American Hospital Association plans to sue CMS over final site-neutral payment rule

Hospitals and physician groups are deeply divided over the final OPPS rule. (Getty Images/SIphotography)

Another legal battle between the nation's largest hospital association and the Trump administration is imminent after the Centers for Medicare & Medicaid Services (CMS) finalized a rule to institute site-neutral payments for clinic visits. 

CMS finalized its 2019 Outpatient Prospective Payment System (OPPS) rule (PDF) on Friday morning, which will gradually institute site-neutral payments in the Medicare program over the next two years.

In a press release, the agency said site-neutral payments for clinic visits will lower out-of-pocket costs for beneficiaries and save the program as much as $380 million in 2019. 

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Hours after the rule was released, the American Hospital Association (AHA) signaled its intent to challenge the new policy in court, arguing the administration has overstepped its boundaries. 

"These actions clearly exceed the administration’s legal authority," executive vice president Tom Nickels said in a statement. "The AHA, joined by the AAMC and member hospitals, intends to promptly bring a court challenge to the new rule’s site-neutral provisions."

He added that the rule is “misguided,” “based on unsupportable analyses and erroneous policy rationales,” and “will hit patients in rural and vulnerable communities especially hard.”

The organization was quick to denounce the proposal when it was released over the summer. 

Bruce Siegel, M.D., president and CEO of America's Essential Hospitals, did not explicitly threaten legal action, but said the rule "not only goes against the intent of Congress but, most importantly, exceeds its statutory authority."

However, not all stakeholders opposed the rule so staunchly. Physician groups, including the American Association of Family Physicians (AAFP) and the American College of Physicians (ACP), have supported site-neutral payments for some time.

RELATED: CMS proposes site-neutral payments in OPPS rule aimed at boosting provider competition

Before the rule was finalized, AAFP encouraged CMS to institute “policies that … pay for healthcare services in a more consistent and equitable manner.”

AAFP also said site-neutral payments can also help community clinics stay open at a time many have had to close due to vertical integration, consequently advancing patient choice and reducing costs.

ACP said it “agrees with CMS that there is no justification” for not having site-neutral payments, and that paying more for a service in a hospital “[does] not result in better service or value to the patient.”

After the rule was finalized, the Partnership to Empower Physician-Led Care (PEPC), an organization that advocates for independent practices’ role in value-based care, called it “a significant first step toward facilitating provider competition that results in better care and reduced costs for patients.”

Doctors and patients should be able to choose lower-cost care settings without pressure, rather than being pushed to select higher-paying settings “solely for financial reasons,” PEPC said.

“We strongly agree that patients and their physicians should have their choice of lower‐cost sites of service and not be encouraged to receive or provide care in higher paid settings solely for financial reasons,” said the group, which includes AAFP, Aledade and the California Medical Association, in a statement. 

The Community Oncology Alliance has said it supports site payment parity as well.

RELATED: Hospital groups decry 'draconian' cuts proposed by CMS in OPPS rule

The rule also expands a policy CMS implemented earlier this year that limits how much drug companies can charge hospitals for their products in the 340B program—another reason hospital organizations vehemently oppose the rule.

AHA is already engaged in a bitter court battle over 340B cuts. The group refiled its lawsuit against the Department of Health and Human Services in September after a federal judge dismissed its initial complaint. 

This rule “will damage the healthcare safety net that serves uninsured, underinsured, and Medicaid patients across the country,” said Maureen Testoni, interim president and CEO of 340B Health, an organization representing hospitals that participate in the 340B program.

340B Health’s member hospitals have already reported “they have had to cut back on services and have had to forgo hiring or lay off doctors, nurses, pharmacists, and other healthcare professionals,” Testoni said.

Earlier this week, the administration bumped up the implementation date for changes to the 340B program that would set price ceilings and add civil monetary penalties for manufacturers—two changes the AHA has supported for some time.