Andris Robeznieks |February 15,2016
The House of Representative’s Energy and Commerce Committee is gathering feedback in advance of possible action on a new Medicare site-neutral payment policy that lowers hospital reimbursement for services performed at off-campus hospital outpatient departments (HOPD) acquired after Nov. 2, 2016.
Most views on the new policy are already known. The American Hospital Association (AHA) was strongly critical of it. But at least one expert recommended that site neutrality not cause hospitals to lose focus on their long-term strategies for population health, higher patient satisfaction, and reducing costs.
“All is not lost,” wrote Greg Anderson in a Nov. 5 blog post. Anderson, a partner for healthcare consultancy Horne and co-author of the 2012 e-book The Financial Professional’s Guide to Healthcare Reform, noted that the policy neutralizes some financial benefits for hospitals acquiring physician practices and ambulatory surgery centers. It will not, however, affect payments for services delivered on a hospital campus, in emergency departments or at rural health clinics.
The site-neutral policy was included in the Bipartisan Budget Act of 2015 signed by President Barack Obama on Nov. 2.
Anderson noted that the policy, which reduces HOPD payment levels to those of physician offices and ambulatory surgery centers, should not have been “completely unexpected.” The Medicare Payment Advisory Commission (MedPAC), the primary Medicare advisory body to Congress, has urged legislators to move in this direction for years, Anderson said in emailed comments.
Meanwhile, hospital advocates argue that such consolidation is necessary to successfully implement the Affordable Care Act.
Congressional Concerns
In a Feb. 5 letter to the healthcare community, Rep. Fred Upton (R-Mich.), chairman of the Energy and Commerce Committee and Rep. Joseph Pitts (R-Pa.) chairman of the Health Subcommittee did not appear to buy this argument.
Their letter cited how Medicare pays $58 to $86 more for an E&M visit when it’s done at an HOPD compared to a similar visit at a physician office. The congressional leaders noted concerns “that this payment inequity drove the acquisition of standalone or independent practices and facilities by hospitals, resulted in higher costs for the Medicare system and taxpayers, and also resulted in higher cost-sharing in some settings than others.”
Upton and Pitts also quote from a December Government Accountability Office report which noted that “regardless of what has driven hospitals and physicians to vertically consolidate, paying substantially more for the same service when performed in an HOPD rather than a physician office provides an incentive to shift services that were once performed in physician offices to HOPDs after consolidation has occurred.”
Provider Split
Site neutrality has its advocates in the healthcare community, such as the Alliance for Site Neutral Payment Reform, which includes the primary-care specialty societies the Academy for Family Physicians and American College of Physicians, payer organizations, and cancer care advocates and providers.
In a Jan. 16, 2015 letter to House leaders, the alliance reported that a colonoscopy in a doctor’s office costs $625 compared to $1,383 in an HOPD.
While primary-care societies may be aligned, oncologists are not speaking with one voice on the issue. Last year, the American Society of Clinical Oncology (ASCO) issued a policy statement noting that arguments for site neutrality focus on flawed comparisons.
“Reductions in payment levels for oncology care threaten to exacerbate the inadequacy of Medicare reimbursement policies to support the full scope of services that patients with cancer require,” The ASCO letter stated.
Opposition to the move toward site–neutral payment is led by AHA, which called for flexibility–particularly in reimbursing for care delivered in a dedicated emergency department (ED). EDs provide diagnostic and therapeutic non-emergency services such as radiology, laboratory testing, medication and infusions, Thomas Nickels executive vice president of AHA, noted in a letter.
“Beneficiaries often come to [dedicated] EDs requesting non-emergency services, such as prescription refills, immunizations, blood pressure checks or treatment for minor illnesses or injuries,” Nickels wrote, adding that none of these services should be subject site-neutral payment reductions.
The new policy has a so-called grandfather clause allowing facilities that billed as an HOPD before the president signed the bill to continue to do. The AHA asked what will happen if the facility has to move because of a revision in a flood plain, expiration of a lease, population shifts or other circumstances. The new facility will have the same Medicare provider number and billing history, but will it lose its ability to bill as an HOPD when it changes its address?
Upton and Pitts wrote that the feedback they’ve received so far includes requests for making no changes to the law, make it retroactive to include grandfathered facilities, and not to reverse the savings the law is meant to achieve – meaning that any changes that may decrease savings “must be offset with reductions in the same provider space.”
Hospital Benefits?
Anderson saw potential benefits for hospitals. The reduction in costs for ambulatory services could help hospitals involved in shared savings or Medicare Advantage plans. Instead of reflexively pushing for growth, Anderson said hospitals could downsize and return some facilities to their original group practices and reduce duplication of services and equipment. Downsizing may also boost patient satisfaction by simplifying registration and billing, he said.
The change in reimbursement methodology will impact hospitals’ strategies for buying off-campus freestanding ancillary facilities such as sleep labs and ambulatory surgery, imaging, infusion, radiation therapy, and pain-management centers, Anderson said.
Other developments will follow.
“Changes in the hospital acquisition dynamics in certain areas may open the market for non-hospital acquirers to acquire and consolidate these facilities,” Anderson said. “A hospital that maintains a remote location of the hospital for the furnishing of inpatient hospital services may be able to use that location to expand the reach of its on-campus facilities.”
Source: HFMA