Analysis: Site-neutral payment ruling favors hospitals for now

• A federal judge on Sept. 17 overturned the CMS rule that cut Medicare payments for some hospital clinic visits, siding with hospitals who sued to prevent the changes, according to Modern Healthcare.
• The decision is a big win for hospitals, who in their original complaint projected cuts of about $380 million this year and $760 million in 2020, according to Modern Healthcare.
• HFMA’s Chad Mulvany believes CMS will appeal the ruling and insist on implementing the site-neutral policy for CY 2020 as proposed in the OPPS rule.

Modern Healthcare is reporting, “A federal judge on [Sept. 17] overturned the CMS rule that cut Medicare payments for some hospital clinic visits, siding with hospitals who sued to prevent the changes. U.S. District Judge Rosemary Collyer in Washington ruled that the Trump administration had exceeded its authority when it expanded the so-called site-neutral pay policy to evaluation and management services at off-campus hospital clinics. The goal was for Medicare to pay the same rate to hospitals as to independent physicians. The decision is a big win for hospitals, who in their original complaint led by the American Hospital Association projected cuts of about $380 million this year and $760 million in 2020. The court was clear that if the government wants to change the way Medicare pays for office visits, it has to be done in a way that doesn’t increase or decrease Medicare spending. Judge Collyer did not order the CMS to pay hospitals what the agency had withheld under the proposed rule, as the hospital plaintiffs had asked. Instead, she asked for a joint status report from the hospitals and agency so she can evaluate whether she needs additional briefing to decide on a remedy. That report is due Oct. 1.”

Takeaway

My guess is CMS will appeal the ruling. If that’s the case, I assume they will insist on implementing the site-neutral policy for CY 2020 as proposed in the Outpatient Prospective Payment System (OPPS) rule. While hospitals will likely ultimately prevail, the reprieve on site neutrality is only short term.

MedPAC has long advocated for making site-neutral payments for evaluation and management services.

At some point Congress will look to pass site-neutral legislation and use the savings to pay for other items on the healthcare wish list.