In September 2019, District of Columbia Federal Judge Rosemary Collyer issued a court ruling that struck down the Trump Administration’s rule instituting site-neutral payments. Judge Collyer opined that the Centers for Medicare and Medicaid Services (CMS) overstepped its authority by finalizing a plan to extend a site-neutral payment policy to clinic visits. The CMS plan would essentially pay the same rate in Medicare for evaluation and management services at both physician offices and hospitals.
As may be expected, and most likely remember, shortly after CMS released its plan in 2018, hospital groups began an outcry, with the American Hospital Association (AHA) vowing a challenge within hours of the rules’ finalization. Then, one month later, in December 2018, the AHA and the Association of American Medical Colleges joined forces with three individual medical centers and filed a lawsuit saying the policy would harm patients, as it would lead to access problems as hospitals cut services.
In her September 2019 ruling on that complaint, Judge Collyer stated that the agency was not “authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain providers.” She noted that she understood the reasoning behind the rule, and even agreed with it, but in the end, she found that CMS could not circumvent “the statutory process for setting payment rates.”
“CMS believes it is paying millions of taxpayer dollars for patient services in hospital outpatient departments that could be provided at less expense in physician offices. CMS may be correct,” Judge Collyer wrote. “But CMS was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain providers.”
Physician Reaction
Judge Collyer’s decision in siding with the hospitals, was “very bad news for all the patients harmed by hospitals adding ‘facility fees’ for visits to doctors in practices they acquired,” tweeted Bob Doherty, senior vice president of government affairs and public policy for the American College of Physicians.
“Payment disparities across different sites of service create unjustified financial stress on patients, community-based physicians and the Medicare program,” said John Cullen, president of the American Academy of Family Physicians. “They force Medicare beneficiaries to pay more at hospital outpatient departments that charge higher rates.”
Ted Okon, executive director of the Community Oncology Alliance, also disagrees with Judge Collyer’s decision. He gave the example of a hospital purchasing a physician practice, which can then charge higher rates while still receiving a discount on cancer drugs through the 340B drug discount program. This is what is hurting smaller physician practices.
What’s Next?
As we reported on Tuesday, the Trump Administration has moved forward with implementing this change, despite the court ruling otherwise. It will be interesting to keep an eye on this space in the coming weeks and months, as it is likely to remain hot and newsworthy. CMS had previously told FierceHealthcare that if it failed in court, it may “turn to Congress to expand site-neutrality rules” as the agency has fielded complaints from providers that the lack of site neutrality has led to rapid consolidation of physicians’ offices.