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February 13 Deadline Looms for Provider-Based Departments Seeking Mid-Build Exception

A new section of the 21st Century Cures Act provides much-needed relief for hospitals with an off-campus provider-based department (off-campus PBD) that was mid-build or under development as of November 2, 2015 (the Mid-Build Exception).

Signed into law on December 13, 2016, Section 16001 specifies that off-campus PBDs meeting this exception will be eligible for full payment under the outpatient prospective payment system as of January 1, 2018, avoiding an otherwise permanent and substantial reduction in Medicare reimbursement. CMS clarified in recent sub-regulatory guidance that the deadline for hospitals to certify compliance with the Mid-Build Exception is February 13, 2017.

Here are the key points to remember as you prepare your certification:

  • Off-campus PBDs qualify for the Mid-Build Exception if the main provider had a binding written agreement with an outside unrelated party for the actual construction of such department before November 2, 2015.

  • If the hospital leases space in a new building, rather than constructing and owning the space itself, consider submitting a certification arguing that the lease agreement (particularly one that specifies interior build-out requirements) meets the requirement.

  • The certification must be signed by the hospital's Chief Executive Officer or Chief Operating Officer.

  • The hospital must submit the certification to the applicable Medicare Administrative Contractor (MAC) by mail or by e-mail. Hospitals should look to their MAC for guidance regarding the department or individual to whom the certification should be sent.

  • In addition to the certification, the hospital is also required by statute to: (1) submit a provider-based attestation to the MAC by February 13, 2017, attesting to compliance with 42 C.F.R. § 413.65 generally; and (2) include the off-campus PBD on its Medicare enrollment form.

  • There is no judicial or administrative review of the MAC's determination, so if there is any ambiguity in the application of the Mid-Build Exception to your hospital's off-campus PBD, consider submitting a cover letter to the MAC to explain why you believe the exception applies.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume VII, Number 40


About this Author


Colleen Faddick's practice includes advising clients regarding the structure of and relationships among health care providers and entities within the complex federal and state regulatory environment. Colleen focuses on Medicare and Medicaid reimbursement and enrollment issues and appeals, fraud and abuse and self-referral law issues, licensing and certification of health care entities, clinical trial compliance and agreements for sponsors and providers, medical device payment and manufacturer relationships with physicians. Colleen works with hospitals, large physician...

Bragg E. Hemme, Polsinelli PC, Medical Licensure Lawyer, State Hospital Regulatory Attorney

In order to assist health care clients address their targeted business concerns, Bragg Hemme draws on a wealth of practical experience and a solid understanding of the industry gained during her time as both external and internal counsel. Her experience includes advising clients regarding the complex and ever-changing federal and state regulatory environment. She focuses her practice on government payer concerns such as:

  • Medicare, Medicare advantage and Medicaid reimbursement

  • Enrollment issues and appeals

  • Licensure and certification

  • Regulatory compliance

  • Fraud and abuse 

  • Self-referral law issues

Sara Iams, Polsinelli Law Firm, Health Care Attorney

Sara Iams collaborates with clients and colleagues to navigate the complex health care regulatory environment. As a result, she helps clients achieve their desired business objectives.

Sara regularly counsels clients with respect to Medicare and Medicaid reimbursement matters, as well as general fraud and abuse issues. In doing so, Sara is not afraid to ask the difficult questions, and she pursues the answers with a steadfast attention to detail.

Sarah Kocher, Polsinelli Law Firm, Healthcare Attorney

Sarah Kocher enjoys helping clients navigate the highly regulated field of health care. She works with health care providers and others across the industry on an array of compliance matters, including:


  • Health care fraud and abuse

  • Medical staff issues

  • Reimbursement

While in law school, Sarah was on the first place team in the 2012 National Transactional Health Law Competition and was...