Hospitals sue over site-neutral payment policy

HOSPITALS ARE TAKING the Trump administration to court in hopes of thwarting a regulation that would cut their reimbursement for outpatient care.

Starting Jan. 1, the CMS will start paying the same rate for services provided in a hospital outpatient setting as it pays independent physician practices. The socalled site-neutral policy was included in the final Hospital Outpatient Prospective Payment System rule, issued in early November.

The American Hospital Association and the Association of American Medical Colleges along with Michigan’s Mercy Health, Washington state’s Clallam County Public Hospital and Maine’s York Hospital, challenged the rule in the U.S. District Court for the District of Columbia. They argue that the “serious reductions to Medicare payment rates” are executive overreach. Total hospital reimbursement is expected to drop by $380 million in 2019 and another $760 million in 2020.

“This court should reject CMS’ attempts to replace Congress’s unequivocal directives with the agency’s own policy preferences,” the hospitals wrote in their complaint. “CMS may not contravene clear congressional mandates merely because the agency wishes to make cuts to Medicare spending.”

The timing and strate- gy of this lawsuit resembles the hospitals’ effort in late 2017 to block roughly $1.6 billion in Medicare Part B drug reimbursement cuts for 340B providers before they went into effect in early 2018. At the last minute, the presiding federal judge tossed that suit as premature because the cuts had not yet gone into effect. Hospitals lost their appeal over the summer and in September lodged their complaint again.

The same day hospitals filed the OPPS lawsuit, HHS Secretary Alex Azar promised the administration would continue its work on site-neutral payment policies despite intense industry opposition. “Fixing this perverse situation has been talked about for years, by administrations of both parties—and yet this administration is the one finally bold enough to do it,” he said in a speech at the right-leaning American Enterprise Institute.

The White House would also like to see site-neutral payment policies at the state level through Medicaid. ●