Judge Reaffirms Decision to Overturn Site-Neutral Payment Policy
A federal judge denied CMS’ request for her to reconsider a decision last month that tossed site-neutral payments for certain clinic visits performed in hospital outpatient departments.
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By - A federal judge yesterday rejected CMS’ motion to modify her Sept. 15 decision to vacate a Medicare site-neutral policy or impose a 60-day stay, according to a court document acquired by the American Hospital Association (AHA).
In an opinion issued on Oct. 21, US District Judge Rosemary M. Collyer ruled that the consequences of the 2018 final Outpatient Prospective Payment System (OPPS) rule that expanded site-neutral payments to off-campus, provider-based hospital outpatient departments for certain clinic visits were “not so complex that they cannot be directly redressed or undone.”
The decision was in response to CMS’ request that the court reconsiders overturning the rule “because there remains considerable doubt over the correct legal outcome” and “because vacatur would cause serious disruptive consequences to the OPPS payment system.”
CMS’ claims were not convincing enough, according to Collyer, who argued that the agency “developed underlying OPPS reimbursement rates and then tacked the E&M rate reduction on at the end.”
“Indeed, there is no evidence at all that CMS considered the underlying OPPS reimbursement scheme when it decided to reduce rates for E&M services at off-campus provider-based departments, other than to note that the OPPS reimbursement rates were higher than comparable rates at physician offices,” she explained in her decision. “Rather, the reduced rate for E&M services ‘operate[d] entirely independently’ of the underlying OPPS reimbursement scheme and was ‘not in any way ‘intertwined’’ with CMS’s obligation to review and set those underlying OPPS reimbursement rates.”
The most recent decision from the federal judge is another win for hospitals, which are now calling on CMS to repay them for lost revenue under the expanded site-neutral payment policy.
“Now that Judge Collyer has ruled against the government’s motion to reconsider her opinion and for a stay, the AHA expects CMS to comply with today’s order and promptly repay the impacted hospitals to support the work they do for the patients they serve,” Melinda Hatton, general counsel for the American Hospital Association (AHA) said in a statement.
The AHA, Association of American Medical Colleges, and several member hospitals filed the lawsuit against CMS in December 2018.
While the leading hospital association demands resolution following the most recent court decision, the association anticipates the federal government to appeal the judge’s decision to overturn the site-neutral payment policy.
The battle over site-neutral payments promulgated in the 2019 OPPS rule is likely to wage on in court. But the war is far from won for hospitals, according to industry experts.
CMS is likely to introduce new site-neutral payment policies in the future, Adria Warren, partner and healthcare lawyer at Foley & Lardner LLP, recently told RevCycleIntellience.com. She explained that the recent decision to overturn the site-neutral payment policy in the 2019 OPPS rule did not address exceptions detailed in Section 603 of the Bipartisan Budget Act of 2015.
“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 stated. “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.”
In fact, an executive order signed by President Trump earlier this month included a section on site-neutral payments. Specifically, section seven titled “Rewarding Care Through Site Neutrality” ordered the HHS Secretary to “ensure that Medicare payments and policies encourage competition and a diversity of sites for patients to access care.”
CMS Administrator Seema Verma has also voiced her support for site-neutral payments, arguing earlier this year that site-neutral payments encourage greater competition between providers, which leads to lower prices, improved care quality, and more choices for patients.
