Hospital leaders are working to head off any momentum in Congress toward overhauling Medicare rates to pay hospitals the same for outpatient services as the program pays for the same services in physician offices.
The Medicare Payment Advisory Commission has pushed site-neutral payment policies for years. The panel will make the same recommendation to lawmakers in its March report, and the change could mean a $1.44 billion annual drop in reimbursement if Congress adopts it.
“When MedPAC looks at this in a vacuum, it might make sense on paper, but when you actually talk to clinicians and actual hospital people about how this would work in the real world, the impact is significant” said Erik Rasmussen, vice president of legislative affairs at the American Hospital Association, which hosted the briefing.
The idea has gained new currency amid a wave of hospitals and health systems buying physician practices to assemble integrated networks, raising Medicare's costs for the care provided in the same facilities.
In 2013, for example, MedPAC observed a 7% rise in echocardiograms taking place in hospitals and an 8% decline in echocardiograms in physician offices, which are paid roughly half what hospitals are for the test.
Hospitals, however, say they hope Congress will consider the consequences of site-neutral payments. The higher rates for hospitals, they say, are justified by the higher cost of keeping a hospital running 24/7.
The AHA also released a report (PDF) arguing that patients who receive care in a hospital outpatient department are more likely to be minorities, poorer and have more severe chronic conditions than patients treated in physician offices.
The financial hit from site-neutral payments would mean Eastern Connecticut Health Network, Manchester, would have to eliminate as many as 70 full-time employees, the system's CEO, Peter Karl, said. He also said the policy would dampen its efforts to manage the broader health of the community to avoid costly hospitalizations.
“I would have to think what would I cut,” Karl said. “Do we really need the two RNs we have in the community now? I know it's a good thing, but we can't afford to do it.”
Follow Virgil Dickson on Twitter: @MHVDickson