CMS to Repay Site-Neutral Payments to Hospitals, Appeal Case
CMS will reprocess hospital claims from 2019 impacted by a site-neutral payment policy overturned by a federal judge earlier this year.
Source: Centers for Medicare and Medicaid Services
By - CMS announced in a newsletter last week that the agency will automatically reprocess claims for hospital outpatient services performed in calendar year (CY) 2019 to abide by a federal judge’s decision to overturn site-neutral payments for hospital clinic visits.
“CMS installed a revised Hospital Outpatient Prospective Payment System Pricer to update the rates being applied to claim lines,” the agency wrote. “The revised Pricer went into production on November 4, 2019, and applies to claims with a line item date of service of January 1, 2019, and after. Starting January 1, 2020, and over the next few months, the Medicare Administrative Contactors will automatically reprocess claims paid at the reduced rate; no provider action needed.”
The US District Court for the District of Columbia ruled in September that a site-neutral payment policy affecting hospital clinic visits in the final rule for the CY 2019 Outpatient Prospective Payment System (OPPS) was unlawful. CMS could not “shoehorn a ‘method’ into the multi-faceted congressional payment scheme” in order to control increased outpatient volumes, the court stated.
The court reaffirmed its decision ruling against the site-neutral payment policy in October.
In light of the decisions, the American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) – both plaintiffs in the case – called on CMS to repay hospitals the difference between the outpatient and site-neutral payment rates following the court’s decision, which would have totaled $380 million if CMS continued to pay hospitals at the reduced site-neutral payment rate through the end of 2019.
READ MORE: CMS Releases Physician Fee Schedule, OPPS, Pushes Site-Neutral Pay
According to the AHA’s general counsel Melinda Hatton, the association is pleased that “at our urging, CMS will be repaying affected hospitals the full OPPS rate for 2019 to support the critical work they do for the patients and communities they serve.”
“Now that a federal court has sided with the AHA and found these outpatient clinic visit cuts exceed the Administration’s authority, we continue to call on CMS to abandon further illegal cuts for 2020 and to pay the full OPPS rate going forward,” Hatton continued.
CMS’ parent organization, however, will continue to fight for the implementation of site-neutral payments for hospital clinic visits. The AHA obtained news that HHS plans to ask the US Court of Appeals to reverse the district court’s ruling in favor of the association and other hospital organizations.
Despite the announced appeal, the AHA remains optimistic that hospitals will win this legal battle.
“We are confident an appeals court will affirm the district court’s decision confirming congressional intent to protect these hospitals from punitive reductions in payment,” said Hatton said in the AHA’s announcement of the appeal.
READ MORE: More Outpatient Site-Neutral Payments to Cut Costs, Coalition Says
The AHA and other hospital organizations have recently realized success with challenging CMS payment policies in court. A federal judge in Washington DC also ruled in favor of the AHA, AAMC, and America’s Essential Hospitals nearly a year ago after the organizations sued HHS over cuts to hospital payments for outpatient drugs acquired under the 340B Drug Pricing Program. The judge similarly decided that the HHS Secretary cannot “fundamentally rework the statutory scheme” in order to adjust payment rates “for whatever reasons he deems ‘necessary.’”
HHS urged a federal appeals court in November to uphold the 340B payment cuts. Leaders urged the court to make a decision before the start of the new year to ensure payments to 340B hospitals align with the rule in 2020.
Hospital organizations may be earning some wins through their legal challenges, but that doesn’t mean the end of site-neutral payments, according to Adria Warren, partner and healthcare lawyer at Foley & Lardner LLP.
“The Bipartisan Budget Act, in our view, created a line in the sand [by 'grandfathering' hospital outpatient facilities that were in existence in November 2015 (when the Bipartisan Budget Act was implemented)],” she recently told RevCycleIntelligence.com. “Congress was very clear and that's the piece that the court did not speak to in this recent decision. How much CMS can work around that line in the sand is still unclear and it's going to play out more.”
This broad approach to overturning the site-neutral payment policy, which commented on the scope of CMS’ authority to reduce reimbursement rates in a budget-neutral manner rather than specifically addressing the carve-out Congress created for certain hospital outpatient departments in the act could lead to more site-neutral payment policies in the future.
“We're going to be dancing this dance for a while,” Warren said.
