CMS' proposed cuts for partial hospitalization irk providers

Providers are urging the CMS to reverse course on proposed reimbursement cuts for partial hospitalization, a treatment category that allows patients to live at home while getting intensive care at a hospital or treatment center for mental illness or substance abuse. Others are calling for more flexibility on procedures that can be done in ambulatory surgical centers.

The agency's proposed rule for the outpatient prospective payment system, released in July, includes a 2.1% increase in payment rates for 2015 under the outpatient prospective payment system (OPPS) and a 1.2% increase for ambulatory surgery centers while also introducing several policy changes. The draft rule drew more than 600 comments from the industry.

Many letters raised concerns about cuts for partial hospitalization programs (PHP). The CMS is proposing a nearly 15% cut for some hospital-based partial programs. The service is also provided in community mental-health centers, for which Medicare is suggesting a 6% cut.

Hospitals say the proposed cut is so deep that they might lose interest in offering the service, which they said would actually lead to higher costs for Medicare as beneficiaries look to other avenues for treatment.

“When partial hospitalization is not available, the only alternatives may be more costly hospitalization or outpatient care … which is insufficient for their needs,” the National Association of Psychiatric Health Systems says.

The American Hospital Association noted that the number of hospitals offering partial hospitalization programs already dropped from 508 in 2003 to 410 in 2013.

“We are concerned that the proposed 15% rate reduction … will be a tipping point, dropping payments so far below costs that hospital-based programs may consider closing,” the AHA says.

To make sure Medicare beneficiaries have access to PHP services, the hospital association and the National Association of Psychiatric Health Systems recommend that the CMS keep payment rates for 2015 at the 2014 rate. Freezing the rates will help stabilize access to these services and give the agency enough time to evaluate steps to help keep costs reasonable for this benefit, they said.

Elsewhere in the rule, the CMS suggests adding a slew of new procedure codes it will now reimburse for in ambulatory surgery-center settings, but some providers say the CMS didn't go far enough. Several centers that focus on spinal surgery said additional codes should be added for the work they are already performing on privately insured patients.

“We have clearly demonstrated that spine surgery can be safely and effectively performed at an ASC with lower costs to the insured and the patient,” said Chris Gallagher, vice president of operations at the California-based Salinas Surgery Center.

Follow Virgil Dickson on Twitter: @MHvdickson