Hospital groups gearing up for battle over site-neutral payment

HOSPITAL LOBBY GROUPS are not standing pat while the CMS reviews thousands of comments on its proposed outpatient payment rule. Instead, they are waging a full assault—including preparing for potential litigation—to prevent the agency from advancing its site-neutral payment policy.

In the proposed outpatient prospective payment system rule, the CMS suggested cutting Medicare’s evaluation-and-management rates for off-campus hospital facilities to the rate independent doctors’ offices receive.

With the comment period ended, the American Hospital Association is gathering lawmakers’ signatures to add to a letter by Sens. Rob Portman (R-Ohio) and Debbie Stabenow (D-Mich.). The letter asks the agency to reverse course on its site-neutral policy in the proposed rule.

The 60% rate cut proposed in the OPPS rule would roughly equal a $760 million hit to hospitals in 2019. The CMS estimates that it was paying approximately $75 to $85 more on average for the same service in hospital outpatient settings compared with physician offices. Beneficiaries were responsible for 20% of that increased cost.

If the proposal is finalized, the AHA may sue the agency and allege it exceeded its authority and strayed from congressional intent.

“Our comment letter lays out clearly that the CMS was aggressive in interpreting its authority,” said

AHA Vice President Erik Rasmussen, noting that the trade group’s next course of action depends on the final rule. “Any time the agency takes more authority than it was given by Congress, it opens them up to legal action.”

The Bipartisan Budget Act of 2015 states that hospitals must bill Medicare at 40% of the OPPS rate for care provided in off-campus facilities in operation after Nov. 2, 2015, unless it was emergency care. The 21st Century Cures Act added another exemption for facilities that were already under construction before that date.

But the site-neutral policy doesn’t recognize that different patient types receive care from physician offices and hospitals, said Dr. Bruce Siegel, CEO of America’s Essential Hospitals.

“These assumptions could not be further from the truth, as hospital (departments) treat more complex patients and provide more specialized services than physician offices,” Siegel said in a comment letter.

Physicians paint a starkly different picture, suggesting that the proposal could stop hospitals from buying medical groups and turning independent doctors into employees.

“The additional revenue allows hospitals to lure doctors into employment by pay-

“These assumptions could not be further from the truth, as hospital (departments) treat more complex patients and provide more specialized services than physician offices.”

Dr. Bruce Siegel CEO America’s Essential Hospitals

ing them more than they can earn under the physician fee schedule,” said Marni Jameson Carey, executive director of the Association of Independent Doctors, in a comment letter. “A lack of site neutrality has contributed to this unhealthy consolidation trend, a leading driver behind our country’s soaring healthcare costs.” Carey’s association represents more than 1,000 doctors in 33 states.

But Eric Lewis, CEO of Olympic Medical Center in Port Angeles, Wash., predicted seven of his system’s outpatient facilities would lose $3.4 million from the policy in 2019 and $47 million over the next decade if the site-neutral policy is finalized. His system has lost money two out of the past four years, he said at an AHA-sponsored congressional briefing last week.

He added that he doesn’t believe independent physicians can step into the gap to take care of the patients who use the off-campus facilities because they can’t afford the heavy Medicare and Medicaid and dual-eligible mix. “These patients will not have care,” Lewis said. “To me this is one of the most concerning policies I’ve ever heard proposed.”

The AHA also released a commissioned study by KNG Health Consulting suggesting that the Medicare patients seeking care at off-campus hospital clinics over independent doctors’ offices are 2.4 times more likely to be under 65—which would mean they have complicated conditions like renal disease that would qualify them for early Medicare enrollment.

The proposed rule is part of the CMS’ push to bring equilibrium to Medicare payments for the same services no matter the setting. The agency’s breakdown of the $760 million that hospitals would lose translates into $610 million in Medicare savings and $150 million in patient savings through lower co-payments.●