AHA urges Congress to reject further site-neutral Medicare payment policies

In a Feb. 12 letter to Republican leaders of the House Energy and Commerce Committee and its health subcommittee, the AHA detailed its concern with reduced payment for Medicare services furnished in new off-campus hospital outpatient departments (HOPD) and urged Congress to reject any further site-neutral payment policies.

“The AHA and the hospital field are extremely concerned about site-neutral payment proposals that would reimburse hospitals at the payment rates of facilities with lesser clinical capabilities,” wrote AHA Executive Vice President Tom Nickels, responding to lawmakers’ request for feedback on Section 603 of the 2015 Bipartisan Budget Act of 2015 and other site-neutral payment proposals.

The Bipartisan Budget Act, P.L. 114-74, creates site-neutral payments for new provider-based HOPDs – those that come into being after the Nov. 2 enactment of the legislation. Beginning Jan. 1, 2017, these departments would not be eligible for reimbursements under the outpatient prospective payment system, but would instead be eligible for reimbursements from the physician, ambulatory surgical center or clinical laboratory payment systems.

The AHA stated that the measure’s treatment of provider-based HOPDs “is in stark contrast with previous grandfather provisions” included in legislation changing Medicare payment for physician-owned hospitals and long-term care hospitals, in which Congress protected facilities under development. “As a matter of fairness, hospitals that have made substantial investments, often tens-of-millions of dollars, in new facilities that were under development when [the Bipartisan Budget Act] was signed into law should be given the same treatment and grandfathering consistent with past precedent,” the AHA wrote.

The AHA also expressed serious concern over other proposals to pay hospitals the same rates as physician offices, ambulatory surgical centers and others for certain services. Those proposals include paying for hospital care at the physician office rate for evaluation and management services and 66 specific ambulatory payment classifications.

“Americans rely heavily on hospitals to provide care to all patients 24 hours a day, seven days a week, to serve as a safety-net provider for vulnerable populations, and to respond to every conceivable type of natural and man-made disaster,” the AHA said. “These roles are not explicitly funded; instead they are built into a hospital’s overall cost structure, and in part, supported by revenues received from providing direct patient care across various settings.”

The AHA also noted that hospitals are subject to significant licensing, accreditation, regulatory and quality requirements, “none of which would be reduced under the proposed site-neutral payment policies.”

Protect access to care for hospital outpatients. The AHA’s letter to Capitol Hill came a week after the association urged the Centers for Medicare & Medicaid Services (CMS) to protect patients’ access to care when it implements Section 603’s site-neutral payments.

“The AHA is deeply disappointed that this law will result in substantial reductions to payments for services furnished in provider-based [hospital outpatient departments],” wrote the AHA’s Nickels. “While we will continue to work with Congress to make changes to the provision to address the serious concerns of the field, we remain concerned that, as it stands, Section 603 will restrict patients’ care options. Therefore, we strongly believe that flexibility is needed when CMS implements this provision to protect patients’ access to care.”

In its Feb. 5 letter to CMS, the AHA said the agency should continue to consider all items and services provided in the same facility as a dedicated emergency department (DED) as part of that facility, and therefore excluded from the law’s site-neutral payment reductions, and that relocating, rebuilding or acquiring a grandfathered DED in the future should not trigger the law’s site-neutral payment reductions.

“To do otherwise would mean that hospitals’ outpatient services would essentially be frozen in place, with no ability to respond to environmental, financial or population pressures or demands – this is clearly unrealistic and impractical and not what the Congress intended,” the AHA said.