Hospitals want redo in site-neutral payment case

The American Hospital Association and dozens of individual hospitals filed a petition Aug. 31 asking a federal appeals court to rehear a case challenging HHS' site-neutral payment policy that cuts Medicare payments for hospital outpatient visits. 

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 several 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. 

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. Since "method" is not defined in the statute, the government argued its approach satisfies generic definitions of the term. U.S. District Judge Rosemary M. Collyer rejected that argument and set aside the regulation implementing the rate reduction in September 2019.

HHS filed an appeal in the case, and a panel of appellate judges reversed the lower court's decision on July 17. The panel held that HHS' reduction in reimbursement for evaluation and management services provided by off-campus provider-based departments falls within its authority. 

The hospitals are now seeking a rehearing before all judges of the U.S. Court of Appeals for the District of Columbia, arguing the appellate panel's decision granted CMS "extraordinary deference that it neither sought nor earned."

The Chevron doctrine is an administrative law principle that compels federal courts to defer to a federal agency's interpretation of an unclear or ambiguous statute that Congress delegated to the agency to administer. The hospitals argue that the appellate panel shouldn't have applied the doctrine to a question of the court's own jurisdiction. The hospitals further argue that the panel shouldn't have applied Chevron because the government forfeited that argument. 

"The panel granted this extraordinary deference even though CMS never explained during rulemaking why it viewed Congress's payment instructions to be ambiguous, and even though the government only briefly alluded to Chevron in its briefing on appeal," the petition states. 

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