Becker's Hospital Review

8 CFO / FINANCE Hospitals win challenge to site-neutral pay cuts By Ayla Ellison A Washington, D.C., federal judge ruled Sept. 17 that CMS over- stepped its authority last year when it expanded a site-neutral pay policy that cut Medicare payments for hospital outpatient visits by hundreds of millions of dollars. Under the 2019 Medicare Outpatient Pro- spective Payment System final rule, CMS made payments for clinic visits site-neutral by reducing the payment rate for evaluation and management services provided at off-campus provider-based departments by 60 percent. In an attempt to overturn the rule, the Amer- ican Hospital Association, the Association of American Medical Colleges and dozens of hospitals across the nation sued HHS. ey argued CMS exceeded its authority when it finalized the payment cut in the OPPS rule. ey claimed the site-neutral payment pol- icy violates the Medicare statute's mandate of budget neutrality and Congress' directive that excepted provider-based departments to be reimbursed at OPPS rates and not at lower payment rates CMS applies. HHS argued that under the Bipartisan Bud- get Act of 2015 it has authority to develop a method for controlling unnecessary increas- es in outpatient department services. Since "method" is not defined in the statute, the government argued its approach satisfies generic definitions of the term. U.S. District Judge Rosemary M. Collyer rejected that ar- gument in granting the hospitals' motion for summary judgment Sept. 17. Oentimes, the meaning of words or phrases only becomes evident when placed in context and with a view to their place in the statutory scheme, the judge wrote in the 28-page deci- sion. "at context does not make clear what a 'method' is, but it does make clear what a 'method' is not: It is not a price-setting tool, and the government's effort to wield it in such a manner is manifestly inconsistent with the statutory scheme." e judge concluded that CMS failed to follow the statutory process for setting Medicare pay- ment rates when it finalized the OPPS rule. "CMS believes it is paying millions of tax- payer dollars for patient services in hospital outpatient departments that could be provid- ed at less expense in physician offices. CMS may be correct. But CMS was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payments only for certain services performed by certain pro- viders," the judge wrote. e decision will stop CMS from reducing re- imbursement rates to hospitals by $380 mil- lion this year and $760 million in 2020. e hospitals had also requested a court order requiring CMS to issue payments improperly withheld due to the final rule. Ms. Collyer did not grant that request. Instead, she asked the parties to submit a joint status report by Oct. 1 to determine if additional briefings are nec- essary to determine an appropriate remedy. "e ruling, which will allow hospitals to maintain access to important services for patients and communities, affirmed that the cuts directly undercut the clear intent of Con- gress to protect hospital outpatient depart- ments because of the many real and crucial differences between them and other sites of care. Now that the court has ruled, it is up to the agency to put forth remedies for impact- ed hospitals and the patients they serve," the groups said in a joint statement. n Board of Arizona safety-net hospital backtracks on CEO's $100,000 pay hike after local paper inquires By Morgan Haefner T he board of Valleywise Health, a public and nonprofit safety-net health system in Phoenix, postponed discussions about increasing its CEO's pay after The Arizona Republic inquired about the hike Sept. 24. A proposal to hike pay for Valleywise President and CEO Steve Purves by $100,000 was removed from the board's Sept. 25 agenda after the newspa- per raised questions to the board. The draft agreement would have increased Mr. Purves' annual pay to $700,000 with a discretionary performance bonus of up to $175,000, according to the report. The agenda proposal would have also boosted Mr. Purves' pay another $70,000 to $770,000 beginning Sept. 25, 2020. Longtime board member Sue Gerard came out against the raise. She told The Arizona Republic she worries how taxpayers would perceive a $100,000 salary boost for the public institution's leader. She also raised concerns about the speed at which the resolution would have been brought to a vote without adequate public input. Board Chairman Mark Dewane said the proposal was removed from the board agenda as negotiations with Mr. Purves continue. The resolution could appear on a future agenda, officials told the newspaper. Mr. Dewane credited Mr. Purves with leading a $170 million financial turn- around at Valleywise, as well as a successful 2014 bond package. "It is our intent to establish his compensation well within the market ranges for CEOs in similar organizations," Mr. Dewane said in a written statement to The Arizona Republic. "I do want to recognize how important our current president and CEO Steve Purves has been to the success of this institution. ... In today's world, you have to pay for talented and tenured professionals and that's what we intend to do." n

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