CMS to reprocess 2019 claims for certain excepted off-campus provider-based department services at lower payment

CMS will begin reprocessing 2019 claims for certain services rendered at excepted off-campus provider-based departments (PBD), the agency announced. The affected claims are for services represented by HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient). Starting July 1, CMS will reprocess these claims to pay them at the same rate as non-excepted off-campus PBDs, or 70% of the 2019 Outpatient Prospective Payment System (OPPS) rate.

This is the latest chapter in a long-running dispute about CMS’ authority to reduce payment for services provided at excepted off-campus PBDs.

Under Section 603 of the Bipartisan Budget Act of 2015, CMS was required to implement a site-neutral payment policy that reduced reimbursement to most off-campus PBDs. Reimbursement reductions to most off-campus PBDs were rolled out in the 2018 OPPS final rule. Certain off-campus PBDs were grandfathered under Section 603 and excepted from the reimbursement reductions. In the 2019 OPPS, CMS finalized a policy that applied a 50% total reduction in payment to excepted off-campus PBDs as if these sites were paid the Medicare Physician Fee Schedule (MPFS) rate for G0463. This effectively paid providers 70% of the OPPS rate for 2019. For 2020 and subsequent years, CMS reimbursed the excepted off-campus PBDs at the MPFS rate for G0463, or 40% of the OPPS rate. Notably, the reductions were not budget-neutral, meaning the savings were not redistributed within the OPPS.

The American Hospital Association (AHA) and other industry groups filed a lawsuit to halt the payment reductions to excepted PBDs. The AHA argued that CMS lacked the statutory authority to enforce the policy and that the agency could not make payment cuts in a non-budget-neutral manner. The U.S. District Court ruled in favor of the AHA in September 2019, and in October 2019 it rejected CMS’ motion to reconsider or issue a stay on the ruling. However, the district court ruling affected only the policy contained in the 2019 OPPS final rule. CMS was ordered to reprocess affected 2019 claims and repay them at 100% of the OPPS rate.

In July 2020, a three-judge panel of the U.S Court of Appeals for the D.C. Circuit reversed the District Court decision. The judges determined that the policy is within CMS’ statutory authority and that the agency was not required to make payments in a budget-neutral manner. The AHA asked the full court to reconsider the decision but the court declined to do so in October 2020.

Although CMS advises that affected hospitals do not need to take any action, it may be prudent to begin reviewing affected claims and payments.