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Health and Human Services appeals site neutral payments ruling

Beyond cost, CMS said it adopted the lower payments for hospital outpatient facilities as a method to control unnecessary increases in volume.

Susan Morse, Managing Editor

The Department of Health and Human Services has appealed a district court ruling on site neutral payments, according to court documents filed Thursday.

Alex M. Azar, secretary of Health and Human Services, appealed the October 21 court order to the United States Court of Appeals for the District of Columbia Circuit.

The district court had sided with the American Hospital Association and other hospitals in ordering HHS to pay grandfathered hospitals at the outpatient prospective payment system rate, rather than at the lower physician fee schedule rate.

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The district court issued instructions for CMS to immediately cease paying the reduced amount for clinic visits furnished at excepted off-campus provider-based departments for 2019.

The Centers for Medicare and Medicaid Services on Thursday announced it would make the back payments. The estimated amount for 2019 is $380 million.

Starting January 1, 2020, and over the next few months, the Medicare Administrative Contractors will automatically reprocess 2019 claims paid at the reduced rate.

But 2020 payments have been in question.

In November, despite the court ruling, CMS issued a 2020 outpatient prospective payment system final rule to complete a two-year phase of the reduction for clinic visits furnished in off-campus provider-based departments to the same amount paid under the physician fee schedule.

"This policy was adopted as a method to control unnecessary increases in the volume of clinic visit services furnished in off-campus provider-based departments paid under the OPPS and will help reduce out-of-pocket costs for Medicare beneficiaries," a CMS spokesperson said.


Millions of dollars are at stake.

CMS has said Medicare would save about $800 million by paying both hospital outpatient facilities and physician clinics the same amount.

The American Hospital Association said on its site that it expected an appeal.

CMS said in earlier statements it was evaluating its appeal rights.


In a final rule released in November 2018, the Centers for Medicare and Medicaid Services said it would pay formerly grandfathered off-campus hospital departments at the same lower rate it paid physician services.

Off-campus provider based departments built or acquired after November 2, 2015, are already paid at the lower rate. But off-campus provider-based departments built earlier had been grandfathered at the higher rate under the Bipartisan Budget Act of 2015.

The AHA, joined by the Association of American Medical Colleges and several member hospitals, sued the Department of Health and Human Services, and won.

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