Federal Judge Rules Favorably for Hospitals on Medicare Outpatient Payment Policy

Posted on September 20, 2019

A federal judge recently ruled in favor of hospitals in the December 2018 lawsuit filed by the American Hospital Association, the Association of American Medical Colleges, Mercy Health Muskegon and several others. The lawsuit was filed against the Department of Health and Human Services for finalizing a policy that phased-in over two years a Medicare payment cut for hospital outpatient clinic visit services provided at off-campus hospital outpatient departments (HOPDs) that were grandfathered under Section 603 of the Bipartisan Budget Act of 2015. These cuts are contrary to congressional intent, which continued to provide full payment for these services at grandfathered facilities.

The lawsuit claimed that the Centers for Medicare & Medicaid Services (CMS) exceeded its statutory authority by implementing the payment cuts that reduced Medicare fee-for-service (FFS) payments for off-campus hospital clinic visits provided by grandfathered facilities to 70% of the Medicare outpatient prospective payment system (OPPS) rate as part of the 2019 Medicare OPPS final rule. These cuts were estimated to reduce Medicare FFS OPPS payments to Michigan hospitals by $22 million in 2019. In the 2020 OPPS proposed rule (see related article), the CMS proposed to further reduce payments for these services to 40% of the OPPS rate, with the impact estimated to be an additional $20 million cut for Michigan hospitals.

The court vacates the rule and will refer to the CMS to determine remedies, with parties required to submit a joint status report by Oct. 1 to determine whether additional briefing on remedies is required. The MHA will provide additional information as it becomes available. Members with questions should contact Vickie Kunz at the MHA.

Tags: Medicare, OPPS, CMS, FFS, HOPDs

Posted in: Member News

MHA Updates Delivered to You

Subscribe to the MHA Monday Report weekly newsletter or our podcast, the MiCare Champion Cast, to keep informed about the latest healthcare news and events in Michigan.

MHA Monday Report
Contact us to subscribe

MiCare Champion Cast
iTunes | SoundCloud

Media Inquiries

Contact the MHA at
(517) 703-8601

Read the MHA policy on publication via MHA media.

MHA 100 Year Anniversary

Watch the video »