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AHA, AAMC to Challenge Site-Neutral Payment Policy in Court

CMS does not have the legal authority to extend site-neutral payments for clinic visits to excepted hospital outpatient departments, the groups argued.

Site-neutral payments and hospital outpatient departments

Source: Thinkstock

By Jacqueline LaPointe

- The American Hospital Association (AHA), along with the Association of American Medical Colleges (AAMC) and their member hospitals, plan to bring a lawsuit against CMS for recently released site-neutral payment rules for hospital clinic visits.

CMS released the final 2019 Hospital Outpatient Prospective Payment System (OPPS) rule earlier today. The rule finalized a site-neutral payment policy that will lower Medicare reimbursement rates for clinic visits furnished in off-campus provider-based departments paid under the OPPS.

The hospital outpatient departments would receive a Physician Fee Schedule (PFS)-equivalent rate for the clinic services, which is about 40 percent of the outpatient rate.

“Today’s misguided final rule will have negative consequences for the patients we serve,” the hospital association said in response to the final rule. “This rule, which phases in over two years payment cuts to hospital outpatient clinic visits, is based on unsupportable analyses and erroneous policy rationales. These ill-advised cuts will hit patients in rural and vulnerable communities especially hard.”

The AHA and AAMC will challenge the new site-neutral payment rule based on the argument that CMS does not have the legal authority to implement the payment policy.

In a recent letter to CMS, the AHS explained that CMS cannot implement site-neutral payments for clinic visits in the manner proposed because regulations specifically except certain off-campus provider-based departments from site-neutral payments.

Specifically, Section 603 of the Bipartisan Budget Act of 2015 enacts exceptions to site-neutral payment rules for off-campus provider-based departments (PBDs) that were billing under the OPPS before Nov. 2, 2015.

The 21st Century Cures Act also excepted off-campus provider-based departments that were in the middle of being constructed on Nov. 2, 2015.

“CMS does not have the authority to implement the Medicare Act in a fashion that eliminates an exception that was expressly established by statute,” the AHA wrote. “When it enacted Section 603, Congress made a clear policy choice that excepted PBDs would not be subject to the same site-neutrality policies that apply to nonexcepted PBDs.”

“CMS’s proposal disagrees with and seeks to overturn the policy choice made by Congress. But it is well established that ‘federal agencies may not ignore statutory mandates or prohibitions merely because of policy disagreements with Congress,’” the association added.

Additionally, the AHA pointed out that extending site-neutral payment to clinic visits would harm care quality. Hospital outpatient departments treat some of the sickest, more vulnerable patients, the hospital association emphasized.

Patients who seek care in a hospital outpatient department are more likely to be poorer and suffer from more severe chronic conditions compared to patients treated in independent physician offices, the hospital group argued, citing a recent KNG Health Consulting study.

The new site-neutral payment rule will harm hospital outpatient departments by reducing the amount they receive for treating complex cases.

Other industry leaders have also voiced their opposition to the site-neutral payment policy.

For example, over 130 lawmakers told CMS in October 2018 that extending site-neutral payments to excepted off-campus provider-based departments would impact the transition away from fee-for-service.

“The proposed rule incorporates changes to hospital outpatient services payment rates that we are concerned may affect efforts to move to value-based care,” the House Representatives wrote.

In September 2018, nearly 50 Senators also expressed their disappointment with the proposed expansion of site-neutral payments to grandfathered hospital outpatient departments (HOPDs).

“[W]e are disappointed that CMS has proposed significant cuts to HOPDs for CY 2019, for they are counter to the intent of Section 603 and will jeopardize access to care for our nation’s seniors,” the lawmakers wrote to CMS.

CMS argues that lowering the reimbursement rate for clinic visits furnished in the hospital outpatient setting will lower Medicare spending. The federal agency projects the new payment policy to decrease spending by $380 million in 2019. And Medicare beneficiaries would spend $7 less, on average, on copayments for clinic visits.

But the AHA and AAMC still intend to “promptly bring a court challenge to the new rule’s site-neutral provisions.”

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