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A federal judge yesterday  in favor of the AHA and hospital organizations saying that the Centers for Medicare & Medicaid Services exceeded its statutory authority when it reduced payments for hospital outpatient services provided in off-campus provider-based departments grandfathered under the Bipartisan Budget Act of 2015. 

U.S. District Court Judge Rosemary Collyer said, CMS was “not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain providers.” The Court vacates the rule and will refer to CMS to determine remedies. The parties will be required to submit a joint status report by Oct. 1, 2019, to determine if additional briefing on remedies is required. 

The AHA, joined by the Association of American Medical Colleges and several member hospitals, in December filed a lawsuit against the Department of Health and Human Services for finalizing a policy to phase-in, over two years, a reduction in payments for hospital outpatient clinic visit services furnished in off-campus provider-based departments that are grandfathered (excepted) under Section 603 of the Bipartisan Budget Act of 2015. The cut was included in CMS’s outpatient prospective payment system final rule for calendar year 2019.

“We are pleased with the District Court’s decision that the Department of Health and Human Services exceeded its statutory authority when it reduced payments for hospital outpatient services provided in grandfathered off-campus provider-based departments,” said the AHA and AAMC in a statement. “The ruling, which will allow hospitals to maintain access to important services for patients and communities, affirmed that the cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the many real and crucial differences between them and other sites of care. Now that the court has ruled, it is up to the agency to put forth remedies for impacted hospitals and the patients they serve.”