Physician groups call court ruling on site-neutral payments 'bad news'

Court building
Physician groups said a court ruling that invalidates the Centers for Medicare & Medicaid Services' site-neutral payment rule will raise costs for patients. (Getty/outline205)

Several physician groups lashed out that a federal judge’s decision to strike down site-neutral payments was “very bad news,” but not surprising considering other recent court losses.

The groups said that the decision Tuesday by District of Columbia Federal Judge Rosemary Collyer preserves a status quo that negatively impacts patients. The rule would have paid hospitals and physicians' offices the same amount for clinic visits under Medicare, which hospitals have opposed because it would cut their reimbursements. 

“This is very bad news for all the patients harmed by hospitals adding ‘facility fees’ for visits to doctors in practices they acquired,” tweeted Bob Doherty, senior vice president of government affairs and public policy for the American College of Physicians.


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The ruling means the government's and payers' hands are “tied because they have no other choice,” said Ted Okon, executive director of the Community Oncology Alliance, a group of independent oncology practices. “They are paying differential rates for the same exact service.”

The ruling also puts undue stress on Medicare and patients, one group added. 

"Payment disparities across different sites of service create unjustified financial stress on patients, community-based physicians and the Medicare program," said John Cullen, president of the American Academy of Family Physicians, in a statement. "They force Medicare beneficiaries to pay more at hospital outpatient departments that charge higher rates."

The Centers for Medicare & Medicaid Services (CMS) told FierceHealthcare it was aware of the court’s ruling and is considering next steps. If the agency fails in court, it will have to turn to Congress to expand site-neutrality rules. Several groups have complained that the lack of site neutrality has contributed to the rapid consolidation of physicians' offices.

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A hospital buys a physician practice and can start charging higher rates while receiving a discount on cancer drugs through the 340B drug discount program, Okon said.

“When a hospital buys up a practice, that cancer business to them is very profitable,” he added.

But hospitals, on the other hand, charge that they are subject to more comprehensive licensing, accreditation and regulatory requirements than other settings, according to the American Hospital Association (AHA). These extra requirements aren’t covered in Medicare’s total payments, the group added.

Several hospital groups sued the Department of Health and Human Services to overturn the rule. While Collyer agreed with the reasoning behind the rule, she said the agency couldn't ignore "the statutory process for setting payment rates."

Hospital advocacy groups cheered that the ruling will “allow hospitals to maintain access to important services for patients and communities,” according to a joint statement from the AHA and the Association of American Medical Colleges.  

Okon said that while he was disappointed in the ruling, "I can’t say I am surprised." 

He mentioned a similar ruling that found CMS exceeded its authority when it cut payments by nearly 30% for drugs covered under the 340B hospital discount program.