Hospitals sue HHS over site-neutral payment policy

The American Hospital Association, the Association of American Medical Colleges and three hospitals sued HHS Dec. 4 for finalizing a policy that will cut Medicare payments for hospital outpatient clinic visits.

Under the 2019 Medicare Outpatient Prospective Payment System final rule, CMS is making payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits 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 next year.

The hospitals argue CMS, an agency within HHS, overstepped its statutory authority when it finalized the OPPS rule. They claim the site-neutral payment policy violates the Medicare statute's mandate of budget neutrality and its requirement that excepted and non-excepted provider-based departments be reimbursed pursuant to different payment systems.

"These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care," AHA President and CEO Rick Pollack said in a press release. "For example, patients who receive care in a hospital outpatient department are more likely to be poorer and have more severe chronic conditions than patients treated in an independent physician office. In addition, only hospitals provide 24/7 access to care for patients, regardless of their ability to pay, hospitals are held to far higher regulatory requirements, and hospital outpatient departments in inner cities and rural areas are often the only sites of care that provide the services they do."

The lawsuit against HHS comes after the AHA threatened legal action over the final OPPS rule in early November.

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