CMS retracts audit determinations for certain provider-based departments

Wednesday, September 29, 2021

CMS is rescinding audit determinations for off-campus provider-based departments (PBD) that claimed the mid-build exception under the 21st Century Cures Act, the agency announced September 10.

The audit determinations, released January 19, found that most off-campus PBDs that claimed the exception did not meet the requirements. CMS is retracting the audit determinations out of an abundance of caution in response to providers’ questions about the audits.

Reimbursement for off-campus PBDs changed dramatically under the Bipartisan Budget Act of 2015. The law permitted existing off-campus PBDs to continue to be paid under the Outpatient Prospective Payment System (OPPS). New off-campus PBDs were to be paid under an “applicable payment system,” which CMS determined was the Medicare Physician Fee Schedule (MPFS). For off-campus PBD services, the MPFS pays approximately 40% of the OPPS rate.

The 21st Century Cures Act created an additional exception that allowed off-campus PBDs that met certain requirements to continue to be paid under the OPPS if the department was mid-build at the time the Bipartisan Budget Act of 2015 was enacted.

CMS subsequently conducted audits to determine whether the 334 organizations that applied for the exception met the requirements. The agency reviewed the applications and supporting documentation. The audit determinations were subject to secondary quality assurance reviews to ensure accuracy, CMS said.

Of the 334 organizations subject to the audit, 202 failed to qualify for the exception and only 132 met the requirements. Under the 21st Century Cures Act, mid-build exception audit determinations are final and cannot be appealed.

However, CMS now plans to review all previously failing PBDs’ audit findings. During the review process, the agency will consider any additional documentation submitted to support eligibility for the mid-build exception, including documentation submitted after January 2021. The reviews will use a broader interpretation of the valid construction contract required to qualify for the mid-build exception. This broader interpretation may include, for example, scenarios in which the provider organization signed a lease agreement.

Previously, CMS stated that PBDs’ that failed the audit and had been billing under the OPPS had likely received overpayments that must be refunded. Because the audit determinations have been rescinded, organizations are no longer required to report or return overpayments based on those audits, the agency says.

Affected organizations will receive a letter rescinding the previous audit determination, and an updated audit determination will be issued once the review is completed. If a PBD fails the review, a new overpayment return deadline will be included in the updated audit determination.

Editor’s note: Find more NAHRI coverage of PBD billing and reimbursement here.