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Association Files Amicus Brief in Lawsuit to Overturn Site-Neutral Policy

America’s Essential Hospitals has filed an amicus brief in a lawsuit to overturn a site-neutral payment policy in the calendar year 2019 Medicare Outpatient Prospective Payment System (OPPS) final rule.

The December 2018 lawsuit, filed in the United States District Court for the District of Columbia by the American Hospital Association and the Association of American Medical Colleges, asserts that the policy adopted by the Centers for Medicare & Medicaid Services (CMS) is unlawful and unenforceable because it conflicts with federal statutes and violates congressional intent.


In Section 603 of the Bipartisan Budget Act of 2015, Congress dramatically reduced Medicare payments to hospital off-campus provider-based departments (PBDs). Congress applied the new policy only to off-campus PBDs that began billing Medicare on or after the law’s Nov. 2 enactment date. Through Section 603, Congress intentionally grandfathered existing off-campus PBDs, preserving payment under the Medicare OPPS for those “excepted” clinics.

In the 2019 OPPS final rule, CMS extended this site-neutral payment policy to excepted clinics. Specifically, CMS cut reimbursement for the most common service at excepted PBDs, the clinic visit, by 30 percent in 2019, and the agency plans to cut reimbursement by an additional 30 percent in 2020. CMS finalized this policy despite widespread criticism, including by America’s Essential Hospitals.

Our Ask

We filed our amicus brief to ensure the federal district court understands the real-world impact CMS’ policy will have. Not only will the policy limit access to care, particularly for underserved populations, it also will disrupt essential hospitals’ efforts to transform their delivery systems to promote quality, value, and efficiency in care settings that work best for patients. Congress recognized the value of off-campus PBDs in crafting the grandfathering provisions of Section 603. America’s Essential Hospitals asked the court not to allow CMS to reverse Congress’ carefully considered policy choice and to rule that CMS’ expansion of site-neutral policy is invalid.

What’s Ahead

Separate from this lawsuit, a group of individual hospitals—including several essential hospitals—filed a lawsuit in the D.C. District Court in January 2019 to overturn CMS’ site-neutral policy. On Feb. 27, the court filed an order requesting that the two lawsuits be consolidated. The parties of both lawsuits must now either present the judge with reasons that consolidation should not occur or propose a schedule for consolidated briefing.


Contact Senior Director of Policy Erin O’Malley at or 202.585.0127.


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