American Hospital Association Leads Lawsuit Against HHS Over Medicare Payment Cuts

The American Hospital Association (AHA) joined with the Association of American Medical Colleges (AAMC) and three healthcare facilities this week in filing a lawsuit against the Trump administration, alleging new outpatient payment rules put an unfair burden on a growing segment of the healthcare industry. Alex Azar, the cabinet secretary in charge of HHS, is the named defendant in the suit.

The final rule for the 2019 Medicare Outpatient Prospective Payment System was announced last month. Included was a new site-neutral payment policy, which eliminates higher rates of reimbursement currently offered to hospitals for certain services. The revised rule is expected to slash Medicare payments for patient visits to hospital outpatient departments in off-campus facilities by 60 percent.

The lawsuit maintains the federal directive is executive action in violation of the law.

“These cuts directly undercut the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care,” Rick Pollack, president and CEO of the AHA, noted in a press release.

The plaintiffs in the case further note that the changes are likely to cause disproportionate harm to low income patients, particularly in inner cities and rural areas, since they are more likely to rely on the services provided by hospital outpatient clinics.

“It is alarming that CMS continues to propose cuts that will harm the teaching hospitals that provide care to the most vulnerable patients, including Medicare beneficiaries,” said Darrell G. Kirch, president and CEO of the AAMC. “Patients who seek care at teaching hospital off-campus outpatient departments often can only find care at these institutions.”

At a healthcare symposium hosted by the American Enterprise Institute this week, Azar reiterated his support for the site-neutral payment model.

In addition to AHA and AAMC, the plaintiffs in the lawsuit are Michigan’s Mercy Health Muskegon, Washington’s Clallam County Public Hospital, and Maine’s York Hospital.