April 9, 2018

MedPAC just proposed cutting certain urban freestanding ED payments by 30%

Daily Briefing

    The Medicare Payment Advisory Commission (MedPAC) on Thursday approved draft recommendations for Medicare payments to freestanding EDs.   

    Background

    According to FierceHealthcare, critics have voiced concerns that freestanding EDs raise care costs in states where they operate.

    Freestanding EDs: How to assess your market's readiness

    According to MedPAC, standalone ED facilities currently receive Medicare payments equal to on-campus hospitals, even though freestanding EDs generally have lower operational costs and different resource needs than their on-campus counterparts.

    Recommendation for urban freestanding EDs

    MedPAC on Thursday approved a draft recommendation that calls for Congress to lower Medicare payments by 30% for off-campus, 24-hour hospital EDs in urban areas that are located within six miles of an on-campus hospital ED. The proposed 30% payment reduction would bring payments for freestanding, 24-hour hospital EDs in line with those for facilities that are not open 24 hours per day, CQ Health reports.

    According to Modern Healthcare, Medicare could save up to $250 million annually if the proposal is approved by Congress. However, CQ Health reports that the language in a final recommendation might offer more flexibility regarding the distance requirements and payment cuts.

    Recommendation for rural, isolated freestanding EDs

    MedPAC on Thursday unanimously voted to approve a draft recommendation that advises Congress to allow freestanding EDs that are located more than 35 miles away from another ED to bill CMS for standard outpatient fees and receive an annual rate from CMS. According to CQ Health, CMS does not recognize EDs that are not affiliated with a hospital, so the recommendations only apply to freestanding EDs with a hospital affiliation. 

    The proposal aims to bolster support for rural freestanding EDs, CQ Health reports.

    Reaction

    Several commission members and industry stakeholders expressed reservations about the urban ED proposal.

    For instance, Warner Thomas, a commissioner and CEO of Ochsner Health System, pointed out that there wasn't adequate evidence indicating urban EDs were trying to "game" the system, Modern Healthcare reports. "My concern is that we're setting a policy based on pretty limited data," Thomas said, adding, "We're setting a precedent of creating a policy on something we think is going to happen."

    Separately, the American Hospital Association (AHA) in a letter to MedPAC said it supported the draft recommendation to allow isolated freestanding EDs to bill at the standard outpatient rate and receive an annual payment, but opposed the draft recommendation for urban facilities.

    Ashley Thompson, AHA's SVP for policy analysis and development, in the letter wrote that the proposal could threaten Medicare beneficiaries' access to EDs in urban communities. Thompson in the letter said the draft recommendation would bring Medicare payments down to record lows for both hospitals and outpatient services. She also criticized the proposal as "unfounded and arbitrary," saying the recommendation had not been based on an adequate analysis of Medicare beneficiaries or their costs. Thompson in the letter urged MedPAC to review Medicare claims data on stand-alone off-campus EDs before moving forward on the draft recommendation. 

    Brian DeBusk, president and CEO of the medical device company DeRoyal Industries, said MedPAC's draft recommendation for payments to certain urban EDs provides an "imperfect solution." DeBusk said, "I'm hoping that this is a jumping-off point to a much larger body of work on more appropriate ED use" (Clason, CQ Health, 4/5 [subscription required]; Dickson, Modern Healthcare, 4/5; Reed, FierceHealthcare, 4/5).

    Freestanding EDs: How to assess your market's readiness

    Increasing consumerism in health care, heightening demand for emergency services, and a shrinking supply of ERs are causing freestanding emergency departments (FSEDs) to proliferate.

    Find out which four key stakeholders you should survey before investing in an FSED, and get the tools you need to guide your decision making.

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