Hospitals Fight MedPAC Plan to Reduce Outpatient Rates

Cheryl Clark, March 13, 2013

The Medicare Payment Advisory Commission seems intent on issuing a recommendation that would reduce federal payments to hospital-based outpatient departments by nearly $1 billion a year for some 66 procedures. The reason: Those services are now provided in a physician's office for less cost.

But hospital representatives say the controversial "site-neutral payment plan," would be a disaster for hospitals and patient access alike because hospitals depend on those extra funds to cover the uninsured, meet regulatory requirements, and be constantly equipped for emergencies.

MedPAC advises the Centers for Medicare & Medicaid Services on policies the agency puts forth in new payment rules each year. Several options for the plan were outlined in a regular MedPAC meeting Thursday.

Under one MedPAC plan, Medicare might pay hospitals the same rate it now pays for the service in a physician's office, or it may narrow the gap between the two, paying the physician's office more and the outpatient physician's office less. Several options are on the table, but under all scenarios, federal payments to hospitals would drop dramatically.

"From our perspective, we hope they don't make any of these [changes] because hospitals have a higher cost structure than these other settings," says Roslyn Shulman, the American Hospital Association's director of policy.

"Hospitals have a safety net function where they care for all patients who seek emergency care regardless of their ability to pay, and hospitals provide about $39 billion in uncompensated care annually. They provide 24/7 access to care, have disaster response and readiness, they have a much heavier regulatory burden, and these are costs that ambulatory surgical centers and physician's offices don't have."

During the Thursday meeting, Joanna Kim, also of the AHA, addressed MedPAC chairman Glenn Hackbarth:

"The commission has already recommended cuts to a number of services of about $1 billion dollars as far as the cut to the hospitals, and today we discussed another $1.5 billion in cuts that, as you said, would reduce outpatient revenue by about 5.4%, and that's to a system that already has a negative margin of 11%," she said, according to the transcript of the meeting.


Facebook icon
LinkedIn icon
Twitter icon