Congress Must Resist Hospitals' Efforts Against Site-Neutral Payments

Congress Must Resist Hospitals' Efforts Against Site-Neutral Payments
Matt Barnard/Tulsa World via AP
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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.

The second proposed change is with respect to additional services provided by hospitals at off-campus sites. To minimize disruption to existing services, hospitals were granted a waiver to continue billing under the outpatient prospective payment system (OPPS) for facilities that were acquired prior to passage of the BBA. Congress made it clear in the BBA that this exception allowing billing under the OPPS was only for those services “actually provided” prior to November 2, 2015.

Medicare practice patterns suggest that hospitals have been shifting services to and expanding services at sites granted waivers under the BBA, thereby increasing costs. In opposing the rule change, hospitals are claiming that they are being subjected to payment cuts outside the scope of the BBA. This is false. The proposed changes only impact service expansion — there is no payment change to services historically provided at these sites. Furthermore, these changes do not apply to inpatient services or outpatient services performed on a hospital campus.

CMS estimates cost savings from leveling payments for office visits alone will be $760 million — $610 million directly to Medicare and $150 million by Medicare beneficiaries in the form of reduced co-payments. 

To protect their competitive advantage, the hospital industry has shifted into overdrive to lobby against CMS’s proposed rule. One such effort is a letter that circulated  in the House of Representatives that said the “clinical family” proposal “could unfairly penalize grandfathered off-campus HOPDs that expand or diversify the critical services they offer to meet the changing needs of their patients.” But that was precisely the point of the bipartisan legislation — to eliminate hospitals’ incentives to reap higher profits by expanding services that were not provided at off-campus sites prior to November 2, 2015. 

Ensuring the solvency of Medicare hinges on allowing CMS to curb system abuses under authority specifically granted to it by Congress under the BBA. CMS has done the necessary research with respect to these site-neutrality reforms and produced convincing data showing how it can save the Medicare program and its beneficiaries nearly a billion dollars per year. Congress should be applauding CMS for these actions and pushing the agency to go further to preserve patient access to high-quality, cost-effective care at the site of service of their choosing.

Deepak Kapoor M.D. is Chairman and CEO of Integrated Medical Professionals, PLLC, Clinical Associate Professor of Urology at Icahn School of Medicine at Mount Sinai, and Chairman of Health Policy at LUGPA.

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