Health-system-based outpatient-care providers are nervous that Medicare may soon reimburse them the same amount of money for clinic visits it reimburses independent physician practices and ambulatory facilities. Physician practices, on the other hand, can’t wait.
Medicare’s wheels are slowly moving in the direction of “site neutrality.” The reason is, site neutrality will probably save the feds money. It also will level the playing field for independent physician practices and outpatient providers.
Right now, Medicare and its beneficiaries often pay more for a clinic visit in the off-campus hospital outpatient setting than in the physician office setting.
So, in 2017, the Medicare Hospital Outpatient Prospective Payment System (OPPS) rate for “evaluation/management of a patient” (the most common service billed under the OPPS) was $184.44 for new patients and $109.46 for established patients, while the Physician Fee Schedule rate for the comparable service at a physicians’ office was $109.46 for a new patient and $73.93 for an established patient.
The hospital industry argues that the arrangement is just, given the hospital’s role as a safety net provider and the more comprehensive licensing, accreditation and regulatory requirements hospitals must meet.
But the Centers for Medicare and Medicaid Services is concerned about what it calls “unnecessary increases in the volume of covered hospital outpatient department services,” particularly as health systems continue to acquire physician practices and other outpatient providers.
In fact, the volume of hospital outpatient department services increased by 47% over the decade ending in the calendar year 2015; and in the five years from 2011 to 2016, combined program spending and beneficiary cost-sharing (copayments) rose by 5% , from $39.8 billion to $60 billion.
That’s why in November 2018, CMS announced that Medicare would apply a Physician-Fee-Schedule-equivalent payment rate for all clinic visit (E/M) services.
“This change would result in lower copayments for beneficiaries and savings for the Medicare program and taxpayers estimated to be $800 million for 2020,” CMS said in a statement one year later, on Nov. 1, 2019. “With the completion of the two-year phase-in, the cost sharing will be reduced to $9, saving beneficiaries an average of $14 each time they visit an off-campus department for a clinic visit in CY 2020.”
A difference of opinion
The Alliance for Site Neutral Payment Reform applauded CMS’ moves. In September 2019, one of its members — the American Academy of Family Physicians — wrote to CMS Administrator Seema Verma that “CMS should not pay more for the same service in the inpatient, outpatient or ambulatory surgical center setting than in the physician office setting. The AAFP encourages CMS to create incentives for services to be performed in the most cost-effective location, such as a physician’s office.”
Although not part of the Alliance, the Medical Group Management Association believes that site neutrality offers an opportunity to reduce healthcare expenditures, says Mollie Gelburd, associate director of government affairs. “Site neutrality offers an opportunity for independent physician practices and ambulatory centers that can furnish services at a lower cost than the hospital,” she says.
But not everyone welcomes such an opportunity.
In November, Tom Nickels, executive vice president of the American Hospital Association, issued a statement saying that the “final rule’s continued payment cuts for hospital outpatient clinic visits not only threaten access to care, especially in rural and other vulnerable communities, but it goes against clear congressional intent to protect the majority of clinic services.” (Nickels was referring to the Bipartisan Budget Act of 2015, which enacted site-neutral payments for newer off-campus provider-based outpatient departments.)
The movement toward site neutrality may be bumpy, but inexorable.
There is bipartisan consensus that site-of-service differentials can be eliminated without affecting patient safety or quality of care, says Gelburd. “That said, the [September 2019] District Court decision shows that in order for CMS to get the requisite authority to implement site neutrality more broadly, additional congressional effort is required.
“I think the policy is here to stay, but there are roadblocks along the way that have to be addressed.”
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Site-neutrality timetable
November 2015: The Bipartisan Budget Act of 2015 requires Medicare to pay for services at newer off-campus hospital outpatient departments (that is, those that were acquired by a health system or newly built as of Nov. 2, 2015) based on the Physician Fee Schedule rather than the higher-paying Medicare Hospital Outpatient Prospective Payment System.
November 2018: The Centers for Medicare and Medicaid Services issues a Final Rule effective Jan. 1, 2019, equalizing (over the course of two years) the payment rate for evaluation/management services (HCPCS code G0463) provided by all off-campus provider-based departments, that is, those operating before and after Nov. 2, 2015, and physician offices.
December 2018: The American Hospital Association files suit against the Department of Health and Human Services, arguing that the department overstepped the authority granted to it by the Bipartisan Budget Act of 2015 by equalizing payments provided by all off-campus PBDs and physician offices.
September 2019: United States District Judge Rosemary M. Collyer rules in favor of the AHA by granting its motion for summary judgment and vacates the November 2018 CMS rule impacting evaluation/management services. Specifically, Judge Collyer’s decision agrees with AHA that CMS exceeded its statutory authority when it cut the payment rate for clinic services at all off-campus provider-based clinics.
Where we stand today: CMS intends to continue implementing site neutrality in 2020, despite ongoing litigation.
Dec. 4, 2019