CMS Ordered to Reprocess 2019 Hospital Clinic Claims, But 2020 Cuts Loom

The Centers for Medicare and Medicaid Services (CMS) announced it would reprocess calendar year 2019 payments for exempted hospital clinics that a U.S. district court ruled were improperly reduced. Noridian, the Medicare Administrative Contractor for the region including Washington State, told WSHA it has begun paying the standard rates for newly submitted 2019 services. It will begin reprocessing of previously reduced 2019 claims beginning January 2020. Hospitals will not be required to resubmit claims to receive the corrected payment.
In 2019 its outpatient rule, CMS reduced Medicare payments to excepted off-campus hospital clinics by 30 percent of their regular payment rate. WSHA estimated the total cut for Washington hospitals to be around $15 million for 2019. In September, the court ruled the cuts were illegal as CMS lacked the authority to make reductions to services that had been specifically exempted by Congress. Olympic Medical Center, Port Angeles, was one of the plaintiff hospitals along with the American Hospital Association.
Unfortunately, the court indicated it could not grant the request by AHA and hospitals that it prevents CMS from applying planned cuts for the same services in its recently finalized 2020 outpatient rule. In its comment letter, WSHA urged CMS not to include the cuts in its final rule. Despite the court’s ruling, CMS plans to continue its planned phase-in reduction to clinic payments for 2020, a sixty percent reduction to the standard payment rates for the hospital clinic services. While AHA and hospitals will need to submit a separate lawsuit regarding the 2020 services, we believe hospitals will have a strong case as CMS is using the same justification for the 2020 cuts as in 2019. We will continue to communicate any significant new developments. (Andrew Busz, andrewb@wsha.org)