Hospital groups launch suit against HHS

Hospital groups have launched a lawsuit against HHS over its new outpatient prospective payment system rule, which was finalized in November.

The rule finalized a policy with a two-year phase that will result in a significant reduction in payments to hospital outpatient clinic visit services, according to the American Hospital Association (AHA), one of the groups named on the lawsuit. The rule will cut about $380 million in 2019 by establishing site-neutral payments to hospitals, which will reduce out-of-pocket costs for beneficiaries but also slash payments to hospital-owned outpatient facilities.

The payment changes are scheduled to begin Jan. 1, 2019.

In addition to the AHA, the Association of American Medical Colleges, as well as member hospitals Mercy Health Muskegon, Clallam County Public Hospital and York Hospital, have joined the suit.

The groups argue HHS overstepped its authority in the final rule by changing the distinction between excepted and non-excepted entities for outpatient settings to make both subject to the same payment rate.

“These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care,” AHA President and CEO Rick Pollack said in a statement.

The agency also overstepped its authority by not making the changes budget neutral, the lawsuit states.

“CMS may not contravene clear congressional mandates merely because the agency wishes to make cuts to Medicare spending,” the lawsuit reads.

The rule was met with backlash when it was proposed earlier this year. Industry groups argue the payments should not be treated equally across settings, particularly as outpatients are more likely to be poorer and sicker, potentially requiring more costly care.