Appeals court upholds payment cut for off-campus outpatient departments

The U.S. Court of Appeals for the District of Columbia Circuit today reversed a district court decision that found the Department of Health and Human Services exceeded its statutory authority when it reduced payments for hospital outpatient services furnished in off-campus provider-based departments grandfathered under the Bipartisan Budget Act of 2015. The AHA, joined by the Association of American Medical Colleges and several member hospitals, challenged the agency’s two-year phase-in of the payment cut in the outpatient prospective payment system final rules for calendar years 2019 and 2020.

“The question at issue is whether HHS may reduce the OPPS reimbursement for a specific service, and may implement that cut in a non-budget-neutral manner, as a ‘method for controlling unnecessary increases in the volume of’ the service,” the appeals court opinion states. “In our view, Congress did not ‘unambiguously forbid’ the agency from doing so.”

In a statement, AHA General Counsel Melinda Hatton said, “America’s hospitals and health systems are disappointed in this decision because it will cause serious harm to their ability to provide care for patients. It fails to account for the fundamental differences between hospital outpatient departments and other sites of care. Hospitals are open 24/7, held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay.

“We have to maintain access to critical care during the fight against COVID-19 and these changes move us in the opposite direction. We are carefully reviewing the decision to determine our next steps."