- The U.S. Supreme Court on Monday declined to hear an appeal from hospital groups asking it to reverse a lower court ruling that upholds HHS' site-neutral payment policy.
- The American Hospital Association along with other provider groups have waged legal challenges against HHS over the policy in the 2019 Outpatient Prospective Payment System that reduced some payments to off-campus hospital outpatient departments to make them consistent with other outpatient payments.
- A lower court found HHS exceeded its statutory authority with the rate change, though an appeals panel reversed that decision in July 2020. The Supreme Court had the final say and now the appellate court ruling stands.
Site-neutral payments became a hot topic when larger hospital systems started buying up physician practices to provide evaluation and management services at higher Medicare rates than stand-alone physician groups.
When HHS issued the 2019 rule barring hospitals from receiving higher reimbursements for outpatient services compared to other providers, the hospital lobby and other hospitals immediately sued. In a multiyear legal battle, they have argued HHS did not act in the required budget-neutral manner and also otherwise flouted congressional intent when issuing the rate change.
Hospital groups also argue there are crucial differences between hospital outpatient departments and other sites of care.
"Hospital outpatient departments are held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay," Melinda Hatton, AHA's general counsel said in a Monday statement.
In May, HHS released a brief asking the Supreme Court to uphold the site-neutral payment policy, arguing it did not act beyond the powers delegated to it by Congress. In the brief the agency noted that E&M encounters per Medicare enrollee grew at outpatient sites by 22%, versus a 1% drop at physician practices from 2012 to 2015.