AHA urges government to reject further site-neutral payment policies

by Steven Andrews

CMS won’t release guidance on the payment impact of Section 603 of the Bipartisan Budget Act of 2015 until the 2017 OPPS proposed rule, but the American Hospital Association (AHA) has weighed in with a letter to Congress urging the government to reject further site-neutral payment policies.

Section 603 declared that any off-campus hospital outpatient departments that started billing after passage of the bill November 2, 2015, would not be paid under the OPPS, but other Part B payment systems, such as the Medicare Physician Fee Schedule (MPFS) or Ambulatory Surgical Center (ASC) Fee Schedule.

This change will have a drastic impact on hospital payments, according to the AHA, and its surprise inclusion in the budget bill puts potentially millions of dollars at risk for facilities that were in the process of developing off-campus departments when the bill passed.

Instead of waiting for clarity when the 2017 OPPS final rule is released in late October, the AHA is asking for more urgency from the government to protect hospitals that have facilities in development so that they’re not abandoned.

“That abandonment because of congressional inaction would mean health care sector jobs eliminated, less financial investment in communities and reduced patient access to care,” said Thomas P. Nickels, AHA’s executive vice president, in the letter.

The AHA argues that site-neutral payments don’t add up for hospitals, since hospital outpatient departments have many more regulatory requirements and roles than physician offices and ASCs. These include 24/7 standby capacity for emergency department services, disaster preparedness and response, and uncompensated care. Hospitals also tend to treat sicker patients than other types of facilities.

According to the Medicare Payment Advisory Commission (MedPAC), the Medicare margins for hospital outpatient department services were at negative 12.4% in 2013. Further recommendations from MedPAC would push those margins to negative 21.2%, according to the AHA, even without considering the clause in Section 603.

These proposals, which lawmakers are considering and the AHA strongly opposes, include:

• Paying evaluation and management clinic visit services at the MPFS amount
• Paying hospitals for 66 specified APCs at the MPFS amount
• Capping hospital payments for 12 proposed APCs at the ASC rate

With CMS advocating for a rapid move toward alternative payment models (APM) and away from fee-for-service payments, AHA argues that these policies would have the opposite effect. Instead, CMS should encourage APMs that include integration of care, in community settings, crossing the inpatient, outpatient, physician office, according to the AHA.