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Court Upholds Delay of Medicare Site-Neutral Payment Cut

Medicare cannot proceed with its plan to pay for outpatient care on a site-neutral basis while it appeals a court ruling rejecting that policy, a federal court has ruled.

A federal judge found that Medicare has not articulated an adequate reason to delay the $380 million a year in site-neutral payment cuts while the Centers for Medicare & Medicaid Services appeals the September decision rejecting the payment policy change.  The court also found that, contrary to CMS’s claim, Medicare still has an appropriate methodology for making payments that are not site-neutral and that the agency has not proved that it would suffer irreparable harm if the cuts are delayed while it considers CMS’s appeal.

The cut took effect on January 1, 2019 but the court did not address how Medicare should compensate hospitals for lost payments, instead ordering CMS and the plaintiffs in the case to submit reports on how the payment shortfalls can best be addressed.

NASH has opposed implementation of the site-neutral payment policy on several occasions in recent years, doing so most recently in its letter last month to CMS (scroll down to page 5) about the agency’s proposed policy for paying for Medicare-covered outpatient services for 2020.

Learn more about the Medicare site-neutral payment cut and why the federal court again ruled against that cut in the Fierce Healthcare article “Judge denies bid to preserve site-neutral payment cuts while awaiting appeal.”

Court Halts Medicare Site-Neutral Payment Changes

The Centers for Medicare & Medicaid Services did not have the authority to implement the site-neutral payment system for Medicare-covered outpatient services that it introduced last year, a federal court has concluded.

According to the court, CMS exceeded its authority because it

…was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payment rates only for certain services provided by certain providers.

In general, hospitals oppose the movement toward site-neutral payments and independent physician groups support it.

The court did not order CMS to reimburse affected physician practices for lost revenue.  Instead, it directed CMS to develop an appropriate remedy.

CMS is likely to appeal the ruling.

Meanwhile, CMS has proposed continuing its phase-in of the site-neutral payment policy in its proposed 2020 outpatient prospective payment system regulation that will take effect on January 1, 2020.  It is not clear how or if – the court ruling might affect CMS’s decision to move ahead with this proposal.

NASH opposed the 2019 change in a formal regulatory comment letter to CMS last year (see pages 2 and 3) on behalf of private safety-net hospitals and next week will submit another comment letter expressing the same view about year two of the proposed changes in Medicare outpatient payment policy.

Learn more about the case, the court decision, and what might happen next in the Healthcare Dive article “Hospitals score victory as judge tosses CMS site neutral rule.”

 

House Members Protest Site-Neutral Payment Proposal

138 members of the House of Representatives have written to Centers for Medicare & Medicaid Services administrator Seema Verma to protest CMS’s proposal to extend Medicare outpatient site-neutral payment policies to off-campus, provider-based outpatient departments specifically exempted from such policies by Congress under the Bipartisan Budget Act of 2015.

In questioning CMS’s rationale for the proposed policy, the House members wrote that

It is unclear how CMS has deemed all of the OPD [outpatient department] services at the grandfathered off-campus HOPDs [hospital outpatient departments] as cause of an unnecessary increase in volume of OPD services, and we ask you to provide clarity on this when making these payment changes.

The House members also wrote that

The agency has also proposed cutting payment to 40 percent of the current HOPD rate for grandfathered off-campus HOPDs that begin to furnish a new service from a clinical facility not offered prior to November 1, 2015 which could unfairly penalize grandfathered off-campus HOPDs that expand or diversify the critical services they offer to meet the changing needs of their patients.

In a formal response to the proposed regulation, NAUH expressed much the same sentiment, maintaining that the regulation, if adopted, could detract from the ability of private safety-net hospitals to serve their communities. See that letter here.

Go here to see the House letter.

Senators Ask CMS to Back Off Medicare Outpatient Proposal

Nearly half of the members of the Senate have written to CMS asking the agency to withdraw its proposal to make more Medicare outpatient payments on a site-neutral basis.

In the letter, 48 senators note that in the 2015 Bipartisan Budget Act Congress specifically directed that CMS grandfather certain existing hospital-based off-campus outpatient facilities from CMS efforts to make more outpatient payments on a site-neutral basis.  The proposed regulation, however, would affect those very facilities.

NAUH made much the same point in its September letter to CMS expressing its opposition to this aspect of the agency’s proposed 2019 outpatient prospective payment system regulation.

Go here to see the senators’ letter to CMS.

 

Medicare Site-Neutral Outpatient Payment Proposal Would Have Disproportionate Impact

The Centers for Medicare & Medicaid Services’ proposal to make more Medicare outpatient payments on a site-neutral basis would significantly cut Medicare’s overall outpatient spending but most of that cut would be borne by just a few hospitals.

A report prepared for the Integrated Health Care Coalition concluded that

…CMS’ Off-Campus Site-Neutral Proposal in the FY 2019 CMS OPPS [note:  outpatient prospective payment system] NPRM [note:  notice of proposed rulemaking] will disproportionate affect about six percent of 3,333 hospitals that participate in the program.  200 hospitals will shoulder 73 percent of the proposed payment reductions….For the top 200, the average reduction will be 5.5 percent.  For the remaining hospitals, the reduction will be 0.5 percent.

Last month NAUH conveyed its strong opposition to this proposal in a formal comment letter to CMS.

Learn more about the CMS proposal and its potential implications in this story in Becker’s Hospital Review or go here to see the complete analysis.

NAUH Urges Congress to Assist With Medicare Outpatient Regulation

Last year Congress passed the Bipartisan Budget Act, which mandated site-neutral Medicare outpatient payments. The Centers for Medicare & Medicaid Services has proposed a new regulation implementing this policy that NAUH believes will detract from the ability of private safety-net hospitals to bring much-needed outpatient care to their communities. NAUH submitted extensive comments to CMS about this proposed regulation; see them here.

NAUH LogoNAUH especially objects to:

  • limits on the ability of hospitals with existing hospital-based outpatient departments to rebuild or relocate those facilities without losing their hospital-based status;
  • limits on hospitals with existing hospital-based outpatient departments expanding those departments and offering additional services in them without losing their hospital-based status;
  • a prohibition against hospitals purchasing a hospital-based outpatient department from another hospital and retaining that hospital-based status for the acquired facility; and
  • an overly rigid definition of what constitutes an “on-campus” department.

Now, NAUH is asking members of Congress to sign onto a letter to CMS urging the agency to revise aspects of that regulation that pose potential barriers to ensuring access to these services in the low-income communities private safety-net hospitals serve. See NAUH’s message to Congress here.

NAUH Comments on Proposed Medicare Site-Neutral Outpatient Payment Changes

NAUH LogoThe National Association of Urban Hospitals has submitted extensive comments to the Centers for Medicare & Medicaid Services on the agency’s proposal to implement site-neutral payment policies for Medicare-covered outpatient services.

In its comments, NAUH raises objections to:

  • how the proposed rule addresses the relocation of existing hospital-based outpatient departments;
  • how it addresses the expansion of services at existing departments;
  • how it proposes addressing the sale of existing departments; and
  • how it could affect such departments’ future eligibility in the section 340B prescription drug discount program.

Last year’s Bipartisan Budget Act called for Medicare to pay providers for outpatient services on a site-neutral basis.  The proposed rule constitutes CMS’s response to that law.

To see NAUH’s entire comment letter, go here.

CMS Fills in the Blanks on Site-Neutral Payments

When Congress passed a budget bill last fall calling for the introduction of site-neutral payments for Medicare-covered outpatient services, hospitals wondered how this might affect their current provider-based outpatient facilities and their plans for future facilities or acquisitions.

Now they have some answers.

cmsLast week the Centers for Medicare & Medicaid Services put regulatory flesh on the bones outlined by Congress in a 764-page proposed regulation that addresses what hospital-based outpatient facilities and services will be covered by the site-neutral payment rule and which will not.

Interested parties have until September 6 to submit formal comments to CMS about the proposed regulation; NAUH currently plans to do so.

Learn more about the proposed guidelines, which are subject to stakeholder review and comment, in this CMS fact sheet and the proposed regulation itself.

Congress Open to Revisiting Medicare Site-Neutral Outpatient Payments?

energy and commerceConceding that Congress “…has received a large amount of feedback” since including in a 2015 law a provision that compels Medicare to pay for outpatient care on a site-neutral basis, the House Energy and Commerce Committee and its Health Subcommittee have invited members of the health care community “…to provide feedback to the Committee related to the enactment of Section 603 of the Bipartisan Budget Act of 2015.”

While noting the differences between Medicare outpatient payments for services provide in hospital-based facilities, private doctors’ offices, and other sites and pointing out that the Medicare Payment Advisory Commission (MedPAC) had urged Congress to address this issue, the committee noted in its invitation letter that many have objected to the new policy and suggested numerous changes and exceptions to the new Medicare outpatient payment policy.

For this reason, the committee is inviting comments on site-neutral Medicare outpatient payments and will accept such comments in writing until February 19.

The National Association of Urban Hospitals opposes the site-neutral payment policy and intends to write to the committee to express its views.

Go here to see the committee’s letter about this issue.