Recently, the Centers for Medicare & Medicaid Services (CMS) announced it is rescinding the audit determinations for providers notified in January 2021 that had failed to qualify for the “mid-build” exception. CMS took this action due to questions raised by these providers regarding the audit process.

The 21st Century Cures Act added an exception from site-neutral payments for off-campus, provider-based departments (PBDs) that were being built when Section 603 of the Bipartisan Budget Act of 2015 was enacted. For an off-campus PBD to qualify for an exception from the reduced Section 603 payment rate, the hospital had to have a “valid written construction agreement” before Nov. 2, 2015. Hospitals had to submit mid-build application materials to their Medicare administrative contractor by Feb. 13, 2017. Pursuant to the 21^st Century Cures Act, CMS audited each hospital that submitted an attestation and mid-build certification to determine compliance with the mid-build exception. CMS then sent mid-build audit determination letters to each provider, and according to a CMS Fact Sheet published on Jan. 19, 2021, 202 of the 334 providers who requested the exception failed to qualify for the exception.

In response to pushback received from providers who were deemed not to meet the mid-build exception, CMS will review each previously failing provider’s audit findings for compliance with statutory requirements and for accuracy and completeness. In its reevaluation of the audit findings, CMS will consider any additional documentation providers choose to submit to support their eligibility for the mid-build exception, and all documentation previously submitted by providers, both before and after issuance of the audit determination letters issued in January 2021 will be considered. CMS has indicated that this new review will utilize a broadened interpretation of what constitutes a “valid construction contract” required to qualify for the mid-build exception.

CMS has instructed that providers who received failing audit determinations are no longer required to report or return overpayments based on those determinations. CMS will issue an updated audit determination letter following the review of each provider’s audit, and a new overpayment return deadline for self-identified overpayments will be included in that letter, should the provider still receive a failing audit determination.

Additional information from CMS regarding the 21^st Century Cures Act mid-build audit is available here.

Please contact a member of Dinsmore’s health care practice group if you have any questions regarding the mid-build exception or the recent announcement made by CMS rescinding the audit determinations.