NASH Comments on Proposed Medicare Outpatient Payment Regulation (part 3 of 4)

The National Alliance of Safety-Net Hospitals has submitted extensive comments to the Centers for Medicare & Medicaid Services about its proposed changes in the Medicare outpatient prospective payment system for 2020.

In its letter to CMS, NASH focuses on four issues:

  • CMS’s price transparency proposal
  • Reimbursement for 340B-covered prescription drugs
  • Medicare site-neutral payment policy
  • Proposed updates of the inpatient-only list of medical procedures

Today this blog features NASH’s comments about proposed changes in Medicare’s site-neutral payment policy for outpatient services.  On Wednesday we presented NASH’s views on CNN’s price transparency proposal and yesterday we presented NASH’s views on reimbursement for 340B-covered prescription drugs.  On Monday we will present NASH’s perspective on CMS’s proposal to permit Medicare to pay for certain medical services on an outpatient basis rather than limiting them to being performed only on patients admitted to a hospital.

See the complete NASH letter to CMS here.

Site-Neutral Payment Policy

In the proposed regulation, CMS calls for completing its two-year phase-in for paying for off-campus clinic visits at the same rates as the physician fee schedule even if those clinics are grandfathered.  As a result, clinic visits to grandfathered, off-campus outpatient departments would be reimbursed at the site-neutral rate of 40 percent of the outpatient fee.

NASH continues to oppose the implementation of site-neutral payment policy for Medicare-covered outpatient services.  Implementation of this policy is based on authority granted to the Secretary under §1833t)(2)(F) to “develop a method for controlling unnecessary increases in the volume of covered OPD services.”  NASH disagrees with the idea that reducing reimbursement for clinic visits is an appropriate method for controlling unnecessary increases in the volume of covered outpatient services.  First, and most fundamentally, there has been no credible finding that Medicare is experiencing “…unnecessary increases in the volume of covered outpatient services.”  Increased volume?  Yes.  Unnecessary increases?  There is no evidence that this increase is unnecessary.  In fact, the federal government for years now has pursued policies that seek to reduce hospital inpatient utilization and encourage the delivery of more care on an outpatient basis.  If anything, increased outpatient utilization should be viewed as a sign that this effort has succeeded and should be further encouraged, not discouraged and suddenly viewed as “unnecessary” and punished.

Second, although similar outpatient services can be safely provided in more than one setting, CMS’s conclusion that providing care in the more expensive setting is unnecessary presumes that patients who require these services have access to both types of settings.  In reality, they often do not:  many private safety-net hospitals that operate off-campus, provider-based departments do so because they are addressing a need in their communities.  Rather than increasing the volume of unnecessary services, the payment differential enables safety-net hospitals to create access to necessary services in communities where these services would otherwise be unavailable in any setting.  NASH asks CMS to stop this misguided drive to “throw out the baby with the bath water” by continuing to cut reimbursement for necessary outpatient department services just because there may be circumstances in which alternative settings might be available.  The proposed regulation continues to take the site-neutral payment policy too far, and in so doing it ultimately could jeopardize access to vital forms of care for the residents of many low-income communities served by private safety-net hospitals.

This continued practice of reducing payments even to exempted hospital-based, off-campus facilities is harmful:  harmful to those medical practices, harmful to the hospitals that own and operate those practices, and most of all harmful in the long run to many of the patients these practices serve.  NASH continues to object to Medicare reimbursing non-excepted, provider-based physician practices at physician fee schedule rates.  These rates fail to reflect the hospital-related costs associated with such practices – costs such as maintaining emergency departments, operating laboratories, offering comprehensive radiology services, complying with regulatory requirements not imposed on independent physician practices, and much more.  These are valid costs that benefit entire communities, and further reducing these payments, as proposed in this regulation, would jeopardize major parts of the health care infrastructure that every community truly needs.

Finally, last week a federal court ruled that CMS’s implementation of its site-neutral payment policy for Medicare-covered outpatient services exceeded the agency’s authority.  NASH understands that CMS may appeal this ruling, as is certainly its right, but we suggest that continued implementation of the policy be suspended until this matter is adjudicated.

See the complete NASH letter to CMS here.

Court Halts Medicare Site-Neutral Payment Changes

The Centers for Medicare & Medicaid Services did not have the authority to implement the site-neutral payment system for Medicare-covered outpatient services that it introduced last year, a federal court has concluded.

According to the court, CMS exceeded its authority because it

…was not authorized to ignore the statutory process for setting payment rates in the Outpatient Prospective Payment System and to lower payment rates only for certain services provided by certain providers.

In general, hospitals oppose the movement toward site-neutral payments and independent physician groups support it.

The court did not order CMS to reimburse affected physician practices for lost revenue.  Instead, it directed CMS to develop an appropriate remedy.

CMS is likely to appeal the ruling.

Meanwhile, CMS has proposed continuing its phase-in of the site-neutral payment policy in its proposed 2020 outpatient prospective payment system regulation that will take effect on January 1, 2020.  It is not clear how or if – the court ruling might affect CMS’s decision to move ahead with this proposal.

NASH opposed the 2019 change in a formal regulatory comment letter to CMS last year (see pages 2 and 3) on behalf of private safety-net hospitals and next week will submit another comment letter expressing the same view about year two of the proposed changes in Medicare outpatient payment policy.

Learn more about the case, the court decision, and what might happen next in the Healthcare Dive article “Hospitals score victory as judge tosses CMS site neutral rule.”


MedPAC Meets

Last week the Medicare Payment Advisory Commission met in Washington, D.C. to discuss a number of Medicare payment issues.

The issues on MedPAC’s December agenda were:

  • Medicare payments for physician and other health professionals services
  • payments for ambulatory surgical centers
  • payments for hospital inpatient and outpatient care
  • Medicare’s hospital quality incentive program
  • payments for skilled nursing facilities
  • payments for long-term care hospitals
  • payments for inpatient rehabilitation facilities
  • the Medicare Advantage program

MedPAC is an independent congressional agency that advises Congress on issues involving the Medicare program.  While its recommendations are not binding on either Congress or the administration, MedPAC is highly influential in governing circles and its recommendations often find their way into legislation, regulations, and new public policy.

Go here for links to the policy briefs and presentations that supported MedPAC’s discussion of these issues.

Medicare Site-Neutral Outpatient Payment Proposal Would Have Disproportionate Impact

The Centers for Medicare & Medicaid Services’ proposal to make more Medicare outpatient payments on a site-neutral basis would significantly cut Medicare’s overall outpatient spending but most of that cut would be borne by just a few hospitals.

A report prepared for the Integrated Health Care Coalition concluded that

…CMS’ Off-Campus Site-Neutral Proposal in the FY 2019 CMS OPPS [note:  outpatient prospective payment system] NPRM [note:  notice of proposed rulemaking] will disproportionate affect about six percent of 3,333 hospitals that participate in the program.  200 hospitals will shoulder 73 percent of the proposed payment reductions….For the top 200, the average reduction will be 5.5 percent.  For the remaining hospitals, the reduction will be 0.5 percent.

Last month NAUH conveyed its strong opposition to this proposal in a formal comment letter to CMS.

Learn more about the CMS proposal and its potential implications in this story in Becker’s Hospital Review or go here to see the complete analysis.

New Reg Pushes Medicare Toward Site-Neutral Outpatient Payments

Medicare would make more payments for outpatient services on a site-neutral basis under a newly proposed regulation just released by the Centers for Medicare & Medicaid Services.

The 2019 Medicare outpatient prospective payment system regulation, published in proposal form, calls for:

  • paying physician fee schedule rates rather than hospital outpatient rates at excepted off-campus provider-based departments;
  • slashing payments for office visits;
  • extending this year’s 340B prescription drug discount payments, already cut nearly 30 percent this year, to additional providers; and
  • raising ambulatory surgical center rates and expanding the list of procedures that can be performed in such facilities so they can compete with hospitals for outpatient services.

The proposed regulation also calls for reducing quality reporting requirements and giving providers financial incentives to prescribe non-opioid pain medicine for surgery patients.

The regulation, which would affect provider payments beginning on January 1, 2019, was published in proposed form and will be finalized later in the year.  Stakeholders have until September 24 to submit comments to CMS.  For further information about what CMS has proposed, see this CMS fact sheet outlining the proposed regulation and the 761-page proposed regulation itself.

MedPAC Meets

The Medicare Payment Advisory Commission met in Washington, D.C. last week.

Among the issues on the agenda of the independent agency that advises Congress on Medicare payment issues were:

  • payment adequacy for physicians and other health professional services
  • An alternative to the merit-based incentive payment system (MIPS)
  • payment adequacy for hospital inpatient and outpatient services
  • payment adequacy for ambulatory surgical center services
  • the status of the Medicare Advantage program

Find links to issue briefs on these subjects and the presentations offered at the meeting by going here, to the MedPAC web site.

MedPAC Still Unhappy With Doc Pay

Despite the recent regulation implemented by the Centers for Medicare & Medicaid Services to prevent hospitals from continuing to acquire physician practices so they can receive higher outpatient payments than those physicians receive in private practice, members of the Medicare Payment Advisory Commission appear to think that more needs to be done to equalize physician payments regardless of where they provide outpatient services.

Stock PhotoOr so MedPAC commissioners discussed during their public meeting in Washington, D.C. last week.

One commissioner observed that physicians appear to become less productive when their practice is acquired by a hospital. Others noted the added costs to Medicare when patients are treated at a hospital-based outpatient facility rather than a private physician’s office. In general, MedPAC members seemed “unimpressed” that CMS’s recent regulation alone will be enough to address the problem and that a better approach would be to reduce or eliminate the pay differentials between the two types of providers. MedPAC staff pointed to the $1.6 billion Medicare spent in 2015 on “evaluation and management “payments only to practices owned by hospitals.

Learn more about what MedPAC’s commissioners think about this issue and what they might do to try to address in this CQ Roll Call article presented by the Commonwealth Fund.

NAUH Urges Congress to Assist With Medicare Outpatient Regulation

Last year Congress passed the Bipartisan Budget Act, which mandated site-neutral Medicare outpatient payments. The Centers for Medicare & Medicaid Services has proposed a new regulation implementing this policy that NAUH believes will detract from the ability of private safety-net hospitals to bring much-needed outpatient care to their communities. NAUH submitted extensive comments to CMS about this proposed regulation; see them here.

NAUH LogoNAUH especially objects to:

  • limits on the ability of hospitals with existing hospital-based outpatient departments to rebuild or relocate those facilities without losing their hospital-based status;
  • limits on hospitals with existing hospital-based outpatient departments expanding those departments and offering additional services in them without losing their hospital-based status;
  • a prohibition against hospitals purchasing a hospital-based outpatient department from another hospital and retaining that hospital-based status for the acquired facility; and
  • an overly rigid definition of what constitutes an “on-campus” department.

Now, NAUH is asking members of Congress to sign onto a letter to CMS urging the agency to revise aspects of that regulation that pose potential barriers to ensuring access to these services in the low-income communities private safety-net hospitals serve. See NAUH’s message to Congress here.

NAUH Comments on Proposed Medicare Site-Neutral Outpatient Payment Changes

NAUH LogoThe National Association of Urban Hospitals has submitted extensive comments to the Centers for Medicare & Medicaid Services on the agency’s proposal to implement site-neutral payment policies for Medicare-covered outpatient services.

In its comments, NAUH raises objections to:

  • how the proposed rule addresses the relocation of existing hospital-based outpatient departments;
  • how it addresses the expansion of services at existing departments;
  • how it proposes addressing the sale of existing departments; and
  • how it could affect such departments’ future eligibility in the section 340B prescription drug discount program.

Last year’s Bipartisan Budget Act called for Medicare to pay providers for outpatient services on a site-neutral basis.  The proposed rule constitutes CMS’s response to that law.

To see NAUH’s entire comment letter, go here.

CMS Fills in the Blanks on Site-Neutral Payments

When Congress passed a budget bill last fall calling for the introduction of site-neutral payments for Medicare-covered outpatient services, hospitals wondered how this might affect their current provider-based outpatient facilities and their plans for future facilities or acquisitions.

Now they have some answers.

cmsLast week the Centers for Medicare & Medicaid Services put regulatory flesh on the bones outlined by Congress in a 764-page proposed regulation that addresses what hospital-based outpatient facilities and services will be covered by the site-neutral payment rule and which will not.

Interested parties have until September 6 to submit formal comments to CMS about the proposed regulation; NAUH currently plans to do so.

Learn more about the proposed guidelines, which are subject to stakeholder review and comment, in this CMS fact sheet and the proposed regulation itself.