MedPAC considers equal outpatient pay to hospitals, doc offices

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The American Hospital Association (AHA) is fighting back against a proposed "site-neutral" Medicare policy that would pay hospitals and physician offices the same amount for certain outpatient services, essentially reducing hospital payments by billions, according to AHA.

Last month, the Medicare Payment Advisory Commission (MedPAC) addressed payment differences across settings. For instance, the rate for a laser eye procedure is 90 percent more at a hospital outpatient department than at a physician's office, MedPAC said at an Oct. 4 briefing.

MedPAC said patients shouldn't pay more for a service in one setting than another. "Medicare should base payment rates on resources needed to treat patients in [the] lowest-cost, clinically appropriate setting," it continued.

But the national trade group said the proposed rule doesn't take into consideration that hospitals offer standby and community services beyond physician offices' capabilities, according to AHA.

"Hospitals are not physician offices and play a very different role in the communities they serve …," AHA Executive Vice President Rick Pollack wrote in a letter Friday. AHA pointed out that hospitals offer 24/7 access to care, safety nets for those who can't pay, as well as disaster response. "These critical roles, which [are] often taken for granted, represent an essential component of our nation's health and public safety infrastructure," Pollack said.

If MedPAC enacts the site-neutral payment policy, combined with the last year's recommended cuts for 10 evaluation and management services, hospitals could lose out on $2 billion a year in Medicare payments.

In 2010, hospital outpatient department (HOPD) services margins were 9.6 percent in the red, according to MedPAC, AHA noted.

For more information:
- see the AHA letter (.pdf)
- check out the MedPAC Oct. 4 brief and presentation (.pdfs)

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