Press Release

Proposed "site-neutral" OPPS rule poses significant legal risks


The rule proposed by the Centers for Medicare & Medicaid Services (CMS) could put hospitals and the physicians treating patients in outpatient departments at risk for violating fraud and abuse laws. In its comments to the agency that includes a legal analysis it commissioned from Hogan Lovells, the American Hospital Association (AHA) raises concerns about the potential legal risks of the so-called “site-neutral” provision of CMS’s outpatient prospective payment system (OPPS).

The analysis warns that “CMS’s proposed site-neutral changes would potentially create unavoidable collateral risks under the federal fraud and abuse laws” by forcing hospitals into the types of arrangements that CMS and the (Office of the Inspector General) OIG have condemned in the past and shutting down valuable community health care resources.

Although not the only flaw in the proposed rule, this aspect of it “puts the hospital community in an untenable position by creating unavoidable legal risks,” said Melinda Hatton, senior vice president and general counsel. AHA will shortly be submitting additional comments that explain more fully the other flaws in this proposed rule and which provide additional reasons for CMS to delay these site-neutral policies until it can adopt much-needed changes that are fair and equitable to hospitals and the patients and communities they serve.

Based on the legal analysis of the fraud and abuse risks inherent in the site-neutral proposal, AHA is concerned that CMS’s approach is at odds with the fundamental tenet of the Stark and Anti-Kickback laws: Hospitals may not provide free goods or services to referring physicians. The analysis found there are significant implications under the Stark and Anti-Kickback laws if hospitals continue to bear the costs for operation of a hospital outpatient department (HOPD) at no cost to the physicians. The workarounds that CMS suggests to avoid the legal pitfalls its proposed rule creates are unrealistic and largely unworkable. By proposing to outsource its responsibility for paying HOPDs for the services it provides to patients, CMS is creating a fraud and abuse “set up” for hospitals and physicians.

To review the comments and legal analysis document, visit


About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at

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