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Late News: MedPAC policy highlights $900 million in annual savings

By Modern Healthcare
Posted: June 15, 2013 - 12:01 am ET

Congress may be salivating over a long list of opportunities to cut hospitals' outpatient services. In March 2012, the Medicare Payment Advisory Commission said the government could save as much as $1 billion a year by paying a uniform rate for evaluation and management office visits, regardless of whether they take place in a hospital's outpatient setting or a physician's office. MedPAC followed that Friday with a report offering another 66 ambulatory payment areas where a “site-neutral” policy could derive big savings, perhaps another $900 million a year. “We have a real interest in that area,” Rep. Kevin Brady (R-Texas), chairman of the Ways and Means Health Subcommittee, said during a hearing on the report. The changes would accomplish $500 million of the projected annual savings from three groups of cardiac imaging services. MedPAC also noted that the use of such imaging among Medicare beneficiaries has shifted from office settings to hospital outpatient departments as hospitals are employing more cardiologists. Mark Miller, executive director of MedPAC, testified that the higher hospital-based rates aren't justified and are causing unintended consequences. “We think that payment has stimulated purchases of physician practices, for example,” he said. The American Hospital Association tried to get MedPAC to strike the proposals from its June report to Congress. The trade group estimated that all of the site-neutral changes would cost hospitals more than $2 billion annually. “Given the complexity involved in crafting a site-neutral payment policy, the AHA believes that a more robust analysis of impact should have been conducted before this issue was committed to a published chapter,” said Marie Watteau, an AHA spokeswoman.

—Rich Daly

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