Senators Bill Cassidy, M.D., R-Louisiana, and Maggie Hassan, D-New Hampshire, published a policy paper advocating to impose site-neutral Medicare payments on hospitals.
The lawmakers argue that site-neutral Medicare payment reform would lead to lower healthcare costs for patients and save taxpayer dollars.
Currently, Medicare payment rates recognize fundamental differences between patient care in hospital outpatient departments compared to other settings. Medicare patients and taxpayers share the cost of hospital “facility fees." These fees, which can be hundreds of dollars, are typically charged when a patient receives basic care—such as a steroid shot or allergy test—in a hospital setting regardless of what the procedure is, Cassidy and Hassan contend.
Site-neutral policies would require Medicare to pay the same rate for the same service, regardless of where the service is delivered—whether it's a hospital, ambulatory surgery center or outpatient clinic.
"Current Medicare regulations allow hospitals to take advantage of the higher Medicare payment structure for hospitals, allowing them to charge the highest possible price for services that can be done in less expensive settings. Many procedures can be done safely and in a less expensive setting like a physician’s office, yet hospitals continue to charge higher prices to do the same," Cassidy and Hassan wrote in a press release.
Cassidy and Hassan’s policy framework (PDF) proposes establishing site-neutral payments in off-campus hospital outpatient departments and for common outpatient services.
The senators say a long list of industry groups and companies, including the Small Business Majority, the ERISA Industry Committee, Families USA, the Bipartisan Policy Center, the Community Oncology Alliance, the Blue Cross Blue Shield Association, Aledade, the American Benefits Council and Arnold Ventures, back their legislative framework.
"Patients should not be forced to pay higher bills just because their regular doctor’s office was purchased by a hospital,” Hassan said in a statement. “Our bipartisan site-neutral payment framework demonstrates how we can significantly lower health care costs for seniors on Medicare—which in turn will save taxpayers billions of dollars. Our bipartisan framework would also make significant investments in rural and high-needs hospitals that serve their local communities. I look forward to continuing to work with Senator Cassidy and our colleagues on both sides of the aisle on future legislation. There is bipartisan agreement that by pursuing site neutral payment in Medicare, we can lower costs and ensure that more people can get the health care that they need.”
However, hospital groups were quick to slam the proposal.
"Simply put, this framework from Senators Hassan and Cassidy will limit and eliminate critical hospital-based care, resulting in increased wait times and decreased access to care for patients. It is irresponsible to think that clawing back up to $140 billion of Medicare spending for seniors won’t destabilize access to care," Stacey Hughes, executive vice president of the American Hospital Association, wrote in a statement.
"Rather than addressing the root causes driving physician acquisitions, this framework instead proposes dramatic and untenable Medicare cuts, reducing seniors’ access to critical hospital-based care. We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers," Hughes wrote.
Federation of American Hospitals Executive Vice President of Public Affairs Charlene MacDonald said site-neutral policies "equate to Medicare cuts that threaten access to 24/7 hospital care—a framework Congress has rejected time and again."
"Seniors deserve better than tired old policies pushed by the insurance industry that just threaten access to reliable hospital care," MacDonald said.
In December, the House passed a bill that included a provision requiring Medicare to pay the same rates for medical infusions, like chemotherapy and many treatments for autoimmune conditions, regardless of whether they’re done in a doctor’s office or clinic owned by a hospital or by a different entity. The policy has sparked a ferocious lobbying battle in the Senate, not the first of its kind, with hospitals determined to kill such legislation, KFF Health News reported.
The Purchaser Business Group on Health (PBGH), a nonprofit coalition representing 40 private employers and public entities, backed Cassidy and Hassan's legislative framework.
"Equalizing payment for medical services across health care settings is important for two reasons": it can lower the prices that consumers and purchasers pay for healthcare, and it can reduce the incentives for hospital systems to further consolidate by acquiring independent provider practices, the PBGH contends.
“PBGH supports site neutral reform because of its pro-competitive and cost-reducing effects on the health care marketplace,” said Elizabeth Mitchell, president and CEO of the PBGH. “We are hopeful this legislative effort by Sens. Cassidy and Hassan will serve as a foundation for future site neutral payment legislation that addresses not just Medicare, but the commercial market as well.”
The PBGH encourages Congress to advance current site-neutral policy proposals contained in the Lower Costs More Transparency Act (H.R. 5378) and pursue additional reforms that extend to the commercial market.