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November 5, 2018

Hospital groups will sue to stop Medicare's latest site-neutral payment cuts

Daily Briefing

    Several industry groups are pushing back on Medicare's site-neutral payment cuts, and the American Hospital Association (AHA) is threatening to file a lawsuit challenging the changes.

    Download the cheat sheet to learn more about HOPPS—and how payments are calculated

    CMS releases final Hospital Outpatient Payment Systems rule

    CMS on Friday released a final rule to update Medicare's Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System for calendar year (CY) 2019.

    The final rule contains several policy updates intended to address payment differences between different sites of service. Currently, CMS generally pays more for clinic visits conducted in the hospital outpatient (HOPD) setting than those conducted in the physician office setting. In CY 2018, CMS paid off-campus HOPDs $116 for routine clinic visits, with Medicare beneficiaries paying $23 copayments for such services.

    However, under the final rule, CMS will begin paying off-campus HOPDs the same amount for clinical visits that it pays under Medicare's Physician Fee Schedule. CMS will implement the payment reduction over a two-year period by:

    • Reducing the payments for routine clinical visits to off-campus HOPDs by 30% in CY 2019 compared with CY 2018, bringing Medicare payments down to $81 for such visits and beneficiary copays down to $16; and
    • Reducing the payments by 60% in CY 2020 compared with CY 2018, bringing Medicare payments down to $46 for such visits and beneficiary copays down to $9.

    CMS predicted that the change will save Medicare an estimated $380 million in 2019.

    Groups say final rule exceeds statutory limits, and AHA threatens to challenge policy

    Tom Nickels, executive vice president of the AHA, in a statement called the final HOPPS rule "misguided." Nickels took particular aim at the rule's site-neutral requirements, saying it is "based on unsupportable analyses and erroneous policy rationales" and "will hit patients in rural and vulnerable communities especially hard."

    Nickels argued that the final rule "clearly exceed[s] the administration's legal authority" and that "AHA, joined by the AAMC (Association of American Medical Colleges), and member hospitals, intends to promptly bring a court challenge to the new rule's site-neutral provisions."

    Bruce Siegel, president and CEO of America's Essential Hospitals, said the final rule "not only goes against the intent of Congress but, most importantly, exceeds its statutory authority." Siegel argued that the OPPS final rule "undermines stability and choice for vulnerable patients." Siegel said, "It's especially troubling that CMS has framed these changes as empowering patients and providing more affordable choices and options. In fact, these changes create new road blocks to care in communities with chronic provider shortages—health care deserts plagued by severe economic and social challenges."

    Blair Childs, senior vice president of public affairs for Premier, said CMS' decision to implement site-neutral payments fails to acknowledge "the overhead cost differences between physician practices and provider-based outpatient clinics." Childs said, "At a time when providers are focusing on total cost of care and two-sided risk, this policy applies micro-managing cuts that foreclose health system decision-making based on how to best deliver care to patients."

    340B Health on Friday also criticized the rule, saying it will further reduce payments to 340B providers. Maureen Testoni, interim president and CEO of 340B Health, which represents providers caring for vulnerable populations, said "We are disappointed that CMS is continuing this misguided and damaging policy." She added, "We continue to believe these regulations are in violation of both the Medicare statute and the law creating 340B and encourage Congress to reverse these cuts and restore stability to hospitals as quickly as possible."

    Physician groups voice support for provisions in the rule

    On the other hand, some physician groups, including the American Association of Family Physicians (AAFP) and the American College of Physicians (ACP), have previously indicated their support for site-neutral payments, according to FierceHealthcare. For instance, AAFP previously called on CMS to implement "policies that … pay for health care services in a more consistent and equitable manner." AAFP told CMS that site-neutral payments would lower costs and provide patients with more options because it would help prevent clinics from closing as a result of vertical integration. AAFP indicated it "agrees with CMS that there is no justification" not to have site-neutral payments, noting paying hospitals more for services "[does] not result in better service or value to the patient" (Meltzer, FierceHealthcare, 11/2; Morse, Healthcare Finance News, 11/2; Finnegan, FierceHealthcare, 11/11; Dooley Young, MedScape, 11/1; Porter, HealthLeaders Media, 11/2).

    Learn more about the 2019 Outpatient Final Rule

    To learn more about the rule, including recent price transparency regulations, updates to outpatient quality reporting, and new measures to address opioid misuse, register for our upcoming webconference on November 15th.

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