Olympic Medical Center became a named plaintiff in an American Hospital Association’s lawsuit against the federal government earlier this year. (Jesse Major/Peninsula Daily News)

Olympic Medical Center became a named plaintiff in an American Hospital Association’s lawsuit against the federal government earlier this year. (Jesse Major/Peninsula Daily News)

Feds claim ruling blocks payment to hospital clinics

Attorneys describe motion as ‘strange’

PORT ANGELES — The federal government has asked a judge who ruled in favor of Olympic Medical Center and other hospitals last month in its lawsuit against the Centers for Medicare and Medicaid Services to temporarily undo a key provision of the ruling because “there remains considerable doubt over the correct legal outcome” of the lawsuit.

In opposing filings filed Monday and Tuesday, lawyers representing hospitals around the country called the government’s motion “strange” and “remarkable.”

The government filed its motion to modify the ruling last week, arguing that U.S. District Judge Rosemary M. Collyer’s ruling in favor of Olympic Medical Center and other hospitals across the country last month created a “vacuum” that removed all methodology for calculating payments for service providers at off-site clinics.

The government has asked the court to modify its order to remand the rule back to the Centers for Medicare and Medicaid Services (CMS) without vacating the rule and asks the court to stay the order for at least 60 days while the Solicitor General considers an appeal.

Olympic Medical Center (OMC) became a named plaintiff in the American Hospital Association’s lawsuit against the federal government earlier this year, successfully arguing that CMS did not have the authority to implement a rule that would have cost OMC more than $47 million over the next decade.

CMS implemented the “site neutrality” rule in November, a move that cut Medicare reimbursements by 30 percent this year and 60 percent in future years at clinics that are more than 250 yards away from a hospital’s main campus.

“The Secretary’s motion for reconsideration is a strange document,” the hospitals wrote in a response Tuesday. “Unable to locate any defect in the order that this Court has entered, the Secretary decries the chaos that might have ensued if an entirely different ruling, one of his own imagining, had been issued instead.”

Olympic Medical Center had delayed expansion of its Sequim Campus because of the rule and has moved some primary care practice to the hospital’s main campus in Port Angeles.

In December 1,780 Clallam County residents wrote to CMS to argue against the cuts. There were about 3,000 total comments from residents all over the country.

In court papers filed in U.S. District Court for the District of Columbia on Monday, the hospitals oppose the government’s request.

“Defendant now makes a remarkable request: that the Court reconsider its vacatur decision ‘because there remains considerable doubt over the legal outcome’ and ‘because vacatur would cause serious disruptive consequences to the [Outpatient Prospective Payment System],” the American Hospital Association wrote in its opposition.

“In essence, Defendant seeks permission to continue to enforce the very portion of the Final Rule that this Court has already declared,” was implemented without the authority to do so.

The hospitals also argue that the vacated portion of the rule does not mean there are no rules for calculating payments for off-site clinics.

“Removal of the offending rate reduction simply means that the prevailing hospital payment rates continue to apply to clinic visits at excepted off-campus [provider-based departments] (just as Congress intended),” the hospitals argued.

“As this court has recognized, because this exception was implemented in a non-budget neutral manner, it is very simple for the agency to restore the outpatient hospital payment rates.”

Attorneys for the hospitals and the government were to submit a joint status report to the court by Tuesday, but as of Tuesday afternoon that document was not publicly available.

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Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at [email protected].

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