HHS asks Supreme Court to keep site-neutral payment cuts in place

HHS is asking the U.S. Supreme Court to keep in place a lower court ruling that cuts the Medicare reimbursement rate for certain hospital-owned outpatient departments. 

In a 33-page brief filed last week, HHS attorneys asked the highest court to retain the site-neutral payment policy. In the brief, HHS argues that it did not act beyond the powers delegated to it by Congress to enact the payment reductions. 

The brief comes in response to a petition from the American Hospital Association and other hospital providers, which asks the Supreme Court to hear its challenge to the site-neutral payment policy.  

Hospitals and HHS have been fighting over the enactment of the payment policy since 2019, when CMS moved to cut payments to hospital-owned outpatient clinics. Under the 2019 Medicare Outpatient Prospective Payment System final rule, CMS made payments for clinic visits site neutral by reducing the payment rate for evaluation and management services provided at off-campus, provider-based departments by 60 percent.

In an attempt to overturn the rule, the AHA and dozens of hospitals across the nation sued HHS. They argued CMS exceeded its authority when it finalized the payment cut in the OPPS rule. They further claimed the site-neutral payment policy violates the Medicare statute's mandate of budget neutrality. 

U.S. District Judge Rosemary Collyer sided with the association and other hospitals in September 2019, ruling that CMS overstepped its authority when it expanded the site-neutral pay policy. HHS filed an appeal, and the appellate court reversed the lower court's decision in July 2020.  

The Supreme Court will have the final say. If the Supreme Court decides not to hear the case, the appellate court ruling would stand and the site-neutral payment rule would remain.

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