The American Hospital Association (AHA) has sued the U.S. Department of Health and Human Services (HHS) to prevent changes to how Medicare reimburses care in hospital outpatient departments.

  • The lawsuit claims the Centers for Medicare & Medicaid Services (CMS) violated its statutory authority and will reduce total hospital payments by $720 million in 2020.
  • The final rule revises the Medicare Hospital Outpatient Prospective Payment System (OPPS) to address concerns about growth in hospital outpatient expenditures, with an effective date of Jan. 1, 2019.
  • The AHA says that reducing payment to hospital outpatient facilities will harm a patient population that largely is poor, medically at-risk, and make frequent hospitalizations and ED visits.

A recent lawsuit filed by medical associations seeks to stop the Centers for Medicare & Medicaid Services (CMS) from implementing a new payment rule. The change would shift funding away from hospital outpatient departments (HOPDs).

Plaintiffs claim CMS violated its statutory authority with changes that will reduce total hospital payments by $380 million in 2019 and $760 million in 2020, according to a civil complaint filed Dec. 4, 2018, in the United States District Court for the District of Columbia. (The lawsuit can be viewed at: http://bit.ly/2AYwvHo.)

The American Hospital Association (AHA), the Association of American Medical Colleges (AAMC), and three hospitals filed the lawsuit against Health and Human Services (HHS) Secretary Alex M. Azar to stop HHS from implementing changes to the Medicare Hospital Outpatient Prospective Payment System (OPPS).

CMS revised OPPS to address longstanding concerns about growth in hospital outpatient expenditures, according to the final rule, “Medicare Program: Changes to Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs,” effective Jan. 1, 2019. (The rule is available at: http://bit.ly/2S4A4CO.)

The OPPS changes will affect hospitals’ ability to care for patients with more severe conditions in their local communities, says Lawrence Hughes, assistant general counsel for AHA in Washington, DC.

“For example, some hospitals might need to limit the number of hours they operate these hospital-based clinics, so that would mean that patients would not be able to get services at particular times,” Hughes says. “Some services might have to be consolidated into particular locations, so patients would have to travel longer distances to get some services. There might be a lack of ability to expand the capacity to serve more patients in those locations.”

Medicare patients in HOPDs are more at risk due to poverty, frequent hospitalizations and ED visits, and multiple or severe chronic conditions, including end-stage renal disease, according to an AHA study. (The study can be found at: http://bit.ly/2RJu8PP.)

Currently, hospital outpatient clinics are reimbursed by Medicare at a higher rate than nonhospital outpatient clinics. The final rule offers an example of a physician visit in which a regular physician office would be paid $109.46 by Medicare, while the hospital outpatient clinic would be paid $184.55 — about 68% more.

“Taking into account that this payment discrepancy occurs across tens of millions of claims each year, this is a significant source of unnecessary spending by Medicare beneficiaries,” the final rule states.

“We understand that many off-campus departments converted from physicians’ offices to hospital outpatient departments without a change in either the physical location or a change in the acuity of the patients seen,” the final rule says. “To the extent that similar services can be safely provided in more than one setting, we do not believe it is prudent for the Medicare program to pay more for these services in one setting than another.”

In the lawsuit, AHA and AAMC claim that CMS is not authorized to enact cost-cutting strategies this way because it violates the Medicare statute’s mandate of budget neutrality. At press time, CMS had not responded to Hospital Case Management’s requests for comment.

The lawsuit was a last resort.

“These changes were proposed as part of the OPPS proposed rule, and we commented very negatively on those proposed changes,” Hughes says. “Unfortunately, CMS decided to go forward with them, and that’s why we’re bringing the lawsuit.”

AHA filed other lawsuits against HHS over the past few years, including a lawsuit in September 2018 related to a delayed final regulation on the price ceiling and penalties for drug manufacturers that have provided discounts to participating hospitals, Hughes notes.

“We bring litigation only as a last resort,” he explains. “We have filed lawsuits that were very successful, including one from 2014 related to a backlog in payment appeals at the administrative law judge level of appeals.”

Individual hospital systems might also wish to address their concerns about the change to members of Congress. “Talking to your congressman and senator about the impact in your community is very important, and we encourage members to do that, as well,” he says.

Other changes in OPPS include quality priorities that reinforce care coordination and case management, says Ellen Fink-Samnick, MSW, ACSW, LCSW, CCM, CRP, principal of EFS Supervision Strategies in Burke, VA.

“It has long been said that care is moving outside of the acute care hospital to ambulatory and community sites, and this is becoming a reality,” Fink-Samnick says. “Disparity of reimbursements between IPPS [inpatient prospective payment system] and OPPS are being addressed, and that’s the intent.”

The OPPS final rule could affect patients’ options, and case managers need to be aware of that possibility, suggests Mary McLaughlin Davis, DNP, ACNS-BC, NEA-BC, CCM, a senior director of care management at Cleveland Clinic in Ohio. Davis also is the immediate past president of the Case Management Society of America (CMSA).

Hospitals in underserved communities have long been the safety net for patients.

“If a patient is from a rural area with one hospital, the patient’s choices might not be as great as in other communities,” she says. “Or if patients have few choices, it’s important for them to understand what their choices are.”

Helping patients make an informed decision takes more effort and time than just giving them a list of potential outpatient facilities, she adds.

Case managers also might see more of a push toward a care continuum focus under the final rule’s quality priorities and The National Quality Initiatives for the U.S. Department of Health and Human Services, which include the following:

  • making care safer by preventing errors in care delivery;
  • strengthening person and family engagement in care aligned with patient goals;
  • promoting effective communication and coordination of care, including medication management;
  • promoting effective prevention and treatment of chronic disease, including mental health and substance use disorders;
  • working with communities to promote best practices of healthy living;
  • making care affordable, partly through appropriate use of healthcare resources. (http://bit.ly/2S4A4CO)

“They want patients to be informed and to have lower cost of care while still maintaining the quality,” Davis says.

Interdisciplinary teamwork, improved patient education, case management, and value-based care are ways to accomplish that goal.

“Case managers will need to be more well-versed in a greater foundation of practice that includes models, which make use of interprofessional teams, including incorporating nurses, social workers, and pharmacists,” Fink-Samnick says. “These models will need to be used in outpatient/ambulatory care, as readily as inpatient care.”

Also, hospital case managers should partner with payer case managers and providers to assure smoother care transitions and handoffs, she adds.

“We understand how important it is that patients have a follow-up visit with their primary care provider when they’re discharged,” Davis says. “It’s really about bringing that interdisciplinary level of care to the ambulatory setting, too, for lower costs and higher value.”