GAO Calls for Look at Medicare Outpatient Payments

Citing the growing consolidation of hospitals and physician practices and the higher rates Medicare pays for care delivered in hospital outpatient departments, the U.S. Government Accountability Office (GAO) has recommended that Congress

…consider directing the Secretary of the Department of Health and Human Services to equalize payment rates between settings for E/M [evaluation and management] office visits…

gaoThe recommendation comes after a GAO study that documented the increase in “vertical consolidation” between hospitals and physician practices in recent years and the increased costs for outpatient services this leads to for the Medicare program. The GAO report notes that “Such excess payments are inconsistent with Medicare’s role as an efficient purchaser of health care services.” It also notes that Medicare lacks the statutory authority to make such changes on its own.

For a closer look at this issue and why it is commanding the attention of the GAO and others, go here to see the GAO report Increasing Hospital-Physician Consolidation Highlights Need for Payment Reform.

Members of Congress Seek Increased Medicare Rates

US Capitol DomeMembers of Congress have written to Centers for Medicare & Medicaid Services (CMS) acting administrator Andrew Slavitt asking him to reconsider his agency’s proposal to reduce the rates Medicare will pay providers for outpatient services.

In July, CMS proposed reducing those outpatient rates 0.2 percent in calendar year 2016.

The letter notes that

According to MedPAC, Medicare already pays hospitals less than 88 cents on the dollar for outpatient services and this rule will make that situation worse for our constituents – both hospitals and patients alike.

The letter also states that

Medicare already pays providers less than the cost of care. Prescribing a negative update to OPPS [note: outpatient prospective payment system] payment rates will only make it more difficult for hospitals to serve their patients and their communities, particularly as they move to adopt delivery system reforms.

To see the letter, including the names of the 95 Democrats and Republicans who signed it, go here.

OIG Reiterates Medicare, Medicaid Recommendations

Every year the U.S. Department of Health and Human Services’ Office of the Inspector General (OIG) examines the operations of various department offices, programs, and policies and offers recommendations for changes and improvements. Some of those recommendations are adopted and others are not.

The OIG annually publishes a document reiterating what it believes to be its most important and potentially useful recommendations that were not adopted, and that publication was just released.

hhsOIGAmong the Medicare and Medicaid recommendations it has presented again are:

  • Establish accurate and reasonable Medicare payment rates for hospital inpatient services.
  • Establish accurate and reasonable Medicare payment rates for hospital transfers.
  • Reduce hospital outpatient department payment rates for ambulatory surgical center-approved procedures.
  • Prevent inappropriate payments to Medicare home health agencies.
  • Reduce inappropriate payments to skilled nursing facilities.
  • Prevent payments for ineligible Medicare beneficiaries.
  • Reconcile Medicare outlier payments in accordance with federal guidance and regulations.
  • Ensure that states calculate accurate costs for Medicaid services provided by local providers.
  • Ensure the collection of identified Medicare overpayments.
  • Improve oversight of management of Medicaid personal services.
  • Improve the Medicare appeals process at the administrative law judge level.
  • Enhance efforts to identify adverse events to ensure quality of care and safety.
  • Ensure that Medicare children receive all required preventive screening services.
  • Strengthen oversight of state access standards for Medicaid managed care.

In its Compendium of Unimplemented Recommendations/March 2015, the OIG presents the issues and its rationale for its recommendation and describes the status of implementation, including, in some cases, why CMS has chosen not to implement its recommendations.

Find the report here.

MedPAC Endorses Site-Neutral Payments

MedPAC has recommended to Congress that Medicare equalize the rates paid to hospital outpatient departments and private physicians’ offices for many outpatient services.

medpac-logo.Par.0001.ImageCurrently, hospital outpatient departments are paid more than physician offices for many Medicare-covered services.

MedPAC, which advises Congress on Medicare payment issues, called for reducing or eliminating current fee differentials.

While MedPAC’s recommendations are not binding, those recommendations frequently form the basis for future Medicare policies.

Learn more about this and other MedPAC recommendations in this Becker’s Hospital Review article.