CMS repaying hospitals for site-neutral cuts but 2020 reductions still on track

Wednesday, December 18, 2019

CMS is automatically reprocessing 2019 hospital claims for certain services provided at grandfathered off-campus provider-based departments (PBD) after a federal judge vacated portions of the 2019 outpatient prospective payment system (OPPS) final rule. However, the agency has filed an appeal and the same federal judge declined to strike down cuts for those services planned for 2020.

On December 12, CMS announced that MACs would begin automatically reprocessing claims for HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient) with modifier -PO with a line item date of service of January 1, 2019, or later. The revisions were effective November 4 and hospitals may have already seen claims for those services paid at the higher pre-2019 rate. However, CMS is appealing the ruling, the American Hospital Association (AHA), one of the plaintiffs, reported December 13.

Section 603 of the Bipartisan Budget Act of 2015 required CMS to implement a site-neutral payment policy that reduced reimbursement to most off-campus PBDs. CMS rolled out reimbursement reductions to most off-campus PBDs in the 2018 OPPS final rule. Certain off-campus PBDs were grandfathered and exempt from the reimbursement reductions.

In the 2019 OPPS final rule, CMS finalized a policy to extend reimbursement reductions to grandfathered off-campus PBDs. CMS applied a 50% total reduction in payment to grandfathered off-campus PBDs as if these sites were paid the Medicare Physician Fee Schedule (MPFS) rate for services described by G0463 with modifier -PO. This effectively paid providers 70% of the OPPS rate for 2019. For 2020 and subsequent years, CMS planned to reimburse the grandfathered PBDs at the MPFS rate, which would equal 40% of the OPPS rate. Notably, the reductions were not budget-neutral, meaning the savings were not redistributed within the OPPS. Despite on-going litigation over the cuts, CMS rolled out the second phase in the 2020 OPPS proposed rule.

In September, U.S District Judge Rosemary Collyer ruled that CMS overstepped its statutory authority when it implemented the reductions. CMS responded by filing a motion asking Collyer to reconsider her decision or issue a stay. Collyer rejected CMS’ motion in October. Undeterred, CMS finalized the second phase of cuts in the 2020 OPPS final rule, released November 1.

The AHA and other plaintiffs asked Collyer to enforce her order regarding the 2019 policy against the 2020 policy as well, but on December 16 Collyer ruled that she lacked the jurisdiction necessary to do so.

Although CMS relied on the same flawed reasoning to support its 2020 rule as it did with the 2019 rule, the new policy isn't “precisely the same rule” as the old one; therefore, it falls outside the scope of her earlier decision, Collyer wrote.

That didn't stop her, however, from criticizing CMS and strongly suggesting that the 2020 policy should eventually be vacated as well, HealthLeaders reported.

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