The Center for Medicare and Medicaid Services released a final rule on Friday for Medicare. The big news is that CMS is still planning on going forward with “site neutral” payments for common doctor visits. Right now, a visit at an office that is marked as a hospital outpatient facility pays at a much higher level than an identical visit at a location that is designated as a doctor’s office. The 2015 CROMNIBUS made payment neutral at new acquisitions but grandfathered in old off-campus outpatient departments at the higher rate. This rule is declaring that CMS will pay a flat rate. Two identically decorated offices in the same building, on the same floor and sharing the same side of the hallway with shared employees can collect from Medicare wildly different rates for the same service.
CMS wants to do this because there is a good amount of research that shows the payment differential encourages vertical integration that leads to higher systematic costs without attendant quality gains. Concentrating provider power tilts payment levels upwards.
CMS wants payments to be ownership structure agnostic. This seems to me to be a good idea. This is a way to make the medical markets a little bit less convoluted with the possibility of encouraging a touch more competition. From a policy point of view, this is a very good thing.
And from a political point of view, this is a very big lift. It is intending to take money out of some very deep pockets.
Breaking: American Hospital Association plans to sue CMS over final site-neutral payment rule https://t.co/iy8niYicJt
— Altarum SHSS (@Altarum_SHSS) November 2, 2018
There will be lots of lawyers billing lots of hours to argue that good policy was not properly formulated. I am not a lawyer so I can not evaluate the legal argument, but I can assume that the American Hospital Association can afford very good lawyers who can tie this rule up in court for years.
This is a good example of good policy having to go through the sausage maker for implementation.