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What is Fair Payment for Outpatient Care?

March 25, 2013

New technologies make it possible for much of the care that used to require a hospital stay to now be delivered in an outpatient setting, but what happens to the provider payment when the site of care shifts?

The Centers for Medicare & Medicaid Services' Advisory Panel on Hospital Outpatient Payment regularly tackles this important reimbursement question as it works to establish fair payment rates for outpatient care.

This group of up to 19 members from the provider community, all of whom are selected by the HHS Secretary or CMS Administrator, convenes several times per year to hear presentations from vendors, providers, and others seeking adjustments to outpatient payment rates. The panel then offers advice and recommendations to CMS regarding appropriate reimbursement levels for these services.

Kris Zimmer, senior vice president of finance at St. Louis-based SSM Health Care, a 4,000-bed health system covering four states, recently joined the panel for a four-year term. At SSM, Zimmer oversees system finance, financial planning, and capital management, among other duties.

I recently asked him why he wanted to join the panel and what he hopes to achieve in his new role.

"Overall, in my mind, the panel provides an important service. As we know, more and more healthcare in our country is being delivered in an outpatient setting and we see a rapidly accelerating pace of change in terms of the technology that is available to take care of patients in an outpatient setting," Zimmer said.

As he sees it, this swift evolution of healthcare technology is great for patients who can receive more—and often better—care without having to be hospitalized, but it has the potential to result in providers being underpaid for the services they are giving on an outpatient basis.

Becoming part of the panel, Zimmer says, is a chance to have a positive impact on provider rates. "The outpatient panel is in an opportune position to help minimize the friction between a rapidly changing environment and the largest payer in the country, which is CMS, who does phenomenal work, but needs to be very driven by facts and data in their historic database," he explained.

"There is a natural conflict that exists between the forward-looking technology companies and process innovators and the retroactive-looking team at CMS."

The panel can help in bringing the two sides together, Zimmer says, noting that one of his personal goals as part of the panel is to "help translate and understand that friction."

Despite the steep time requirement, Zimmer and the leadership team at SSM believe there is significant value in his participation on the panel. "We decided it was a role that would be meaningful and worthwhile as an expenditure of time, which is the most valuable resource for all of us, so I don't take the commitment lightly. … There will be dramatic evolution of care delivery in our country over the next four years, and it is exciting to be at the forefront of that."

Zimmer attended his first panel meeting in mid-March, which was held via teleconference, although panel members typically meet in person.

During the meeting, the panel heard a variety of presentations from technology vendors and providers. "The topics ranged from the classification of proton therapy—a very high-end, narrow service—to many services that had much broader applications to much larger populations," Zimmer said. "Most were situations where a technology has evolved that has allowed a change in patient care … or a change in the standards of care."

"In one case, a technology company wanted to achieve what they felt was appropriate and fair payment," Zimmer says, adding that another presentation was given by a specialty provider group that believes the current payment methodology for their services is behind the times.

The topics will all be subject to "further evaluation and discussion in future meetings," Zimmer says. The next meeting date has not been set, but will likely take place in the late summer.

Improvements in technology and a more patient-centered approach to care delivery will fuel providers' efforts to keep patients out of the hospital and toward delivering more care in ambulatory settings. And it will remain important for providers to be paid appropriately for their services.

Zimmer is optimistic that the panel will play a significant role in keeping provider payments at fair levels and says he's happy to be part of the process. "I think it's a big challenge, but I am hopeful. The panel will be at the forefront in many ways. I'm excited for this opportunity to provide input into how Medicare evolves its payment policies."

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