Rule-o-rama spells trou­ble for hos­pi­tals

Modern Healthcare - - NEWS - By Vir­gil Dick­son

In ad­di­tion to Med­i­caid cuts that con­tinue to be part of the GOP’s plan to re­peal and re­place the Af­ford­able Care Act, a 1,500-page Medi­care pay­ment rule and next year’s physi­cian fee pay rule re­leased last week tighten re­im­burse­ment for providers, and mostly that spells trou­ble for hos­pi­tals.

The change that seemed to most ruf­fle in­dus­try feath­ers was a pro­posal last week to halve what Medi­care pays when pa­tients re­ceive ser­vices at fa­cil­i­ties that are owned by hos­pi­tals but lo­cated off cam­pus.

While the Obama ad­min­is­tra­tion last year fi­nal­ized a rule that paid most hos­pi­tal off-cam­pus fa­cil­i­ties the same as hos­pi­tal-based out­pa­tient de­part­ments, the Trump ad­min­is­tra­tion last week pro­posed drop­ping that rate from 50% of the out­pa­tient pay­ment rate providers once re­ceived to 25% to save $25 mil­lion next year.

“At a time when the na­tion is mov­ing to­ward value-based pay­ments, this pro­posal makes no sense. In essence, it re­moves all in­cen­tives to pro­vide care out in the com­mu­ni­ties rather than at the hos­pi­tal, and ul­ti­mately will lead to higher over­all Medi­care spend­ing,” said Blair Childs, se­nior vice pres­i­dent of pub­lic af­fairs for Premier.

Hos­pi­tals say off-cam­pus fa­cil­i­ties give pa­tients more en­try points to care, es­pe­cially in un­der­served ar­eas.

Congress passed what’s called the site-neu­tral pol­icy af­ter a fed­eral re­port found Medi­care was pay­ing 141% more for an echocar­dio­gram in an out­pa­tient set­ting than for the same ser­vice in a doc­tor’s of­fice.

Ac­cord­ing to the Amer­i­can Hos­pi­tal As­so­ci­a­tion, 17.2 mil­lion hos­pi­tal vis­its in­cluded in­va­sive, ther­a­peu­tic surg­eries in 2014. Over half of th­ese vis­its oc­curred in a hos­pi­tal-owned am­bu­la­tory surgery set­ting.

That’s likely why the CMS now also is con­sid­er­ing ex­pand­ing Medi­care pay­ment for hip and knee re­place­ment pro­ce­dures at am­bu­la­tory sur­gi­cal cen­ters, ac­cord­ing to an­other pro­posal re­leased last week.

The Am­bu­la­tory Surgery Cen­ter As­so­ci­a­tion said nearly 40 cen­ters around the coun­try per­form out­pa­tient joint re­place­ments, and out­pa­tient surgery com­pa­nies such as Sur­gi­cal Care Af­fil­i­ates are aim­ing to in­crease them.

That’s threat­en­ing one of the largest and most prof­itable ser­vice lines at many hos­pi­tals. In 2014, more than 400,000 Medi­care ben­e­fi­cia­ries re­ceived a hip or knee re­place­ment, cost­ing the gov­ern­ment more than $7 bil­lion for the hos­pi­tal­iza­tions alone—over $50,000 per case.

The move to out­pa­tient set­tings also raises ques­tions about the fu­ture of Medi­care’s manda­tory bun­dled-pay­ment ini­tia­tive for in­pa­tient pro­ce­dures in 67 mar­kets around the coun­try, called the Com­pre­hen­sive Care for Joint Re­place­ment pro­gram, which be­gan last April. The CMS rule ap­pears to un­der­mine that ini­tia­tive.

An­other threat to hos­pi­tals’ fi­nances pro­posed last week would pay hos­pi­tals 22.5% less than the av­er­age sales price for drugs ac­quired un­der the 340B pro­gram. The fed­eral pro­gram is in­tended to lower op­er­at­ing costs for hos­pi­tals with dis­pro­por­tion­ate num­bers of low-in­come pa­tients.

The 340B pro­gram is con­tro­ver­sial be­cause it does not spec­ify or re­strict how hos­pi­tals can use

Hos­pi­tals say off-cam­pus fa­cil­i­ties give pa­tients more en­try points to care, es­pe­cially in un­der­served ar­eas.

money gen­er­ated by the pro­gram and crit­ics say that leads to some hos­pi­tals tak­ing ad­van­tage of the sav­ings.

The cur­rent 340B pay­ment for drugs, Medi­care’s long-stand­ing method, is 6% on top of the av­er­age sales price. With the pro­posed changes, if a drug costs $84,000, the CMS would pay just over $65,000, in­stead of the cur­rent $89,000. Vac­cines would con­tinue to be paid at the cur­rent rate.

The change, HHS Sec­re­tary Dr. Tom Price said in a news re­lease, is a sig­nif­i­cant step to­ward ful­fill­ing Pres­i­dent Don­ald Trump’s prom­ise to ad­dress ris­ing drug prices.

“This pro­posal has the po­ten­tial to re­duce drug costs for se­niors, by at least an es­ti­mated $180 mil­lion per year. If it is adopted, Medi­care would pay hos­pi­tals for drugs pur­chased through the 340B dis­count pro­gram at a price more con­sis­tent with the ac­tual cost hos­pi­tals and other providers pay to ac­quire those drugs. Se­niors would see those sav­ings passed on to them in the form of lower co­pays,” he said.

The pro­posal is bud­get-neu­tral and sav­ings would re­turn to the Medi­care pro­gram. Hos­pi­tals in the 340B pro­gram pro­vide 60% of un­com­pen­sated care, even though they make up only 36% of the na­tion’s hos­pi­tals.

“The data show 340B hos­pi­tals pro­vide sig­nif­i­cantly higher lev­els of care to low-in­come pa­tients, in­clud­ing low-in­come Medi­care ben­e­fi­cia­ries,” Ted Slaf­sky, CEO of 340B Health, an as­so­ci­a­tion of more than 1,300 par­tic­i­pat­ing hos­pi­tals, said in a state­ment. “With the unin­sured rate ris­ing again and so much un­cer­tainty about the health­care mar­ket­place, this is no time to cut re­im­burse­ment to hos­pi­tals that serve pa­tients in need.”

In one bright note for providers, the CMS is look­ing to ex­pand cov­er­age of telemedicine and pro­vided new billing codes for some ser­vices in­clud­ing psy­chother­apy and con­sul­ta­tions for chronic-care man­age­ment.

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