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Site-neutral payments: The Supreme Court weighs in

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The American Hospital Association and other hospitals have spent the last few years disputing the CMS decision to expand its site-neutral pay policy. Now the Supreme Court has weighed in.

The highest court in the nation decided June 28 not to hear the association's appeal of a change of the 2019 Outpatient Prospective Payment System Rule that reduced the pay rate for services provided at off-campus provider-based departments and clinics, upholding the policy. While the association has decried the payment decision since it was proposed, ASC executives have lauded efforts by HHS and CMS to level the playing field with site-neutral payments.

"Medicare has closed the gap between the inpatient and the hospital outpatient reimbursement rates, effectively eliminating any monetary incentive to perform a total knee replacement as an inpatient case," said Matt Reigle, associate principal of ECG Management Consultants during a virtual session at the Becker's 18th Annual Spine, Orthopedic and Pain Management-Driven ASC + The Future of Spine Conference.

The association and other hospitals sued CMS in 2019 to halt the policy, and a federal judge initially agreed that CMS overstepped its authority. But in 2020, the U.S. Court of Appeals for the District of Columbia Circuit reversed the decision, and the association, along with other hospitals, appealed to the Supreme Court. The high court's decision not to hear the case upholds site-neutral pay cuts.

CMS will likely go further to shift outpatient services into the lowest cost settings. In 2021, the agency formalized a plan to eliminate the inpatient-only list in the next three years, which prevents CMS from paying for procedures in the ASC, a move the association also has criticized. While the ASC-payable list remains intact, the actions by CMS give administrators hope for driving up patient volume in the future.

"In a traditional sense, ASCs receive a smaller reimbursement for the same service that can be performed at an HOPD," said Andrew Lovewell, administrator of the Surgical Center at Columbia (Mo.) Orthopaedic Group. "However, the site-of-service differential is narrowing greatly. With a proposal to eliminate the inpatient-only list and allow more procedures to become available for ASCs to perform them, I foresee a bright future in the ASC space."

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