Posted by Anne Phelps, Principal, US Health Care Regulatory Leader on February 12, 2016.
A letter seeking comments on site-neutral payments under Medicare went out to the health care community from Congressional leaders on Friday, February 5 and highlighted a recent change in law that will affect Medicare payments for certain provider-based off-campus hospital outpatient departments (PBD HOPDs).
On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015, which included a provision on site-neutral payments for PBD HOPDs. Beginning January 1, 2017, the provision will bar PBD HOPDs that execute CMS provider agreements after November 2, 2015 (the date the law was enacted), from being reimbursed under the CMS Outpatient Prospective Payment System (OPPS). PBD HOPDs barred from OPPS will only be eligible for reimbursement under the Medicare Physician Fee Schedule (PFS) or the Ambulatory Surgical Center Prospective Payment System (ASC PPS), both of which have generally lower reimbursement rates than OPPS.
The change in payment policy for these HOPDs is a major consideration for health systems because of the policy’s potential effect on operations, revenue streams, and volume. To prepare for the upcoming changes, health systems may need to revisit some physician payment agreements, evaluate the impact of participating in the 340B Drug Pricing Program, and assess their reporting and other administrative processes.
Details of the Letter
As health care stakeholders eagerly await guidance from the Administration on how this change in law will be applied, they have raised concerns with members of Congress. This prompted Rep. Fred Upton (R-MI), chairman of the House Energy & Commerce Committee, and Rep. Joe Pitts (R-PA), chairman of the Energy & Commerce Health Subcommittee, to issue a letter requesting formal feedback on policies related to the enactment of the PBD HOPD provision and recommendations for how the House Energy & Commerce Committee should approach site-neutral payments going forward.
The letter highlights recommendations from the Medicare Payment Advisory Commission (MedPAC) and findings from a Government Accountability Office (GAO) report in favor of site-neutral payments, as well as calls from supporters of site-neutral payments to enact further site-neutral policies across Medicare. Conversely, the letter cites concerns raised with the House Energy & Commerce Committee related to the policy’s effect on hospitals’ financial viability; a “lack of specificity on those HOPDs that are ‘grandfathered’ and a need for statutory clarity on issues surrounding implementation, growth, relocation, and change of purpose”; and the short period of time to the provision’s effective date, among other issues.
Responses to the letter are due to the House Energy & Commerce Committee by February 19, 2016.
AHA voices concerns on site-neutral payments
The same day that congressional leaders sent their letter to health care stakeholders, the American Hospital Association (AHA) sent a letter to Andy Slavitt, Acting Administrator of the Centers for Medicare and Medicaid Services (CMS), urging the agency to apply the policy so that it would not affect HOPDs in some circumstances. Specifically, the AHA urged CMS to implement the policy so that:
For more information regarding the impact of these regulatory developments on your organization, please contact: