AHA legal analysis sees compliance risk in site-neutral rule proposal

Statue holding justice scales

The American Hospital Association has renewed calls for the Centers for Medicare & Medicaid Services to delay implementation of the site-neutral provisions of the Bipartisan Budget Act on January 1, 2017, citing potential risk for hospitals to run afoul of the Stark law and Anti-Kickback statute.

Under the site-neutral rule, CMS would pay for services rendered in hospital outpatient departments at the same, lower rate it pays for physicians’ offices, according to a legal analysis (.pdf) commissioned by the group. The proposal has engendered controversy since its announcement, with physicians and hospitals taking opposing views on its merits, FiercePracticeManagement has previously reported.

The AHA, which has long objected to the change, now has further ammunition in its push to delay the rule’s implementation. Elements of the rule would make hospitals vulnerable to legal action under the Stark and Anti-Kickback laws restricting the provision by hospitals of free goods or services to referring physicians, according to the analysis.

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Senior Vice President and General Counsel for the AHA Melinda Hatton says the rule “puts the hospital community in an untenable position by creating unavoidable legal risks,” in an announcement. The analysis concludes that hospitals could suffer “significant implications” by bearing the extra cost of operating their outpatient department at “no cost to physicians.”

Adding the new concerns to a set of “additional flaws” the AHA sees in the rule has strengthened the group’s call for delay.

“Because CMS cannot finalize its proposal without forcing impacted hospitals to accept significant compliance risk, it must delay the implementation of the site-neutral policies in the proposed rule by at least one year,” wrote Tom Nickels, executive vice president of AHA, in a letter (.pdf) to CMS. He argued that hospitals would need more time to develop payment policies which would allow them to receive direct payments without running afoul of current compliance rules.