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Site-Neutral Back Pay: CMS to Give Hospitals More Money for 2019, Carry Fight Into 2020

Analysis  |  By Steven Porter  
   December 13, 2019

The administration agreed to comply with a federal judge's order that vacated site-neutral payment provisions of OPPS 2019, but it appealed her decision and will keep pushing for related provisions in OPPS 2020.

Hospitals are celebrating a financial win after the Trump administration agreed to release more funds to hospital-owned outpatient provider departments in accordance with a federal court ruling. But the fight isn't over.

U.S. District Judge Rosemary M. Collyer ruled in September that the Centers for Medicare & Medicaid Services acted in a manner "manifestly inconsistent with the statutory scheme" when it included site-neutral payment provisions in the Outpatient Prospective Payment System final rule for 2019. The provisions reduced reimbursement rates for clinic visits at hospital-owned departments to bring them down to the rates paid for clinic visits in physician offices. Collyer declined in October the government's request to put her ruling on hold.

Despite the decision vacating its 2019 rule, CMS moved forward in November with its plan to include site-neutral payment provisions in the OPPS rule for 2020, calling it "the second year of the two-year phase-in of the clinic visit policy." The hospital plaintiffs that successfully challenged the 2019 rule asked Collyer to enforce her order against the 2020 rule as well, arguing that CMS had simply reinstated the same two-year policy that had been vacated. (The government contended, however, that it would be appropriate to move forward with the 2020 policy while officials considered whether to file an appeal.)

Officials have decided to do three things: (1) issue back payments to hospitals that endured rate reductions in 2019 due to the site-neutral payment policy, (2) appeal Collyer's decision with regard to the 2019 rule, and (3) maintain course with site-neutral payment policy in the 2020 rule. (The government filed a notice of appeal Thursday.)

Only the first of those three items drew an expression of approval from American Hospital Association General Counsel Melinda Hatton.

"The AHA 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," Hatton said in a statement. "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."

In a follow-up statement, Hatton said the AHA is confident the appellate court will affirm Collyer's decision.

The hospital plaintiffs told the court in a filing earlier this month that some hospitals had in recent weeks begun receiving payments for their claims processed without the site-neutral payment calculation for relevant services.

A spokesperson for CMS tells HealthLeaders that the agency began November 4 processing payments in accordance with Collyer's order for claims dated January 1, 2019, and thereafter. Beginning on January 1, 2020, and for the next few months, the 2019 claims that were paid at the reduced rate will be reprocessed automatically, with no need for providers to take any additional action, the spokesperson said.

This story was updated Friday afternoon with additional information from a CMS spokesperson and a follow-up comment from the AHA general counsel.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


A judge ruled that CMS had overstepped its legal authority in finalizing site-neutral payment policy provisions in the OPPS 2019 final rule.

Claims that were paid at the reduced rate in 2019 will be reprocessed automatically beginning January 1, 2020, a CMS spokesperson said.

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