News & Updates

July 21, 2020

Alliance Applauds Federal Appeals Court Decision Upholding CMS Site Neutral Payment Changes

Decision reverses lower court ruling on 2019 OPPS Rule, allows CMS
to move forward with payment parity across sites of service

Washington, DC — The Alliance for Site Neutral Payment Reform (Alliance) today applauded a decision issued by the U.S. Court of Appeals for the District of Columbia Circuit to overturn a lower court’s ruling that blocked implementation of the Centers for Medicare & Medicaid Services’ (CMS) site-neutral payment policy for hospital provider-based departments included in the 2019 hospital outpatient prospective payment system (OPPS) final rule.

By revoking the lower court’s decision, the appellate court has ensured that CMS’ efforts to implement payment parity for routine Evaluation and Management (E/M) across sites of service can move forward. The opinion noted that hospital outpatient departments can be paid up to 114% more than independent physician practices. This ruling is a victory for community-based providers, payers, employers and, most importantly, patients.

This case hinged on whether CMS had the authority to impose site neutral payment policies and if such policies must adhere to Medicare’s budget-neutrality requirements. The decision said “We therefore hold that the agency acted within its statutory authority” to allow service-specific, non-budget-neutral  reimbursement reductions.

Site neutral payment reform decreases Medicare and commercial spending, ensures patients receive the right care in the right setting, and lowers taxpayer and beneficiary costs. In light of the ruling, the Alliance urges policymakers to continue working to equalize payments across sites of service for all clinically appropriate outpatient services.


CMS included site neutral payment reforms in its 2019 Hospital Outpatient Prospective Payment System (OPPS) final rule. However, a coalition of hospitals led by the American Hospital Association challenged the rule in federal court. In September 2019, the U.S. District Court for the District of Columbia ruled that the agency had overstepped its statutory authority in making the changes, arguing that it does not have the power to make changes that are non-budget neutral. The federal government then appealed the ruling to the U.S. Court of Appeals for the District of Columbia Circuit which issued its decision today.

Site neutral payments generate significant healthcare savings that directly and positively impact beneficiaries, the Medicare program, employers and American taxpayers. According to CMS , site neutral payments for Evaluation and Management (E/M) services were projected to save the Medicare program an estimated $300 million and lower patient co-payments by $80 million in 2019.

To view the Appeals Court ruling, CLICK HERE.


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