Supreme Court review of appellate decision on site-neutral payments is unnecessary, HHS says in new filing

The Biden administration has asked the Supreme Court to take a pass on an appeals court decision upholding the agency’s authority to bring Medicare payments to off-campus clinics in line with independent physician practices.

In a recent filing (PDF), the Department of Health and Human Services (HHS) argued opponents of the site-neutral payments policy, which is a long list of provider industry stakeholders headlined by the American Hospital Association (AHA), “have not identified any ‘specific prohibition in the statute that is clear and mandatory’ that HHS’ action contravenes.” Rather, the appellate court had correctly determined that “the reduction was a permissible exercise of HHS’ statutory authority,” the agency wrote.

HHS also argued prior application of the so-called “Chevron deference” by the appeals court was unnecessary within the circumstances of this case. As such, they wrote that this case would be an “unsuitable” vehicle for the top court to address long-standing ambiguity tied to the landmark 1984 court case.

HHS’ 2019 Outpatient Prospective Payment System rule aims to remove payment disparities where hospital-affiliated clinics receive more Medicare reimbursement than physicians' offices providing the same services. Critics and studies have suggested disparity has helped drive greater consolidation within the provider landscape.  

RELATED: Vertical integration drives higher Medicare spending on common testing procedures

The rule has been the subject of a lengthy legal battle between HHS and industry groups. Although the courts’ decisions have gone back and forth over the last couple of years, appeals courts have most recently sided with HHS on the controversial rule.

The AHA requested a judicial review by the Supreme Court (PDF) in February and supported its position last month with research indicating the hospital outpatient departments being hit by the rule are treating poorer, more complex Medicare patients than independent practices.

“Patients of higher complexity may require a greater level of care than patients of lower complexity,” the AHA said in the accompanying research report. “To the extent that these differences result in variations in the cost of care, site-neutral payments may have adverse effects on patient access to care.”

Should the Supreme Court deny the AHA’s petition, the prior decisions by the court of appeals permitting the site-neutral payments rule would stand. It would also save the Centers for Medicare & Medicaid Services about $800 million in payments to outpatient departments in 2020 alone, according to the agency.