Deferring to the expertise of HHS, the Trump administration pushed federal appeals judges to bring back the HHS site neutral payment policy for office visits. HHS determined that Medicare’s outpatient prospective payment system increased taxpayer spending, as too many office visits were occurring in hospital outpatient departments.
The payment variance in evaluation and management services performed in outpatient clinics and practices by physicians led Medicare to pay more for the same services, as hospitals bought up neighboring practices resulting in increased costs to taxpayers.
Congress granted agency power in reducing service volume. A Department of Justice attorney argued that congress provided the agency power to reduce service volume; methods were broadly defined under the Medicare statue and did not speak to the issue directly. A similar argument appeared in U.S. District Court where Judge Collyer sided, ultimately unsuccessfully, with hospitals. Judge Collyer held that congress did not give HHS the ability to alter reimbursement rates to decrease utilization and that the law required payment changes to be budget neutral.
Hospitals argue that HHS has two ways to make payment adjustments: either conduct targeted, budget neutral payment changes, or, under the outpatient prospective payment system, correct the conversion factor to increase or decrease all payments. However, targeted payment adjustments that are not budget neutral cannot be made by the agency. Advocates of site neutral payments as well as the Trump Administration would win big if the courts find that this method of payment adjustment is legitimate. The opposite holds true for hospitals.
Advis consultants are specialized in site-neutral payments and other healthcare or operational matters. For more information, please contact us online or call 708-478-7030.
Published: April 27, 2020