the U.S. that sued to recover reimbursement cuts resulting from CMS’s so-called site-neutral policy.
In the 2019 outpatient prospective payment system rule (OPPS) released at the end of 2018, CMS reduced Medicare payments for certain services provided at grandfathered off-campus hospital provider-based departments (PBDs). These PBDs are defined as practice locations that are not located in the immediate proximity of the main hospital but are nonetheless closely integrated with and controlled by the hospital. (Some examples are stand-alone oncology clinics or medical offices offering specialized care.) The new federal rule essentially treated the grandfathered off-campus provider-based departments as similar to physician offices – and paid them at a lower rate.
The American Hospital Association and other provider groups sued in December 2018, arguing that off-campus PDBs often have higher costs, and that CMS exceeded its authority and overrode Congressional intent by issuing the final OPPS with the payment cut. This September, a federal district court judge ruled in favor of the hospitals, but it remained unclear how and when CMS would reimburse hospitals.
However, last week CMS announced that it would begin reprocessing past claims and refund the 2019 monies owed to hospitals. Interestingly, CMS’ 2020 OPPS rule continues to phase in the same off-campus provider-based department cuts that the court vacated. It remains to be seen how CMS will resolve the discrepancy going forward.