House GOP floats hospital-payment reform

Healthcare policy watchers say a new House Republican proposal to overhaul the way that Medicare pays hospitals for short stays signals hope that the new GOP-led Congress may be willing to address complex healthcare issues with thoughtful approaches.

The provisions of the discussion draft from the House Ways and Means health subcommittee could resurface during Congress’ next effort to repeal and replace Medicare’s sustainable growth-rate formula for paying physicians, with the latest patch set to expire at the end of March. That annual exercise has become a vehicle for other healthcare proposals because it’s virtually guaranteed to move.

“This should be viewed as the latest step in the long-running and very difficult debate about how to deal with short stays at hospitals,” said Eric Zimmerman, principal at McDermott & Consulting.

The Ways and Means discussion draft proposes a payment system for hospital stays that would be adopted for fiscal 2020, blending the current payment systems for inpatient and outpatient care to create a unified system. In the interim, the CMS would develop a transitional per-diem payment system for short hospital stays. It also would place restrictions on recovery audit contractor audits until the new payment system could be adopted.

The draft also includes other proposals that may be part of the healthcare debate. One is a partial lifting of the moratorium on expansion of physician-owned hospitals included in the Patient Protection and Affordable Care Act, supported by Rep. Sam Johnson (R-Texas). Another proposal by Rep. Diane Black (R-Tenn.) would establish a nationwide bundled-payments program.

Ilisa Halpern Paul, president of Drinker Biddle’s District Policy Group, said these other proposals are carrots to bring members on board with the broader discussion about overhauling Medicare hospital payments.

The American Hospital Association said it was still studying the proposal. The Federation of American Hospitals raised concerns about lifting the moratorium on physician-owned hospitals, which it said would bring back the perils of physician self-referral arrangements.

Halpern Paul said it’s welcome news that Republicans seem to be seriously engaging on the Medicare hospital payment front. “It’s clear that a lot of thought and work went into the construction of the bill,”she said.

“It’s clear that a lot of thought and work went into construction of the bill.”