CMS and its contractors have announced that beginning January 1, 2020, the agency will repay hospitals for underpaid evaluation and management (E/M) services provided in excepted off-campus provider-based departments during CY 2019. This announcement is a direct result of the September 17, 2019 victory that King & Spalding won on behalf of more than 40 hospitals and health systems challenging the agency’s decision to reduce payments for such services by 30 percent. In that decision, the United Stated District Court for the District of Columbia vacated CMS’s payment rule for excepted E/M services, holding that the payment rule was outside of the scope of CMS’s authority because the agency had tried to circumvent the requirement in the OPPS statute that payment adjustments be conducted in a budget-neutral manner. CMS will now reprocess affected 2019 claims using a revised outpatient Pricer software that will ensure hospitals receive the difference between the full OPPS rate and the reduced rate they received. Hospitals will not need to resubmit claims or take any other action. Hospitals should monitor their claims payments beginning in January to confirm they have received the repayment.

While CMS will comply with the District Court’s ruling for 2019 claims, CMS also filed notice of its intent to appeal that ruling to the United States Court of Appeals for the District of Columbia Circuit on December 12. In addition, CMS recently finalized its policy to reduce payment for these services by 60 percent in 2020, contending that the District Court’s ruling only applied to 2019 claims. The 2020 rate cut is based on the same flawed legal justification as the 2019 decision the court invalidated. King & Spalding plaintiffs will bring another challenge to that rate determination once those rates go into effect next year.