Hos­pi­tals protest CMS plan to not pay new off-cam­pus de­part­ments

Modern Healthcare - - NEWS - By Shan­non Much­more

Hos­pi­tals are livid about the Obama ad­min­is­tra­tion’s plans to elim­i­nate their Medi­care pay­ments for ser­vices at new off-cam­pus out­pa­tient de­part­ments, say­ing it ig­nores the in­tent of Congress and will limit ac­cess to care.

Un­der an out­pa­tient payment rule pro­posed last week for 2017, Medi­care would not pay hos­pi­tals for most ser­vices pro­vided at off-cam­pus de­part­ments that started billing Medi­care af­ter Nov. 2, 2015. In­stead, physi­cians would be paid for ser­vices there at an en­hanced rate. And off-cam­pus de­part­ments that were al­ready billing Medi­care as of that date would not be paid for any ser­vices they add. They also would be cut off from all pay­ments if the fa­cil­ity is re­lo­cated or ex­panded.

Joanna Hi­att Kim, vice pres­i­dent of payment pol­icy at the Amer­i­can Hos­pi­tal As­so­ci­a­tion, said the pro­posal is not sus­tain­able for hos­pi­tals and would have a “hugely neg­a­tive im­pact on ac­cess to care.”

Beth Feld­push, se­nior vice pres­i­dent for pol­icy and ad­vo­cacy at Amer­ica’s Es­sen­tial Hos­pi­tals, which rep­re­sents safety net hos­pi­tals, said out­pa­tient de­part­ments in ru­ral ar­eas may not be able to open un­der the new payment ar­range­ment. Un­der­served com­mu­ni­ties of­ten re­ceive pri­mary care from com­mu­nity health cen­ters but rely on hos­pi­tals for spe­cial­ists, she said.

Also, hos­pi­tals build­ing in these ar­eas need to be able to re­lo­cate or change their ser­vices to con­tinue meet­ing the needs of the com­mu­nity, Feld­push added. CMS of­fi­cials, she said, “are ig­nor­ing the re­al­ity that noth­ing in health­care is static and hos­pi­tals need to be able to evolve.”

CMS of­fi­cials had no im­me­di­ate re­sponse to re­quests for com­ment.

Congress called for the so-called site-neu­tral pay­ments in the Bi­par­ti­san Bud­get Act of 2015. But the hos­pi­tal or­ga­ni­za­tions say the way the CMS plans to carry out the pro­vi­sion vi­o­lates what the law ac­tu­ally says. The leg­is­la­tion states that new off-cam­pus de­part­ments should be paid “un­der the ap­pli­ca­ble payment sys­tem.” While some an­a­lysts thought it was pos­si­ble the CMS might in­ter­pret that to mean the physi­cian fee sched­ule, they also thought the agency might choose the fee sched­ule Medi­care uses for am­bu­la­tory surgery cen­ters.

“The law does not say stop pay­ing hos­pi­tals, it says pay them dif­fer­ently,” Feld­push said.

Both or­ga­ni­za­tions said they, along with many oth­ers, met fre­quently with the CMS to dis­cuss how the site-neu­tral pro­vi­sion would be han­dled and were dis­ap­pointed that their sug­ges­tions were not re­flected in the pro­posed rule.

The pol­icy was adopted by Congress in re­sponse to a 2013 Medi­care Payment Ad­vi­sory Com­mis­sion re­port that found Medi­care was pay­ing 141% more for a Level 2 echocar­dio­gram in an out­pa­tient set­ting than the pro­gram paid for one per­formed in a physi­cian’s of­fice.

Con­sumer advocates and law­mak­ers ar­gued that the higher pay­ments weren’t jus­ti­fied and pushed hos­pi­tals to buy physi­cian prac­tices. The AHA coun­tered that hos­pi­tals have higher cost struc­tures than physi­cian of­fices be­cause they have emer­gency de­part­ments and trauma ca­pac­i­ties.

Travis Lloyd, a health lawyer with Bradley Arant Boult Cum­mings, said he was sur­prised at the strict­ness of last week’s pro­posed rule, par­tic­u­larly since the CMS seemed to go out of its way to so­licit in­put on the pol­icy. It would have made more sense to hold off on im­ple­ment­ing the change un­til a more ap­pro­pri­ate payment sys­tem could be in­cor­po­rated, he said. In­stead, the agency just “threw its hands in the air.”

There is noth­ing in the pro­posal that spells out how a hos­pi­tal is sup­posed to be paid for its over­head ex­penses be­cause all of the re­im­burse­ment goes to the physi­cian, Lloyd said. And that physi­cian-based payment struc­ture also raises the risk

of vi­o­lat­ing the anti-kick­back statute and Stark law lim­its on physi­cian re­fer­rals, he said. “If the cur­rent pro­posal is fi­nal­ized, hos­pi­tals will need to re­ex­am­ine their re­la­tion­ships with physi­cians.”

The CMS is likely to re­ceive a bar­rage of com­ment letters on the pro­posal, and Kim said the AHA hopes the CMS will “be more rea­son­able” and pro­vide a fair payment model.

The as­so­ci­a­tion also will push for hos­pi­tals to have more ex­cep­tions for re­tain­ing payment when im­prov­ing or re­build­ing out­pa­tient de­part­ments be­yond the “ex­tra­or­di­nary con­di­tions” stated in the pro­posed rule, she said.

Some build­ings may need to be up­dated for build­ing code changes or be­cause of weather dam­age. The strict in­ter­pre­ta­tion will also dis­cour­age hos­pi­tals from ex­pand­ing out­pa­tient build­ings, pro­vid­ing ad­di­tional ser­vices or mov­ing to­ward new payment sys­tems, she said.

While the CMS has en­cour­aged hos­pi­tals to adopt value-based mod­els and move away from fee-for-ser­vice payment, the new rule “will thwart or halt that” at out­pa­tient de­part­ments, Kim said.

Law­mak­ers have al­ready re­sponded to one con­cern of the hos­pi­tal in­dus­try. Last month the House passed a bill that would ex­empt hos­pi­tal out­pa­tient de­part­ments from the new site-neu­tral pay­ments if the provider had an agree­ment for con­struc­tion of the fa­cil­ity be­fore Nov. 2, 2015.

The au­thor, Rep. Pat Tiberi (R-Ohio), said dur­ing markup of the bill that Congress needs to al­low providers to tran­si­tion to­ward change.

“This bill will help hos­pi­tals at­tain the rev­enue they an­tic­i­pated when they made the de­ci­sion to in­vest in new con­struc­tion projects,” he said. “It’s just com­mon sense to rec­og­nize the re­al­ity of busi­ness prac­tices. No one likes to think of health­care as a busi­ness, but hos­pi­tals have to keep the lights on to treat pa­tients, just like any other busi­ness.”

Note: 95% con­fi­dence in­ter­vals of es­ti­mated av­er­age un­da­justed and risk ad­justed pay­ments not shown.

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