Hospitals ask Supreme Court to reverse payment cuts


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The American Hospital Association, other trade groups and individual hospitals filed petitions Feb. 10 asking the U.S. Supreme Court to reverse appeals court decisions in two cases involving outpatient payment cuts to hospitals. 

One lawsuit hospitals are asking the Supreme Court to hear challenges HHS’ payment reductions in 2019 for certain outpatient off-campus provider-based departments. 

Under the 2019 Medicare Outpatient Prospective Payment System final rule, CMS made payments for clinic visits site-neutral by reducing the payment rate for evaluation and management services provided at off-campus provider-based departments by 60 percent.

In an attempt to overturn the rule, the AHA, the Association of American Medical Colleges and dozens of hospitals across the nation sued HHS. They argued CMS exceeded its authority when it finalized the payment cut in the OPPS rule. They further claimed the site-neutral payment policy violates the Medicare statute’s mandate of budget neutrality. 

HHS argued that under the Bipartisan Budget Act of 2015 it has authority to develop a method for controlling unnecessary increases in outpatient department services. Since “method” is not defined in the statute, the government argued its approach satisfies generic definitions of the term. U.S. District Judge Rosemary M. Collyer rejected that argument and set aside the regulation implementing the rate reduction in September 2019.

HHS filed an appeal in the case, and the appellate court reversed the lower court’s decision July 17.

The second lawsuit hospitals are asking the Supreme Court to hear challenges HHS’ nearly 30 percent cut to 2018 and 2019 outpatient drug payments for certain hospitals participating in the 340B Drug Pricing Program. 

A district court sided with hospitals and found the payment reductions were unlawful. Two members of a three-judge panel of the U.S. Court of Appeals overturned that ruling in July. 

The hospitals argue in both petitions that the Supreme Court should review the cases because of the “excessive deference” the appeals court gave to HHS’ interpretation of the respective governing statutes. 

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