Hospitals 'deeply concerned' about CMS' site-neutral payment proposal

Hospital and other industry groups are voicing concerns about CMS' proposed rule to update Medicare's Hospital Outpatient (OPPS) and Ambulatory Surgical Center (ASC) Payment Systems for calendar year (CY) 2019.

Cheat sheet: What is HOPPS? How does CMS calculate reimbursement for outpatient services?

CMS accepted public comments on the proposed rule through Sept. 24 and received over 2,800 comments on the proposed rule.

Hospital and industry groups oppose proposals

Several hospital and industry groups raised concerns about the proposed rule's changes to site-neutral payments and the 340B program and questioned CMS' authority to make those changes, HealthLeaders Media reports.

For example, Thomas Nickels, executive vice president of government relations and public policy for the American Hospital Association (AHA), in comments submitted to CMS wrote that AHA opposes the agency's proposals to continue reimbursement cuts under the 340B drug discount program and extend those cuts to non-excepted, off-campus hospital departments that are paid under the physician fee schedule. Nickels also questioned CMS statutory authority to enact a proposed 60% cut to reimbursements for routine clinic visits (code G0463) at off-campus hospital outpatient departments.

Nickels said AHA recommends CMS withdraw the proposals because they "would have a chilling effect on beneficiary access to care and new technologies, while also dramatically increasing regulatory burden."

Erik Rasmussen, AHA's VP, at a briefing Tuesday on the proposed payment reductions said AHA is considering a legal challenge if CMS moves forward with the current proposed rule, but added that AHA will wait for CMS to release the final rule before taking any such action.

Bruce Siegel, president and CEO of America's Essential Hospitals (AEH), raised similar concerns in a comment to CMS. Siegel wrote, "We are deeply concerned about several provisions of the proposed rule that exceed the agency's statutory authority and would have a disproportionately negative impact on essential hospitals—those that provide stability and choice for people who face barriers to care." He continued, "CMS' policy proposal is based on flawed assumptions, including that patients at physician offices and hospital PBDs are identical and that the only reason for treating patients in the outpatient setting is to receive a higher payment rate. These assumptions could not be further from the truth, as hospital PBDs treat more complex patients and provide more specialized services than physician offices."

Blair Childs, SVP of public affairs at Premier, in a comment submitted to CMS on behalf of roughly 4,000 hospitals and 165,000 other providers similarly challenged the proposed changes, writing that CMS should take into account the differences between PBDs and physician practices when setting reimbursements. Childs wrote, "[W]e are concerned that CMS' over-reach is counterproductive and will have negative consequences for beneficiaries. In lieu of expansive site-neutral payment policies, CMS should focus on methods to encourage providers to adopt risk-based alternative payment models."

Separately, Eric Lewis—CEO of Olympic Medical Center, a 67-bed hospital where Medicare and Medicaid beneficiaries comprise 84% of its patient population—at the briefing Tuesday said site-neutral payments could result in his medical center canceling plans to expand its primary care services. Lewis said, "You can't spend money you don't have."

Darrell Kirch, president and CEO of the Association of American Medical Colleges, in a statement issued earlier this year said, "CMS' proposal to cut Medicare payments to existing outpatient departments for clinic services runs counter to congressional intent and would seriously damage the ability of the nation's teaching hospitals to serve the most complex and vulnerable patients."

340B Health, which represents more than 1,300 hospitals and health systems participating in the 340B program, in a statement also criticized the proposed rule, saying, "In 2018, CMS slashed $1.6 billion from Medicare outpatient drug payments to many 340B hospitals, a reduction of nearly 30%. CMS now plans to make a bad rule worse by extending the cuts to drugs provided in certain off-campus hospital clinics, including facilities providing infusion therapy for cancer patients and other high-cost drug therapies to treat chronic and life-threatening conditions."

Value-based care network offers support for proposed rule

However, Farzad Mostashari—founder and CEO of Aledade, a value-based care network—said the proposed rule is "a significant and welcome proposal from the [Trump] administration to end incentives in the Medicare reimbursement system which increased costs for patients and promoted consolidation of health care providers." He continued, "This will level the playing field between independent practices and huge health care systems. While hospitals, undoubtedly, will oppose this new rule, they should welcome it as it could help them become more competitive in value-based payment contracts—which is the future of health care" (Ellison, Becker's Hospital CFO Report, 9/27; Minemyer, FierceHealthcare, 9/26; Gooch, Becker's Hospital CFO Report, 7/26; Porter, HealthLeaders Media, 9/25).

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