Appeals court urged to reject CMS argument in outpatient payment case

The AHA, joined by the Association of American Medical Colleges and a number of member hospitals, late yesterday filed a brief urging the U.S. Court of Appeals for the District of Columbia Circuit to affirm a district court ruling that voided the Centers for Medicare & Medicaid Services’ calendar year 2019 payment cut for hospital outpatient services provided in grandfathered off-campus provider-based departments. 

“CMS claims that a sub-sub-sub provision of the Medicare Act implicitly permits the agency to upend the longstanding Medicare reimbursement scheme, and to replace it with the scheme of its choice,” the hospital groups wrote, responding to the agency’s opening brief in its appeal. “The provision CMS cites, however, authorizes CMS to ‘develop a method for controlling unnecessary increases in the volume of covered [outpatient department] services.’ It does not say anything about payment rates at all. … The legislative history, and CMS’s own prior interpretation of the relevant statutory text, further demonstrate that CMS lacks the power to adopt its new payment rates for outpatient clinic services. Indeed, Congress expressly considered whether to adopt the payment scheme that CMS now seeks to impose by regulation, and it declined to do so.” 

The hospital groups last month challenged the agency’s continuation of the payment cut in 2020, arguing that the 2020 reduction is unlawful for the same reasons as the 2019 cuts. The appeals court will hear oral arguments in the case on April 17.