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Appeals court sides with HHS on site neutral payments

The loss of hospital revenue due to the ruling is estimated at $800 million for 2020.

Susan Morse, Managing Editor

An appeals court has reversed a decision of a lower court and has upheld the action of the Department of Health and Human Services to pay formerly grandfathered off-campus outpatient departments run by hospitals at the same, lower rate of physician clinics.

In November 2019, the Centers for Medicare and Medicaid Services decided to move forward with a two-year phase-in of site neutral payments despite a decision in the district court earlier in the year siding with hospitals in their fight to keep the higher outpatient payments for off-campus facilities.

In the ruling, the U.S. Court of Appeals in the District of Columbia said HHS had the authority to reduce payments to the off-campus facilities to bring them in line with other outpatient payments.

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WHY THIS MATTERS

This court's decision reduces hospital revenue.

At stake is an estimated $800 million for 2020.

The ruling could not have come at a worse time for hospitals, particularly those that serve vulnerable communities, according to America's Essential Hospitals.

CEO and President Bruce Siegel called the decision a "gut punch" to the nation's essential hospitals which are already struggling under persistent funding shortages made worse by the COVID-19 crisis.

THE LARGER TREND

In September 2019, a federal judge declared that Centers for Medicare and Medicaid Services overstepped its authority in making payment changes to the outpatient prospective payment system which led to reduced rate for grandfathered off-campus hospital facilities. 

In December 2019, the Centers for Medicare and Medicaid Services said it would repay hospitals for cuts made in site neutral payments by automatically reprocessing calendar year 2019 claims for hospital outpatient services provided in off-campus provider-based departments that had been grandfathered under the Bipartisan Budget Act of 2015. The amount was estimated at $380 million for 2019.

ON THE RECORD

Bruce Siegel, president and CEO of America's Essential Hospitals said, "Allowing the Centers for Medicare and Medicaid Services to maintain its policy of deep cuts to payments for outpatient care will widen gaps in healthcare access in communities across the country. We call on Congress and the administration to reverse course on this terrible site-neutral payment policy and restore access to care for all people."

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com