MedPAC votes to cut payments for free-standing ERs

The Medicare Payment Advisory Commission voted unanimously to cut reimbursement for some stand-alone emergency departments in urban areas. The proposal could save Medicare up to $250 million annually if adopted by Congress.

Hospital industry stakeholders immediately slammed the idea, arguing the cuts could undermine access to care.

In its vote Thursday, MedPAC asked federal lawmakers to reduce emergency department payment rates by 30% for off-campus stand-alone facilities that are within six miles of an on-campus hospital emergency department. The suggestion will be published in the advisory group's June report to Congress.

In 2017, there were between 550 and 600 of these stand-alone facilities, two-thirds of which were hospital-owned versus independent centers without an affiliation. A review of five large markets found that roughly 75% of the stand-alone EDs were located within six miles of the nearest on-campus hospital ED.

Between 2010 and 2016, Medicare outpatient ED payments per beneficiary increased 72%, MedPAC found.

Off-campus facilities have lower standby costs than on-campus EDs. They do not maintain operating rooms, have trauma teams, or have specialists on call 24/7. In addition, ambulance companies typically bypass stand-alone EDs in favor of an on-campus one to ensure access to inpatient care if needed.

Despite their different resource needs, stand-alone EDs receive Medicare payments that are equal to on-campus hospital EDs, according to the commission.

If the payment change is enacted, urban facilities would be paid similarly to off-campus facilities that are not open 24/7 and lack additional support personnel to handle trauma or non-urgent issues. These facilities can bill Medicare a maximum of $329 in emergency room fees, versus the $476 that traditional emergency rooms are eligible to receive.

"There may be incentives in the Medicare system to drive greater use of ED services," Sydney McClendon, a research assistant at MedPAC, said Thursday during a commission meeting.

Despite unanimous support for the proposal, several commission members said they had reservations. For instance, commissioners said there wasn't sufficient evidence to suggest that operators of these urban ED facilities were attempting to game Medicare in some way.

"My concern is that we're setting a policy based on pretty limited data," said Warner Thomas, a commissioner and CEO of Ochsner Health System in New Orleans. "We're setting a precedent of creating a policy on something we think is going to happen."

Shortly after the vote Joanna Hiatt Kim, vice president of payment policy at the American Hospital Association, raised concerns about access to care.

"The recommendation is not based on any analysis of Medicare beneficiaries, Medicare costs or Medicare payments, and would make Medicare's record underpayment of outpatient departments and hospitals even worse," Kim said. "Even more troubling to us is that (the recommendation) has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections."

Congress has historically agreed with MedPAC on reducing payments for off-campus facilities. It passed a site-neutral policy that cut pay for off-campus hospital outpatient departments after a 2013 MedPAC report that found Medicare was paying 141% more for an echocardiogram in an outpatient setting than for the same procedure in a doctor's office.