MedPAC again advised CMS to move toward site-neutral pay for outpatient procedures to prevent consolidation and directing services to the highest pay setting in a June 15 report to Congress.
Pay differential between hospital outpatient departments, ASCs and physician offices has led to hospitals purchasing ASCs and office-based practices, increasing the pay rate for procedures, according to the report. MedPAC noted outpatient chemotherapy administration in freestanding clinician offices fell 14.2 percent from 2015 to 2021 while volumes increased 21 percent in HOPDs, the setting with the highest pay rates.
"Based on the recent growth in hospital acquisition of physician practices and our own empirical analysis, the Commission recommends that Congress more closely align payment rates across ambulatory settings for selected services that are safe and appropriate to provide in all settings and when doing so does not pose risk to access," the report read.
MedPAC recommended setting pay rates at the setting most commonly used for select procedures. The report identified 57 services most commonly performed in physician offices and nine procedures most commonly performed in ASCs and recommended lowering HOPD rates to align with the lower-reimbursed care settings. There were 103 services most often performed in HOPDs, and MedPAC recommended no changes for those procedures.
Pay rate changes must be implemented on a budget-neutral basis by law, so MedPAC found pay rate alignment would not change spending in the short term. But in the long term, aligning pay rates could reduce costs because financial incentives would not influence site-of-service decisions, MedPAC predicted.
MedPAC estimated aligning pay rates for the 66 procedures most often performed in offices or ASCs would have saved Medicare $7.75 billion in 2021, according to the report.
Lower HOPD rates for select procedures would have the biggest impact on rural, non-critical access hospitals, which would see a 2.5 percent drop in Medicare revenue. For-profit hospitals would see a 1 percent increase and nonprofit hospitals would remain neutral.
The American Hospital Association, meanwhile, released a statement opposing MedPAC site-neutral payments and Medicare's recommendations. The organization noted the plan would cut rural hospitals' average Medicare margin from -17.8 percent to -21 percent.
"As most of rural hospital revenue comes from government payers, of which Medicare comprises nearly half, such additional site-neutral cuts would lead to devastating financial hardship, even more closures and drastically impact the communities rural hospitals serve," the statement said. "Moreover, a current legislative proposal modeled after MedPAC"s recommendation but not budget-neutral would lead to a $180.6 billion cut to hospitals over 10 years."