The Medicare program currently pays significantly different rates for the same services provided in different settings. For instance, according to the Medicare Payment Advisory Commission, Medicare paid hospital outpatient departments 78 percent more on average than ambulatory surgery centers for the same procedure in 2013.
MedPAC and CMS have been considering options to eliminate the gap between payment rates for different settings for certain care services, a proposal that has been met with backlash from hospital advocates. Here are five things to know about the site-neutral Medicare payment debate, according to a Health Affairs issue brief and previous Becker's Hospital Review reports.
1. The controversy surrounding site-neutral payments has been inflamed partly by the recent shift of services from physician offices to HOPDs, according to Health Affairs. MedPAC and others have expressed concerns about this development, with MedPAC in particular pointing out the share of physician visits (evaluation and management services) and certain diagnostic cardiology procedures administered in a HOPD setting increased by 8 percent between 2010 and 2011 and by 9 percent between 2011 and 2012. "Because of the higher payment rates for outpatient department services, this shift in site of service means that Medicare spending on these services is increasing even though there may be no difference in the care the patient receives," the issues brief states. "Out-of-pocket costs to the beneficiary are also higher since beneficiaries are responsible for roughly 20 percent of the payment amount for outpatient services."
2. MedPAC and CMS have both introduced proposals to get rid of the payment differentials for particular services. MedPAC has recommended limiting payments to hospital outpatient departments. In 2012, the Commission advised Congress to set payment rates for evaluation and management services provided in HOPDs that are equivalent to rates paid under the physician fee schedule. In subsequent years, MedPAC has recommended additional reforms to eliminate the payment differential between HOPDs and ASCs. In its annual report to Congress this past March, MedPAC evaluated 450 ambulatory payment classifications and found 66 that don't require emergency standby capacity, don't have extra costs associated with greater patient complexity and don't need the additional overhead that comes with services that must be provided in a hospital setting. Aligning HOPD payments with physician fee schedule rates for these APCs would reduce Medicare spending and beneficiary cost sharing by $1.1 billion in one year.
3. In April, the HHS Office of Inspector General reignited the argument over HOPD payments by recommending CMS reduce hospital outpatient prospective payment system rates for ASC-approved procedures to ASC levels for low-risk patients. The OIG report stated reducing hospital outpatient prospective payments rates for ASC-approved procedures for low-risk cases could save Medicare as much as $15 billion from 2012 through 2017. Lower HOPD reimbursements could also save beneficiaries $2 billion to $4 billion in copays and coinsurance during the same time period.
4. Hospital leaders and organizations such as the American Hospital Association have criticized these site-neutral payment proposals, arguing that hospitals need the higher payments because all of them — even those not designated as safety-net hospitals — play a unique role in their communities, compared with ASCs and other outpatient care providers. Hospitals provide care for all patients regardless of their ability to pay, something ASCs don't do, according to AHA policy director Roslyne Schulman.
5. Still, according to Health Affairs, CMS and MedPAC have indicated they're still interested in exploring the potential to enact site-neutral payments in areas where the reimbursement differential isn't deemed appropriate. The Protecting Access to Medicare Act, which President Barack Obama signed into law April 1, could give CMS an additional opportunity and authority to revisit the site-neutral payment issue through its provisions expanding the types of information CMS can use to determine costs under the physician fee schedule. The law also encourages the agency to address potentially misvalued codes, according to the issue brief.
More Articles on Site-Neutral Payments:
The Outpatient Payment Rate Debate: What Lower Reimbursement Would Mean for Hospitals
AHA to Congress: Don't Lower Hospital Outpatient Department Payments
OIG: Medicare Should Reduce HOPD Surgery Payments to ASC Rates