A federal judge on Monday denied hospitals' request to halt the CMS' plan to implement its so-called site-neutral payment policy in 2020.
U.S. District Judge Rosemary Collyer had ruled against the policy in September for 2019 payments because it wasn't budget-neutral. Despite that ruling, the CMS built it into next year's Outpatient Prospective Payment System rule.
The American Hospital Association, which spearheaded the request, argued that planned 2020 payment cuts for some hospital clinic visits are illegal because the move is a continuation of a policy that Collyer threw out. Hospitals asked her to enforce her decision before the 2020 Outpatient Prospective Payment System takes effect on Jan. 1.
Collyer ruled Monday that the court does not have jurisdiction to intercede.
"As a technical matter, the government correctly argues that the Court's previous order was limited only to the 2019 Final Rule," Collyer wrote.
"CMS will continue to work to ensure that Medicare has more choices that would lower out-of-pocket costs" an agency spokesperson said. "There is significant payment disparity between Medicare payments for clinic visits in certain off-campus hospital outpatient departments versus the physician office setting. CMS looks forward to implementing policies that will result in lower copayments for Medicare beneficiaries."
Hospitals will have to wait until 2020 claims are submitted to and paid by the CMS before they challenge the site-neutral payment policy in court again, according to Katrina Pagonis, a partner and co-chair of the regulatory department at Hooper, Lundy & Bookman.
Providers will have a strong case because "CMS clearly disregarded the substance of the court's decision in AHA I when it relied on the same … reasoning to justify its 2020 reimbursement rates," wrote Collyer in her opinion.
"It appears highly likely that a (calendar year) 2020 challenge to the site-neutral policy will be successful," Pagonis said.
Hospitals agree, siding with Collyer's view that the CMS plans to act "above the law" by moving forward with the payment cuts in 2020.
"The AHA and other plaintiffs remain confident that the courts will find the 2020 cuts to be illegal, just as they found the 2019 cuts," the AHA said.
Although the CMS appealed Collyer's ruling against its 2019 payments, it agreed last week to repay hospitals for doctor's visits during the year.
The government had asked the U.S. District Court for the District of Columbia to put a halt on further legal actions related to the 2019 cuts, but it was denied. HHS decided not to pursue it any further, so the government had to comply with the District Court's order to pay hospitals, according to Pagonis.
It remains unclear how a legal challenge to the 2020 pay cuts would fit into the ongoing appeals process surrounding the 2019 site-neutral payment policy. But it could be put on ice until the 2019 case wraps up, said Pagonis.
The CMS' site-neutral payment policy aims to slash healthcare spending by paying the same amount for a doctor's visit, regardless of whether it happens inside a hospital outpatient facility or a regular doctor's office. The Trump administration has argued that it makes more sense to reimburse for the services provided than to differentiate payments based on the site of care, which may contribute to hospital-provider consolidation and drive up costs for consumers. The agency estimates it would reduce federal spending by $800 million in 2020.