Supreme Court declines to hear AHA's appeal of site-neutral payments decision

The Supreme Court has declined to hear an appeal of a lower court decision upholding the Department of Health and Human Services’ (HHS') site-neutral payments policy.

The appeal was requested by the American Hospital Association (AHA) in February as part of a multiyear legal battle challenging HHS’ authority to bring Medicare payments to off-campus clinics in line with independent physician practices. The AHA’s bid was supported by a long list of other provider industry stakeholders.

By taking a pass on the case, the top court has now paved the way for HHS to move forward with the 2019 Outpatient Prospective Payment System rule—a policy the agency has said would have saved the Centers for Medicare & Medicaid Services roughly $800 million in payments to outpatient departments during 2020.

“We are disappointed that the U.S. Supreme Court has declined to hear the compelling arguments in our case on payment cuts for hospital outpatient visits,” Melinda Hatton, general counsel for the AHA, said in a statement.

“These cuts to hospital outpatient departments directly undercut the clear intent of Congress to protect them because of the many real and crucial differences between them and other sites of care. Hospital outpatient departments are 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,” she said.

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The Supreme Court did not discuss why it declined to hear the case in today’s release of orders (PDF).

Last month, HHS submitted a filing that supported the appellate court’s decision and urged the Supreme Court to pass over AHA’s appeal.

The agency wrote that the AHA and other plaintiffs had “not identified any ‘specific prohibition in the statute that is clear and mandatory’ that HHS’ action contravenes.” It also noted that the case would be an “unsuitable” vehicle for the top court to address other long-standing legal ambiguities.

HHS’ rule aims to remove payment disparities where hospital-affiliated clinics receive more Medicare reimbursement than physicians' offices providing the same services. Researchers have suggested over the years that these disparities have played a part in provider consolidation.

The AHA and other groups filed suits against the Trump-era policy as early as December 2018, kicking off a back-and-forth legal battle that ultimately landed on the side of HHS in July 2020.