Appeals court asked to reconsider payment cut for off-campus outpatient departments

The AHA, joined by the Association of American Medical Colleges and several member hospitals, yesterday asked the full U.S. Court of Appeals for the District of Columbia Circuit to rehear a July 17 decision by a three-judge panel that upheld the authority of the Department of Health and Human Services to reduce payments for hospital outpatient services furnished in off-campus provider-based departments grandfathered under the Bipartisan Budget Act of 2015. The panel upheld the payment reduction as a reasonable exercise of the agency’s statutory authority to control unnecessary increases in service volumes, relying on the legal theory announced in Chevron U.S.A. Inc. v. Natural Resources Defense Council Inc. (1984) that instructs a court to defer to such reasonable agency interpretation.  
 
Reversing a lower court decision in hospitals’ favor, the panel “sustained a draconian Centers for Medicare & Medicaid Services rulemaking by granting extraordinary deference to the agency that it neither sought nor earned,” the petitioners state. “To reach this result, the panel gave the wrong answer to several important, recurring Chevron questions.” They continue, “This case is not just important in the Chevron abstract. It is critically important in the here-and-now. It permits the Executive to unilaterally cut hundreds of millions of dollars from hospital outpatient clinics serving millions of patients across the country. Those deep cuts will be felt all the more now, as hospitals navigate the unprecedented challenges imposed by the pandemic.”