News: Hospital site-neutral payments voted in favor by appeals court

According to an opinion published by the US Court of Appeals for the District of Columbia, the Department of Health and Human Services (HHS) acted within its statutory authority when implementing hospital site-neutral payments. The Court of Appeals decision reverses a 2019 lower court’s ruling to overturn the site-neutral payment policy. This will allow the HHS to continue the lowering of outpatient reimbursement rates for all off-campus provider-based departments.

The earlier site-neutral payment policy reduced reimbursements for clinic visits performed in off-campus provider-based departments so as to control unnecessary increases in covered outpatient services. HHS stated that paying off-campus provider-based departments at the same rate paid to physician practices for the same services would help decrease the amount of common outpatient services.

While various hospitals have challenged the hospital site-neutral payment policy, the new Court of Appeals decision stated that the HHS did in fact have the authority to “develop a method for controlling unnecessary increases in the volume of covered outpatient services” under the Outpatient Prospective Payment System. The appeal ruled that “a service-specific, non-budget-neutral rate reduction” falls within the Outpatient Prospective Payment Systems’ outline and that reducing reimbursement rate for specific services qualifies as a way of controlling unnecessary increases in the volume of those services.

Editor’s note: The US Court of Appeals opinion can be found here. To read ACDIS coverage of site-neutral payments, click here.