A panel of appeal judges on July 17 reversed a lower court ruling and ruled that a neutral HHS payment policy that reduces Medicare payments for outpatient hospital visits can go forward.
Under the 2019 Medicare Outpatient Prospective Payment System Final Rule, CMS made payments for neutral on-site clinic visits by reducing the payment rate for assessment and management services provided in the clinic by 60%. departments based on off-campus providers.
In an attempt to reverse the rule, the American Hospital Association, the Association of American Medical Colleges and dozens of hospitals across the country have sued the HHS. They argued that CMS overstepped its authority when it finalized the reduction in payments in the OPPS rule. They further claimed that the site’s neutral payment policy violated the Medicare Act’s budget neutrality mandate.
The HHS argued that under the bipartisan budget law of 2015, it has the power to develop a method to control unnecessary increases in ambulatory care services. Since the term “method” is not defined in the law, the government argued that its approach meets the generic definitions of the term. U.S. District Judge Rosemary M. Collyer rejected this argument and overturned the settlement implementing the tariff reduction in September 2019.
HHS appealed the case and the appeals court overturned the lower court’s decision on July 17.
The issue on appeal was whether HHS could reduce the OPPS reimbursement for a specific service and implement the reduction in a non-budget neutral manner, as a method of controlling unnecessary increases in service volume.
“Reducing the payment rate for a particular OPPS service is easily characterized … as a ‘method of controlling unnecessary increases in the volume’ of that service,” wrote a panel of judges of the United States Court of Appeals for the District of Columbia in the decision. “The lower the reimbursement rate for a service, the less incentive there is to provide it, all other things being equal. The reduction in the reimbursement rate is therefore naturally adapted to cope with unnecessary increases in the overall volume of a service provided by hospitals.
The court found that the HHS ‘reduction in reimbursement for assessment and management services provided by departments based on off-campus providers was within its authority to develop a method to control the unnecessary increase in the volume of outpatient services. .
“Because we conclude that the settlement rests on a reasonable interpretation of HHS ‘statutory authority to adopt volume control methods, we are now backtracking,” the panel of appeal judges wrote in the decision.