Court Decides in Favor of CMS: Site-Neutral Payment Policy to Continue in 2020

Thoughtware Alert Published: Dec 30, 2019
Health care professionals  meeting

On December 16, U.S. District Judge Rosemary Collyer denied a request from hospitals to cease CMS’ site-neutral payment policy for 2020.


CMS was sued by the American Hospital Association (AHA) and other hospital groups for its site-neutral policy update that reduced off-campus provider-based clinic reimbursement in calendar-year (CY) 2019. In a September 2019 ruling, the U.S. District Court for the District of Columbia (Court) found that CMS didn’t have the statutory authority to make such an update and overturned the 2019 Outpatient Prospective Payment System (OPPS) final rule.

CMS filed a notice of appeal of the September decision but agreed to repay hospitals for the 2019 OPPS payments that had been withheld. Per CMS’ newsletter on December 12, it will reprocess claims paid at the reduced rate with CY 2019 dates of services. Repayment/reprocessing will begin on January 1, 2020.

Court Denies AHA Request

Despite the September ruling, CMS included the site-neutral policy in the CY 2020 OPPS final rule. The AHA requested that the Court halt the policy in 2020 based on the Court’s decision for the 2019 rule. Collyer denied the request, writing that “as a technical matter, the government correctly argues that the Court’s previous order was limited only to the 2019 Final Rule.”

Thus, CY 2020 services at off-campus hospital-based clinics will be paid a reduced rate, per the 2020 final rule, and hospitals will have to wait until 2020 claims are submitted and paid before they can challenge the site-neutral payment policy in court again.

It remains unclear how a legal challenge to the 2020 policy will be affected, if at all, by the appeals process for the 2019 policy. But regardless of legal challenges, CMS continues to look for ways to implement policies that lower copayments for Medicare beneficiaries and ultimately reduce Medicare spending.

The site-neutral payment policy aims to reduce health care spending by paying the same amount for a doctor’s visit regardless of whether it happens in a freestanding location, such as an independent doctor’s office, or in a hospital outpatient facility. CMS estimates the policy could reduce federal spending by nearly $800 million in 2020. We’ll continue to watch for changes and provide updates. For more information, reach out to your BKD trusted advisor or use the Contact Us form below.

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