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HEALTH CARE LAW

societies; and hospitals in Michigan, Maine, CMS, however, failed to follow the As CMS now attempts to drive business
and Washington filed a lawsuit against Alex M. requirements in these statutes as the 2019 Final away from hospital-owned locations to
Azar II, in his official capacity as Secretary of Rule purports to do precisely what Congress freestanding facilities, the lawsuit against CMS
Health and Human Services. expressly prohibited: CMS seeks to reduce demonstrates that providers will fight back
The lawsuit asserts that Congress laid out a total payments for covered hospital outpatient to stop the implementation of ill-conceived
clear distinction between excepted off-campus services for 2019 by hundreds of millions of policies like site neutrality. The lawsuit also
provider-based departments, which meet dollars by targeting a select group of services has broader implications regarding CMS’
the specified grandfathering requirements for non-budget neutral payment adjustments. authority to make payment adjustments, and
mentioned above, and non-excepted off- If CMS wants to make cuts to payment rates in it remains to be seen how the court addresses
campus provider-based departments, and order to control unnecessary increases in the this far-reaching issue.
that 42 U.S.C. §1395l(t)(21)(C) makes clear volume of hospital services, it must do so across
that services provided at excepted and the board, to all services and items under the
non-excepted off-campus provider-based OPPS, by using the conversion factor. If CMS Laura Fryan is a health care attorney
departments should be paid pursuant to instead wants to make adjustments to payment at Brouse McDowell LPA. She solves
different payment systems. But, despite these rates for specific services, it must do so in a complex problems for health care
statutes, the 2019 OPPS Final Rule effectively budget-neutral manner. providers, hospitals, health plans,
abolishes any distinction between excepted In sum, the lawsuit alleges that CMS has and health care companies. She
and non-excepted entities by subjecting them acted in clear violation of its statutory authority advises clients about any issue that is important
both to the same payment system and rate. for two separate reasons: (i) the site neutral to them, including HIPAA, Stark and Anti-Kickback
The lawsuit supports its argument against policy violates the Medicare statute’s mandate compliance, vendor agreements and employment
the site-neutrality rule by noting that Congress of budget neutrality; and (ii) the site neutral contracts, overpayments and government
previously established a structure for CMS policy violates the statutory mandate that investigations, reimbursement from commercial
to make annual Medicare payment changes excepted and non-excepted provider-based and government payors, facility bylaws and peer
for hospital outpatient covered services. The departments must be treated differently. The review plans, and state and federal licensing. Laura
Medicare statute authorizes CMS, on an plaintiffs are seeking an order for preliminary also facilitates transactions, including joint ventures,
annual basis, to review and revise the “groups, and permanent injunctive relief vacating and leasing of physician practices, and the buying and
the relative payment weights, and the wage barring CMS from enforcing the changes selling of hospitals, physician groups, and other
and other adjustments ... to take into account made to the OPPS for 2019, requiring CMS health care related entities. She can be reached at
changes in medical practice, changes in to conform its payment policies and conduct (330) 434-6785 or LFryan@Brouse.com.
technology, the addition of new services, new to the requirements of the Medicare Act, and
cost data, and other relevant information and ordering that CMS provide immediate payment
factors.” See 42 U.S.C. §1395l(t)(9)(A). But the of any amounts improperly withheld as a result Nick Kopcho is a health care and
statute also includes the critical requirement of the unauthorized conduct described above. litigation attorney at Brouse
that any such adjustments be budget neutral. Site neutrality represents a drastic change McDowell LPA. He routinely
See 42 U.S.C. §1395l(t)(9)(B). Specifically, in policy for CMS and significantly slashes handles health care provider
CMS may not reduce Medicare Part B payments to hospitals with grandfathered contracting and reimbursement
spending by selectively slashing the payment off-campus provider-based departments. The issues, all types of insurance recovery matters,
rates for specific types of services. implication of site neutrality is that hospitals and business litigation for small to large
If CMS wishes to make non-budget-neutral will no longer receive much of an added benefit businesses. He has been a CMBA member since
cuts to payments under the OPPS, the statute from a reimbursement perspective for services 2012. He can be reached at (216) 456-3853 or
also provides a separate mechanism for the at an off-campus provider-based department. NKopcho@Brouse.com.
agency to do so. First, CMS must “develop a
method for controlling unnecessary increases
in the volume of covered [hospital outpatient fairness (/fernəs/) noun 1. Even-handed; treating people in a way
department] services.” See 42 U.S.C. §1395l(t) that is right. 2. An expectation imprinted in the DNA of all
(2)(F). Once the method is identified, CMS primates, including human disputants.
can make non-budget-neutral adjustments
to address those unnecessary increases in Jerome F. Weiss, Mediator
volume — but only through across-the-board
adjustments to all items or services paid under
the OPPS. Specifically, if CMS determines
that the “volume of services ... [has] increased Facilitating dispute resolution
beyond amounts established through those for individuals and institutions
methodologies,” CMS “may appropriately Tel 216.589.9995
adjust the update to the conversion factor Fax 216.589.9723
otherwise applicable in a subsequent year.” See www.mediate.com/mediationinc

42 U.S.C. §1395l(t)(9)(C).
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