YORK, Maine — York Hospital is a plaintiff in a lawsuit filed by the American Hospital Association against the Department of Health and Human Services over reduced Medicare payments to hospitals with off-campus clinics.
The hospital is one of three joining the AHA and the Association of American Medical Colleges in seeking redress in the courts from a DHHS decision they say countermands the 2015 Budget Act. In that law, Congress passed language to pay a higher reimbursement rate to off-campus hospital clinics in operation before 2015.
The lawsuit claims such clinics are essentially grandfathered, according to law. Any clinics built after 2015 are reimbursed at a lower, physician practice rate. At issue is the fact that the DHHS Centers for Medicare and Medicaid Services in November ruled that all clinics, grandfathered or not, receive the lower rate. That rule is expected to go into effect Jan. 1.
CMS is phasing this in over two years, resulting in a payment reduction nationwide of $380 million each year in 2019 and 2020, according to the lawsuit.
President Jud Knox said he was precluded from speaking about the lawsuit, as it was a pending legal matter.
According to the lawsuit, York Hospital has 14 off-campus clinics that are grandfathered. Further, 54 percent of the hospital’s patients are receiving Medicare. The clinics, according to the suit, offer a range of services including psychiatric, oncology, urology, diabetes and cardiovascular care.
The lawsuit states that the higher rate is necessary, because these clinics offer much more than a doctor’s office does, often having specialized equipment on site so that patients in outlying areas do not have to go to the main campus for certain services.
“York will suffer immediate and concrete harm from the outpatient payment reductions set for in the Final Rule” of the CMS, the lawsuit states.
The lawsuit states that Congress, “to balance concerns of the differing payment rates and the trend toward hospitals acquiring physician practices, created two classes of off-campus providers.” Those acquired or built before 2015 were “deemed ‘excepted’” and were to be paid Medicare rates under the old system.
CMS in its rulemaking, according to the suit, “took the view that Medicare costs could be lowered if these same outpatient services were furnished in a less-expensive physician office setting” regardless of when they were built. The clinics can then be uncoupled from the main hospital and run independently. The CMS as of this week had not filed a written reply to the lawsuit, filed Dec. 4.
The AHA and the plaintiffs argue CMS is in essence ignoring a Congressional directive regarding pre-2015 clinics, which is “in clear violation of its statutory authority.”
“These hospitals were chosen for their geographic diversity to help the court understand the real-world impact of this policy on patients and communities across the country,” an AHA spokesperson said in a statement. “Hospitals could face some tough decisions about how best to continue providing services to their patients and communities in the face of the significant payment reductions imposed by the rule. These could include limiting hours of service or consolidating services at certain locations, which would mean that patients might have to travel greater distances to get the same services that they now get closer to home.
“These cuts violate the clear intent of Congress to protect hospital outpatient departments because of the real and crucial differences between them and other sites of care and HHS does not have the authority to substitute its own policy preferences for judgments of Congress.”
The plaintiffs are seeking a judicial order that the CMS’ action was illegal. Moreover, they are seeking a temporary and permanent injunction against CMS instituting its rule on Jan. 1. To date, there has been no judicial action on a temporary injunction.