Judge upholds decision to vacate OPPS site-neutral payment policy

Wednesday, October 23, 2019

A federal judge rejected CMS’ motion to reconsider or issue a stay on her September order to vacate cuts to reimbursement to grandfathered off-campus provider-based departments (PBD).

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 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 HCPCS code G0463 (hospital outpatient clinic visit for assessment and management of a patient). 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 facing lawsuits over the policy, CMS rolled out its plans for the second phase in the 2020 OPPS proposed rule, released July 29.

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. The agency stated that it believes Collyer’s decision may be overturned on appeal and, if so, it would be difficult to recoup any overpayments due to administrative costs. CMS also argued that when Collyer vacated the relevant portions of the 2019 OPPS final rule, she essentially struck down the methodology for reimbursing affected PBDs. Even if Collyer disagreed, CMS added, the vacated portions of the 2019 final rule would need to remain in effect for at least 60 days while the agency decided whether it would appeal.

However, Collyer rejected both of CMS’ arguments and reaffirmed her previous order. CMS put forth an impermissible interpretation of the statutory scheme, and no amount of new data or reasoning on remand can save its interpretation, Collyer wrote. Reversal is always a possibility, she added, and therefore cannot weigh in her decision to vacate the cuts. Refuting CMS’ statement that the entire payment methodology had been struck down, Collyer wrote that vacating the E/M cuts in 2019 OPPS final rule simply reverted the affected services back to the general rule. In fact, as Collyer pointed out, CMS admits that there are extant OPPS reimbursement rates for on-campus PBDs which the relevant off-campus PBDs would have been subject to but for the 2019 OPPS final rule.

The AHA expects CMS to appeal the ruling.

The 2020 OPPS final rule is expected in early November. If CMS is not able to successfully appeal the ruling before that time, the second phase of the reductions would be cut from the final rule. CMS may include policies to redress or undo the reductions finalized in the 2019 OPPS final rule. Organizations that were affected by the reimbursement reductions should collect data on affected claims including calculating potential underpayments.

Editor’s note: For a detailed analysis of the 2020 OPPS final rule, join Jugna Shah, MPH, CHRI, and Valerie A. Rinkle, MPA, CHRI, for their webinar 2020 OPPS Final Rule: Implementing the Latest CMS Policies.

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