CMS payment proposal divides physicians, hospitals


Doctors like it, hospitals don’t.

That’s how you can summarize reaction to one aspect of the Centers for Medicare & Medicaid Services’ proposed changes under the 2017 payment rule for hospital outpatients based on statements from the leading organizations that represent physicians and hospitals.

This week CMS proposed changes to policies and payment rates under the Hospital Outpatient Prospective Payment System (OPPS), as well as the Ambulatory Surgical Center (ASC) Payment System. One policy change aims to level the playing field when it comes to payment policies for physicians in independent practice with those owned by hospitals.

Yesterday, the American Medical Association (AMA), which represents physicians, praised the proposed change but the American Hospital Association, which represents hospitals, dissed it.

The AMA said the proposal will remove hospital payment incentives that have promoted consolidation in the healthcare industry--namely, a move by hospitals to buy physician practices in order to receive higher Medicare rates. “The CMS proposal could help stem the tide of consolidation by large systems and help small practices maintain their independence,” according to an AMA statement.

CMS proposes paying the same Medicare rates after future hospital acquisitions, whether physician services are provided in freestanding independent practices or in off-campus, hospital-owned practices, the AMA said. Currently, Medicare pays a higher rate for certain items and services provided in a hospital outpatient department rather than a physician’s office, said CMS, which estimates the change would save Medicare about $500 million in 2017.

“Providing similar payments for similar professional services located outside of a hospital campus, regardless of facility ownership, could lead to a more level economic playing field and help preserve independent practice,” AMA President Andrew W. Gurman, M.D, said in the statement. “The new policy is more equitable for patients, who, CMS notes, often pay more for the same service provided in an off-campus department of a hospital.”

The AHA disagreed with the plan to stop paying their off-campus facilities the same as hospital-based outpatient departments. CMS is proposing to provide no funding support for outpatient departments and that “does not reflect the reality of how hospitals strive to serve the needs of their communities,” said AHA Vice President Tom Nickels, in a statement.

He also called it “unreasonable and troubling” that CMS will not continue current reimbursement to hospitals that need to relocate or rebuild their outpatient facilities in order to provide needed updates and ensure patient access. “Taken together, it appears that CMS is aiming to freeze the progress of hospital-based healthcare in its tracks,” he said.

The draft rule does provide exemptions for dedicated off-campus emergency departments. The proposed rule, which will be published in the Federal Register next week, is open for comment through September 6.

- read the AMA statement
- find the AHA statement