Hospital groups sue HHS, seek to block site-neutral pay cuts

Two organizations representing hospitals and health systems across the nation and several individual hospitals sued HHS Jan. 13 over site-neutral payment cuts for 2020.

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 American Hospital Association, the Association of American Medical Colleges and dozens of hospitals across the nation sued HHS in January 2019. They argued CMS exceeded its authority when it finalized the payment cut in the OPPS rule. HHS argued that under the Bipartisan Budget Act of 2015 it has authority to develop a method for controlling unnecessary increases in outpatient department services. 

In September, U.S. District Judge Rosemary M. Collyer concluded that CMS failed to follow the statutory process for setting Medicare payment rates when it finalized the 2019 OPPS rule. However, CMS moved forward with site-neutral payment cuts in its 2020 outpatient payment rule.

Hospitals tried to block the 2020 payment cuts from taking effect Jan. 1 by asking the judge to enforce her order. However, the judge ruled in December that the order was limited to the 2019 final rule. She asked the hospitals and the groups representing them to file a claim this year to show the effects of the 2020 final rule.

The hospitals made their new claim in a lawsuit filed Jan. 13, arguing the 2020 final rule is unlawful.

"The 2020 final rule is no less an impermissible flex of regulatory authority than the 2019 final rule, and should meet the same fate," reads the complaint.

The hospitals seek injunctive relief and a declaration that the 2020 final rule exceeds CMS' statutory authority and is unenforceable.

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