AHA: CMS’ site-neutral payment plan could lead to access problems as hospitals cut services

Hospital groups are warning that CMS’ plan to institute site-neutral payments could lead to access problems and canceled services—and, they say, the change may not even be within the agency's authority to make. 

The Centers for Medicare & Medicaid Services issued its annual proposed Outpatient Prospective Payment System (OPPS) rule in late July, and the comment period closed this week. The American Hospital Association, in a letter (PDF) to the agency, said that the proposals “run afoul of the law and rely on the most cursory of analyses and policy rationales. Taken together, they would have a chilling effect on beneficiary access to care and new technologies, while also dramatically increasing regulatory burden.”

AHA has long opposed site-neutral payments, and both the letter and a briefing held Tuesday on the issue signal that the group is serious about fighting the changes if they reach the final rule—and hinting at the potential for a legal battle.

In a site-neutral payment system, CMS would cap its payments to hospitals for outpatient clinic visits at the same rate as physician office clinic visits. Erik Rasmussen, AHA’s vice president, said at the briefing that the payment cuts would be significant and likely to lead hospitals to cut or scale back services. 

There is “no Medicare fairy” to restore the lost money to providers when payments are cut, Rasmussen said. The change would cut payments to hospital-run outpatient clinics by about 60%. 

CMS argued that the payment structure changes would “help lay the foundation for a patient-driven healthcare system.” As CMS pays more for visits to clinics run by hospitals, the changes would lead to lower copays for Medicare beneficiaries, the agency said, dropping the average copayment from $23 per visit to $9 and saving $150 million each year in copays.

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Rasmussen said AHA is watching to see where the final rule lands, but litigation is on the table should the payment cuts move forward. The group’s letter, he said, clearly lays out its belief that CMS overstepped its authority and acted too aggressively. 

AHA is involved in two current lawsuits against CMS and the Department of Health and Human Services already, one in hopes of getting it to overturn cuts to 340B drug discount payments and another to push for CMS to implement the long-delayed 340B final rule, which would institute price ceilings and civil penalties.

AHA isn’t the only group to weigh in and warn of the potential negative impacts of site-neutral payments. In its letter (PDF), America’s Essential Hospitals (AEH) says that the changes would “run counter to CMS’ goal of providing efficient care in the lowest-cost setting.” 

“CMS’ policy proposal is based on flawed assumptions, including that patients at physician offices and hospital PBDs are identical and that the only reason for treating patients in the outpatient setting is to receive a higher payment rate,” AEH wrote. “These assumptions could not be further from the truth, as hospital PBDs treat more complex patients and provide more specialized services than physician offices.” 

Aaron Wesolowski, vice president of policy research and analytics for AHA, echoed the sentiment at the briefing, saying that high-complex patients who present to physician offices are often set to hospital clinics for care. 

In tandem with its comments, AHA released a study on Tuesday that dives more deeply into the population of patients that visit outpatient hospital clinics. Using Medicare data from between 2010 and 2016, AHA researchers found that hospital clinic patients are 1.6 times more likely to be under 65, and thus likely qualify for Medicare because of a complex condition, and 1.1 times more likely to be over the age of 85. 

Medicare patients at hospital clinics were also 1.8 times more likely to be dual-eligible patients who are also enrolled in Medicaid, according to the study. 

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The payment changes could especially impact midsized hospitals, which do not fall into the critical access hospital category but still treat large numbers of rural Medicare and Medicaid patients, AHA said. Eric Lewis, CEO of Olympic Medical Center in Washington, said at the briefing that switching to site-neutral payments could lead his hospital to cancel its plans to expand primary care services altogether. The 67-bed hospital serves 84% Medicare and Medicaid patients, so a 60% payment cut for outpatient services could be devastating to some of its programs and services, Lewis said. 

“You can’t spend money you don’t have,” Lewis said.