HHS Site-Neutral Pay Cuts are Legal

Appeals court rules HHS has the authority to reduce payments.

In November of last year, the Centers for Medicare & Medicaid Services (CMS) decided to move forward with a two-year phase-in of site-neutral payments, despite a decision in court earlier in the year siding with hospitals in their fight to keep higher outpatient payments for off-campus facilities.

Under the 2019 Medicare Outpatient Prospective Payment System (OPPS) Final Rule, CMS made payments for clinic visits site-neutral by reducing the payment rate for evaluation and management (E&M) services provided at off-campus, provider-based departments by 60 percent.

The American Hospital Association (AHA), the Association of American Medical Colleges, and dozens of individual hospitals across the nation sued the U.S. Department of Health and Human Services (HHS).

However, upon appeal, the U.S. Court of Appeals in the District of Columbia stated that HHS had the authority to reduce payments to the off-campus facilities to bring them in line with other outpatient payments.

The court held that HHS’s reduction in reimbursement for E&M services provided by off-campus, provider-based departments fell within its authority to develop a method to “control unnecessary increase in the volume of outpatient services.”

Why does this decision matter?
The court’s decision reduces hospitals’ revenue in a time that they are bleeding red ink during a pandemic.

According to HHS estimates, it could reduce hospital revenues by $880 million in 2020.

In an open call to CMS, Bruce Siegel, president and CEO of America’s Essential Hospitals, said that “allowing the Centers for Medicare & Medicaid Services to maintain its policy of deep cuts to payments for outpatient care will widen gaps in healthcare access in communities across the country. We call on Congress and the administration to reverse course on this terrible site-neutral payment policy and restore access to care for all people.”

However, as I reported in my ICD10monitor article in August, “Do Hospitals Have a Target on their Backs?”, the opinion by Chief Judge Sri Srinivasan noted that “…without site neutrality, off-campus outpatient departments can get paid up to 114 percent more than freestanding physician offices.”

This HHS ruling is an attempt to continue to combat continued rising healthcare costs, according to HHS Secretary Alex Azar. HHS in the 2019 OPPS rule reduced E&M visit payments for off-campus departments to be in line with freestanding offices, and thus site-neutral. That is when the AHA sued the department. The court’s opinion was that “the lower the reimbursement rate for a service, the less the incentive to provide it, all else being equal.”

HHS continued by noting that “if the service is already being provided for and accessible to patients, from independent physicians, why isn’t there equal or neutral payments?” That is where the hospitals lose their position in not being able to respond, beyond citing their “higher regulated” sites. The quality and access to care is still there for the patient.

AHA continues to urge Congress to reject calls for any additional site-neutral payment policies for hospital outpatient departments (HOPDs). Their position cites the pandemic, saying that Americans rely heavily on hospitals to provide 24/7 access to care for all types of patients, to serve as a safety-net provider for vulnerable populations, and to make available the resources needed to respond to disasters.

However, with the implementation of telehealth, access has expanded for these populations, and HHS believes that the payment paradigm should be equal or neutral across the board. The courts agree at this time.

Keep an eye on this story in the coming months, as there could be a shift in rulings after the Nov. 3 election on all CMS- and HHS-funded payments.

Programming Note: Terry Fletcher is a member of the ICD10monitor editorial board. Listen to her live reporting on this subject today on Talk Ten Tuesdays, 10 a.m. EST.

Print Friendly, PDF & Email
Facebook
Twitter
LinkedIn

Terry A. Fletcher BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMSCS, ACS-CA, SCP-CA, QMGC, QMCRC, QMPM

Terry Fletcher, BS, CPC, CCC, CEMC, CCS, CCS-P, CMC, CMSCS, CMCS, ACS-CA, SCP-CA, QMGC, QMCRC, is a healthcare coding consultant, educator, and auditor with more than 30 years of experience. Terry is a past member of the national advisory board for AAPC, past chair of the AAPCCA, and an AAPC national and regional conference educator. Terry is the author of several coding and reimbursement publications, as well as a practice auditor for multiple specialty practices around the country. Her coding and reimbursement specialties include cardiology, peripheral cardiology, gastroenterology, E&M auditing, orthopedics, general surgery, neurology, interventional radiology, and telehealth/telemedicine. Terry is a member of the ICD10monitor editorial board and a popular panelist on Talk Ten Tuesdays.

Related Stories

Have You Been CHOPD?

Have You Been CHOPD?

The recent cyberattack on UnitedHealth Group’s subsidiary Change Healthcare, also known as Optum, has sent shockwaves through the medical community. This incident, which unfolded in

Read More

Leave a Reply

Please log in to your account to comment on this article.

Featured Webcasts

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Leveraging the CERT: A New Coding and Billing Risk Assessment Plan

Frank Cohen shows you how to leverage the Comprehensive Error Rate Testing Program (CERT) to create your own internal coding and billing risk assessment plan, including granular identification of risk areas and prioritizing audit tasks and functions resulting in decreased claim submission errors, reduced risk of audit-related damages, and a smoother, more efficient reimbursement process from Medicare.

April 9, 2024
2024 Observation Services Billing: How to Get It Right

2024 Observation Services Billing: How to Get It Right

Dr. Ronald Hirsch presents an essential “A to Z” review of Observation, including proper use for Medicare, Medicare Advantage, and commercial payers. He addresses the correct use of Observation in medical patients and surgical patients, and how to deal with the billing of unnecessary Observation services, professional fee billing, and more.

March 21, 2024
Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets

Explore the top-10 federal audit targets for 2024 in our webcast, “Top-10 Compliance Risk Areas for Hospitals & Physicians in 2024: Get Ahead of Federal Audit Targets,” featuring Certified Compliance Officer Michael G. Calahan, PA, MBA. Gain insights and best practices to proactively address risks, enhance compliance, and ensure financial well-being for your healthcare facility or practice. Join us for a comprehensive guide to successfully navigating the federal audit landscape.

February 22, 2024
Mastering Healthcare Refunds: Navigating Compliance with Confidence

Mastering Healthcare Refunds: Navigating Compliance with Confidence

Join healthcare attorney David Glaser, as he debunks refund myths, clarifies compliance essentials, and empowers healthcare professionals to safeguard facility finances. Uncover the secrets behind when to refund and why it matters. Don’t miss this crucial insight into strategic refund management.

February 29, 2024
2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

2024 ICD-10-CM/PCS Coding Clinic Update Webcast Series

HIM coding expert, Kay Piper, RHIA, CDIP, CCS, reviews the guidance and updates coders and CDIs on important information in each of the AHA’s 2024 ICD-10-CM/PCS Quarterly Coding Clinics in easy-to-access on-demand webcasts, available shortly after each official publication.

April 15, 2024

Trending News

SPRING INTO SAVINGS! Get 21% OFF during our exclusive two-day sale starting 3/21/2024. Use SPRING24 at checkout to claim this offer. Click here to learn more →