Recent efforts by the nation's hospital industry illustrate the difficulty of controlling expenditures in the nation's $700 billion Medicare program. Congress included in the Bipartisan Budget Act of 2015 (BBA), a clear, bipartisan message that, to the extent similar services can be safely provided in multiple settings, it is not prudent for Medicare to pay more in one setting compared to another. Currently, the Centers for Medicare and Medicaid Services (CMS) is proposing two very narrow rule changes that will carry out Congress' clear intent and implement site-neutral payments.
The first of these changes equalizes outpatient doctors' office visits across sites of service. Historically, hospitals have been paid disproportionately more for physician services than when the same service is provided in an independent physician's office. After careful analysis, CMS has rightly concluded that payment disparity for office visits is driving services to the most expensive sites of service. CMS presents compelling data that Medicare has spent billions of additional dollars in unnecessary facility payments to hospitals due to this payment imbalance, which also results in hundreds of millions of dollars more in beneficiary out-of-pocket costs each year. Reducing this unnecessary volume is the basis for CMS's proposed rule.
