Providers protest against site-neutral payment proposal

The American Hospital Association (AHA) and other providers are pushing back against a proposed Obama administration policy change that would introduce much greater site neutrality regarding how they are paid.

Such a change would likely prevent many providers from charging more at outpatient facilities that are owned by hospitals than if they had been owned by medical practices. That has been the bane of many patients who wind up seeking care at physician offices or outpatient facilities that have been acquired by hospitals, causing higher bills or out-of-pocket costs compared to past visits.

The proposal would eliminate any payment differentials for ambulatory care, whether it is rendered in physician offices or in facilities owned and operated by a hospital, according to the New York Times. The change would wind up saving the Medicare program more than $30 billion over the next decade, which is more than it would save by raising the eligibility age to 67, according to the newspaper.

Physicians who continue to work in hospital-owned buildings would still be paid at a higher rate, but whole medical practices that are acquired by hospitals would not be paid more.

Providers object to such a policy change. Hospital-owned outpatient facilities treat sicker, poorer and more minority cancer patients at sites they own compared to those owned by other entities, according to AHA News Now. That's based on the findings of a November 2014 study conducted by the AHA.

However, some industry observers support the move, saying that the disparate payment policies had prompted physician practices to sell out to hospitals. "If hospitals are going to employ physicians, it should be done for the right reasons, not the wrong reasons," Robert Berenson, M.D. a senior fellow at the Urban Institute told the New York Times.

The proposed policy change does not address another trend that has come on the heels of hospitals buying physician practices: The levying of so-called facility fees on patients. In states such as Connecticut, they range from $100 to as much as $1,000, prompting the legislature there to try and take action to cap such charges and make the patient's insurer responsible for paying them.

To learn more:
- read the New York Times article 
- check out the AHA News Now article 
- here's the AHA study (.pdf)

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