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'Deeply Disappointed': Hospitals Urge CMS to Change Course on OPPS 2019

Analysis  |  By Steven Porter  
   September 25, 2018

Two major hospital groups suggested separately that CMS had overstepped its legal authority in proposals for next year.

The deadline to comment on proposed changes to the Medicare outpatient prospective payment system (OPPS) and ambulatory surgical center (ASC) payment system for next year passed Monday evening.

Hospital groups did not pass up the opportunity to make their displeasure known, and they hinted that legal action to block the proposal could be warranted.

Among the more than 2,800 comments received, there were some unsurprisingly unhappy responses from the American Hospital Association (AHA), America's Essential Hospitals (AEH), and others who had already expressed their general opposition the government's plan when it was announced in July.

Both groups added detail to their feedback Monday and accused the Centers of Medicare & Medicaid Services (CMS) of pursuing changes beyond its legal authority.

"The AHA is deeply disappointed in certain proposals that CMS has chosen to set forth in this rule, which run afoul of the law and rely on the most cursory of analyses and policy rationales," AHA Executive Vice President Thomas P. Nickels wrote. "Taken together, they would have a chilling effect on beneficiary access to care and new technologies, while also dramatically increasing regulatory burden."

The AHA objects specifically to three items in the CMS proposal:

  1. A payment reduction for hospital outpatient clinic visits in certain off-campus provider-based departments (PBD). These visits would be reimbursed at the physician fee schedule rate, which equals 40% of the OPPS rate.
  2. A payment reduction for "services from expanded clinical families" in certain off-campus PBDs. This would also be set at 40% of the OPPS rate.
  3. A continuation of the policy that pays for 340B program separately payable drugs at 22.5% less than the average sales price and an expansion of that policy to certain PBDs.

The AEH comment, signed by organization President and CEO Bruce Siegel, MD, MPH, made similar points.

"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," Siegel wrote.

CMS Administrator Seema Verma has touted the so-called "site-neutral" payment proposal as an effort to rationalize the way the federal government reimburses services, saying it doesn't make sense for taxpayer-funded healthcare programs to pay different rates depending upon the site of service.

"It's a great example of some of the bizarre things in the Medicare program that just don't make sense and that are actually having a perverse incentive on the entire healthcare delivery system," Verma said.

In a comment on behalf of about 4,000 hospitals and 165,000 other providers, Premier Senior Vice President of Public Affairs Blair Childs contended that there are key differences between PBDs and physician practices that should be taken into account in CMS reimbursement decisions.

"At a time when providers are adopting population health strategies that seek to limit inpatient care when it is safe and medically appropriate, we are concerned that CMS' over-reach is counterproductive and will have negative consequences for beneficiaries," Childs wrote. "In lieu of expansive site-neutral payment policies, CMS should focus on methods to encourage providers to adopt risk-based alternative payment models"

Less than 20% of the comments received by CMS had been released publicly as of Tuesday morning, but major industry groups released their comments publicly on their own, reflecting a variety of concerns beyond the site-neutral payment policy. The Pew Charitable Trusts, for example, focused on a request for information in the proposal pertaining to the Competitive Acquisition Program.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


The administration has touted site-neutral payment policies as a way to rationalize reimbursement.

Industry groups contend that site-specific costs should be considered when calculating rates.

The proposals intersect with administration efforts to reduce drug costs.

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