More on Medicare & Medicaid

American Hospital Association urges CMS to rescind mid-build denials

The group said CMS either missed its deadline or misinterpreted provider information when denying mid-build exceptions.

Jeff Lagasse, Associate Editor

(Photo by Maskot/Getty Images)(Photo by Maskot/Getty Images)

The American Hospital Association is imploring the Centers for Medicare and Medicaid Services to rescind recent denials of hospital requests for a mid-build exception to the site-neutral payment policy, according to a letter sent last week.

The "mid-build" exception, according to Morgan Lewis, has two prongs. The first provided relief to hospitals that had off-campus sites that were nearly operational when the Bipartisan Budget Act was enacted in 2015. The act precluded hospital outpatient payment for new hospital sites that did not submit outpatient claims for the site prior to its passage.

The second prong involved three criteria relating to the site that had been under construction that needed to be present: a provider-based attestation for the site; adding the site as a new location through an 855; and filing a certification that the mid-build requirement had been met.

At issue, according to the AHA, are recent mid-build denials from CMS. The 21st Century Cures Act, the AHA said, authorizes CMS to deny a mid-build exception request only if the agency completed its audit of the provider by Dec. 31, 2018. 


At stake is lost revenue for hospitals, as CMS' site-neutral payment policy reduces the amount paid to off-campus facilities run by hospitals.

In a March 23 email, CMS said it "performed all audit activities in accordance with the requirements set forth in the law." But the AHA claims the agency didn't meet the deadline. The audits were completed and hospitals were notified of the results more than two years after this statutory deadline.

Citing these factors, the hospital group said the denial determinations should be rescinded. Specifically, providers that submitted mid-build exception requests must be excluded from the definition of "off-campus outpatient department of a provider" in instances where CMS failed to render a contrary determination as part of the audit under deadline.

"The issuance of these denials could not have come at a worse time for hospitals that are struggling both financially and with staff and resource shortages due to the pandemic," the AHA wrote.

The group added that, in addition to the denials made past the deadline, some denials were incorrect, with many hospitals being denied despite fulfilling the requirements. AHA chalked this up to Medicare Administrative Contractors' misunderstandings of the information that the provider submitted, or their interpretation of what the statute requires.


Bipartisan legislation introduced in 2016 by the leaders of the House Ways and Means Subcommittee on Health resolved two provisions of the Bipartisan Budget Act in allowing hospitals that were building outpatient facilities off-campus to be paid at higher reimbursement rates, and in taking into consideration for payment socioeconomic status.

The bill closed a loophole in the Budget Act related to Medicare payments for off-campus hospital outpatient departments. The law did not take into account facilities that were mid-build as of the date of the enactment in November 2015. It also allowed cancer hospitals to continue to be paid at cancer hospital rates at new off-campus locations.

In July 2020, an appeals court reversed a decision of a lower court and upheld the action of the Department of Health and Human Services to pay formerly grandfathered off-campus outpatient departments run by hospitals at the same, lower rate of physician clinics.

Twitter: @JELagasse
Email the writer: