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December 07, 2013 12:00 AM

Hospital groups unhappy about new Medicare flat rate for clinic visits

Maureen McKinney
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    Hospital groups generally are not pleased with the new CMS rule converting the current five-level, intensity-based payment system for clinic visits into a single outpatient visit code. But at least one hospital official isn't too worried.

    Ken Fisher, chief financial officer of University of Iowa Hospitals and Clinics, said the Iowa City-based 692-bed hospital, which averages more than 800,000 outpatient visits a year, did its own assessment and found it would fare the same or even a little better financially under the flat payment rate.

    “We're pretty ambivalent about it,” Fisher said. “It actually simplifies billing, which is a good thing, and it reduces the amount of back-end costs to get claims out the door.”

    In its final outpatient prospective payment rule for 2014, released Nov. 27, the CMS said the change would incentivize hospitals to provide more efficient care for Medicare beneficiaries, reduce hospitals' administrative burdens and eliminate the temptation to upcode patients to higher-paying levels—a problem many experts say is widespread. Medicare payments for hospital outpatient services under the final rule will increase 1.7% in 2014. In addition, the agency finalized its proposal to no longer distinguish between new and established clinic patients.

    “A single code and payment for clinic visits is more administratively simple for hospitals and better reflects hospital resources involved in supporting an outpatient visit,” according to a CMS news release.

    Fisher acknowledged the potential for upcoding in a multilevel payment system for outpatient visits. “I don't disagree that is something (the CMS) should be concerned about,” he said.

    But in a relief to hospital groups, the CMS announced it would not institute a Medicare flat-payment rate for emergency department visits, which it had proposed in July.

    MH Takeways

    CMS pulls back on flat-rate system for ED visits.

    The CMS said it reconsidered the ED payment proposal amid a flood of concerned comments from providers, many of whom said a single emergency-visit payment would unfairly impact hospitals that specialize in trauma and other high-acuity types of care. That argument was a compelling one, the CMS said in the rule, adding that “an alternate payment structure, possibly including more than one payment level, may be warranted.” The CMS said more study is needed to make sure the payment structure “would not underrepresent resources required to treat the most complex patients, such as trauma patients.”

    Providers had raised similar objections to flat payments for clinic visits.

    In a Sept. 5 comment letter to the CMS, Illinois Hospital Association President and CEO Maryjane Wurth said consolidating payment codes for clinic and emergency visits would “create undue financial hardship” for hospitals that treat complex patients.

    Despite pushback, the CMS said there was significantly less range across clinic-visit cost levels when compared with cost levels for emergency department visits, which it said indicated the appropriateness of a single clinic code. “We believe the proposed payment rate for APC 0634 represents an appropriate payment for clinic visits as it is based on the geometric mean costs of all visits,” the CMS said, referring to the single-payment code.

    American Hospital Association officials said they were pleased that the CMS reconsidered the move to a flat-rate system for emergency visits. But the AHA balked at the new policy for hospital clinics. “Hospitals that provide care for large numbers of complex patients will receive payment well below the cost of treating these patients,” AHA Executive Vice President Rick Pollack said in a written statement.

    Joanna Kim, AHA's vice president for payment policy, said hospitals may break even, but only if they treat equal numbers of patients above and below the mean.

    Fisher shares the AHA concerns about doing away with intensity-based emergency department visit payments. “We get a lot of high-acuity patients in our ED,” he said, adding that most low-acuity patients in the region now seek care in University of Iowa Hospital's walk-in QuickCare clinics. “It would definitely hurt us.”

    Follow Maureen McKinney on Twitter: @MHMMcKinney

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