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Analysis

Hospitals Seek En Banc Hearing in Site Neutral Payments Ruling

By John Commins  
   September 02, 2020

In reversing the district court last month, the appeals court ruled that the Trump administration's payment reductions were a reasonable exercise of statutory authority.

Hospital stakeholders this week asked the full U.S. Court of Appeals for the District of Columbia to rehear a three-judge panel's ruling last month that upheld the Trump administration's authority to impose site-neutral payments under the Outpatient Prospective Payment System final rule.

"The panel decision sustained a draconian Centers for Medicare & Medicaid Services rulemaking by granting the agency extraordinary deference that it neither sought nor earned," the American Hospital Association, the Association of American Medical Colleges and dozens of member hospitals said in an 83-page appeal filed on Monday.

The Trump administration has maintained that CMS has the authority to impose payment cuts under the Bipartisan Budget Act of 2015 to reduce unnecessary and costly increases in hospital procedures.

OPPS had reduced reimbursement rates for clinic visits at hospital-owned outpatient provider departments by 40%, to match the rates paid for clinic visits in physician offices. CMS estimates that the OPPS final rule could save the Medicare program about $760 million in 2020.

Hospitals have complained that the site-neutral cuts undercut the intent of Congress to protect hospital outpatient departments, which are held to a higher regulatory standard and often serve a sicker, older, poorer patient mix.  

In AHA v. Azar, a three-judge panel in July ruled unanimously in favor of the Department of Health and Human Services, reversing a district judge's ruling last September that CMS acted in a way that was "manifestly inconsistent with the statutory scheme" when it finalized the site-neutral payment as part of the OPPS final rule for 2019.

In reversing the lower court, the appeals court ruled that the Trump administration's payment reductions were a reasonable exercise of statutory authority under the Chevron Deference.

In their appeal, the hospitals said the three-judge panel overturned the lower court based on a what the plaintiffs called a flawed interpretation that "gave the wrong answer to several important, recurring Chevron questions."

"This case is not just important in the Chevron abstract. It is critically important in the here-and-now," the plaintiffs wrote.

"It permits the Executive to unilaterally cut hundreds of millions of dollars from hospital outpatient clinics serving millions of patients across the country. Those deep cuts will be felt all the more now, as hospitals navigate the unprecedented challenges imposed by the pandemic."

“It permits the Executive to unilaterally cut hundreds of millions of dollars from hospital outpatient clinics serving millions of patients across the country. Those deep cuts will be felt all the more now, as hospitals navigate the unprecedented challenges imposed by the pandemic.”

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The Trump administration has maintained that CMS has the authority to impose payment cuts to reduce unnecessary and costly increases in hospital procedures.

OPPS had reduced reimbursement rates for clinic visits at hospital-owned outpatient provider departments by 40%, to match the rates paid for clinic visits in physician offices.

CMS estimates that the OPPS final rule could save the Medicare program about $760 million in 2020.

Hospitals have complained that the site-neutral cuts undercut the intent of Congress to protect hospital outpatient departments.


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