38 hospitals sue HHS over site-neutral payment policy

Thirty-eight hospitals filed a lawsuit against HHS Jan. 18, alleging HHS Secretary Alex Azar overstepped his authority when he finalized a policy that will cut Medicare payments for hospital outpatient visits.

Four things to know:

1. 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. Based on a two-year phase-in of this policy, half of the total reduction will apply this year.

2. In their lawsuit, the hospitals argue Mr. Azar acted beyond his statutory authority in finalizing the OPPS rule. They claim the site-neutral payment policy violates the Medicare statute's mandate of budget neutrality and Congress's directive that excepted provider-based departments be reimbursed at OPPS rates and not at lower payment rates HHS applies.

3. "The Secretary's unlawful rate cut directly contravenes clear congressional directives and will impose significant harm on affected off-campus hospital outpatient departments and patients they serve," the complaint states.

4. In December, the American Hospital Association, the Association of American Medical Colleges and three hospitals filed a similar lawsuit against HHS over the site-neutral payment policy.

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