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Healthcare Business News
Dr. Craig Samitt, executive vice president of HealthCare Partners

MedPAC pushes for site-neutral Medicare payments

By Virgil Dickson
Posted: December 13, 2013 - 4:30 pm ET

The Medicare Payment Advisory Commission on Thursday called for harmonizing CMS reimbursement rates for a number of services that are reimbursed differently depending on their setting.

While no vote was taken, panel members appeared to unanimously support including the proposals in MedPAC's March 2014 report to Congress.

The key recommendation would cut hospital payment rates for a variety of services so they are comparable to physician offices.

For instance, this year Medicare pays about 140% more for an echocardiogram offered in a hospital outpatient department than it does for the same service in a freestanding physician's office. That not only costs Medicare more, it raises the beneficiary's copay, according to the congressional advisory panel. It also incentivizes hospitals to shift services to the more costly in-patient environment when they have the option of doing so.

The commission also recommended bringing payments to long-term acute care hospitals in line with those paid to acute care hospitals for patients who spend fewer than eight days in an intensive-care or critical-care unit. The proposal would reduce Medicare payments for long-term care hospitals by $2 billion in 2015.

While the commission voiced approval for the recommendations without dissent, some panel members expressed concern about recommending an abrupt change in long-term hospital payment policy. The changes are “quite significant and there needs to be a transition period,” said Dr. Craig Samitt, executive vice president of HealthCare Partners, the huge California-based physician practice owned by DaVita.

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The American Hospital Association expressed deep concerns about changing payment for long-term care hospitals. “We are deeply disturbed by the commission's draft recommendation to cut payments to 64% of LTCH cases,” said Joanna Hiatt Kim, AHA vice president of payment policy. “The discussion focused solely on payment rates, lacking any dialogue about the financial impact on LTCHs or, most importantly, potential consequences on beneficiary access to the high-quality, specialized care that LTCHs provide.”

In public comments offered at the meeting, the hospital trade group condemned MedPac for failing to take sequester cuts into account in its recommendations.

The House and Senate included less severe cuts to long-term care hospitals in the budget bills passed Thursday. They would give long-term acute care hospitals their full rates if patients have spent at least three days in the ICU. Congress needed the $3 billion over 10 years (about $300 million a year—far less than the MedPAC proposal) to help pay for postponing physician pay cuts to March 31.

Meanwhile, MedPac also proposed Congress freezing payments to ambulatory surgical centers in 2015. In 2012, these organizations were paid $3.6 billion to serve 3.4 million people. A freeze would save about $500 million a year.

MedPac says there enough evidence to suggest that current reimbursement rates are adequate. The commission suggested frozen rates would be partially offset by a higher overall number of procedures performed at the organizations.

The Ambulatory Surgery Center Association expressed disappointment with the recommendation.

Follow Virgil Dickson on Twitter: @MHvdickson

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