Federal Judge Rules CMS Exceeded Authority in Hospital Clinic Cuts

September 18, 2019

A federal judge yesterday ruled in favor of the American Hospital Association (AHA) and hospital organizations saying that the Centers for Medicare & Medicaid Services (CMS) exceeded its statutory authority when it reduced payments for hospital outpatient clinics grandfathered under the Bipartisan Budget Act of 2015.

It is unclear how quickly the court decision will affect cuts occurring under the existing policy. The Court vacated the rule and referred the decision back to CMS to determine remedies. The parties will be required to submit a joint status report by Oct. 1, 2019, to determine if additional briefing on remedies is required.

The ruling affects a CMS rule that beginning January 1, 2019, reduced payment to grandfathered off-campus hospital clinics by 30 percent, to 70 percent of the regular outpatient payment rate. Under CMS’s proposed 2020 outpatient proposed rule, clinic services would be reduced by an additional 30 percent, to 40 percent of the regular outpatient rate. WSHA earlier estimated the change will cut payments to Washington hospitals for services to Medicare enrollees by an estimated $15 million for 2019, $30 million or more for 2020 and each succeeding year, and about $424 million over a ten-year period. The American Hospital Association and hospitals, including Olympic Medical Center challenged the cuts in court on the basis that Congress did not authorize CMS to apply site-neutral cuts to grandfathered clinics, only new facilities opened after November 2015.  (Andrew Busz, andrewb@wsha.org).


Contact Us

Washington State Hospital Association
999 Third Avenue
Suite 1400
Seattle, WA 98104

Map / Directions

206.281.7211 phone
206.283.6122 fax


Staff List