Appeals court hears oral arguments in site neutral case

A federal appeals court today heard oral arguments in the government’s appeal of its loss in a legal challenge to the 2019 reduction in site neutral payment brought by the AHA, joined by the Association of American Medical Colleges and several AHA member hospitals.

The judges questioned counsel for the government on its assertion of broad authority under the Medicare statute to take an action it says was designed specifically as a method to control an unnecessary increase in the volume of services provided in a hospital-based outpatient clinic that could be provided less expensively in a physician-office, as well as its assertion that the statute shielded its action from judicial oversight.

Counsel for AHA, AAMC and the hospitals forcefully countered that the government’s broad assertion of authority and its attempt to shield its action from review by the court was not aligned with the statute nor consistent with the agency’s previous view of what the statute permitted. 

Counsel also pointed out that Congress explicitly considered exactly the concern that the agency asserted it was addressing by making the payment reduction and made a different choice to ensure that higher payments for certain excepted facilities continued under the existing payment system.