Site neutral payments: Good policy and billable hours

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.

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.

10 replies
  1. 1
    cain says:

    I’m sitting exposed cuz I got no healthcare due to a fuck up with COBRA. So I gotta hold on till January 1st. I’m goign to be hitting the exchange today and hoping to get into a gold or even platinum plan if possible. Can I whine again about wanting govt healthcare. Feckless republicans piss me off.

    Anyhoo, it’s good to see some interesting positive steps in the healthcare front.

  2. 2
    p.a. says:

    Is CMS political? Can it be ‘Federalist-Society-ized’? Who are they, how do they get there?

  3. 3
    Ella in New Mexico says:

    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

    I know things sound great from behind a desk in some actuarial office some place, but I really don’t think you understand how this works.

    The money won’t come out of those “deep pockets” at the top of the food chain, especially in “for profit” settings. it will come out of the pockets of and off the backs of front line healthcare workers in the form of position eliminations, no raises, increased costs of their insurance benefits, increased patient loads, and infrastructure/resource cutbacks, including closing clinics.

    Currently doing my NP clinical internships at a hospital outpatient clinic here that is part of the University of NM’s Health Sciences center. In a highly rural and underserved state like NM, we depend on UNMH’s hospital and specialty clinics, without which our citizens would have to travel to other states for services. It’s a non-profit and educational institution, with a huge Medicare/Medicaid insurance population proportion, the only Level 1 trauma center (hundreds a year are flown in from rural areas for our care) in the state, and has one-of-a-kind clinics staffed by uber-qualified providers in everything from pediatric nephrology to being an NCI Comprehensive Cancer Center of Excellence. It and it’s outpatient clinics is/are integral to the provision of care to people all over the region without regard to ability to pay.

    I’m guessing if it doesn’t get those differentials it literally would impact it’s ability to afford to serve the multitudes of people across the state with not only excellent, evidence-based primary care but high quality consultations with specialists they don’t have in their communities.

    Even though they’re non-profit, they have the same bills to pay to do the work and compete with other more profit oriented organizations. I’m assuming this new rule could care less about the status of a hospital like UNMHSC.

    Taking away money from any hospital system really only means negative consequences for employees and patients. At this point in time, this sounds like a very bad idea to me.

  4. 4

    @Ella in New Mexico:

    Ella if on Monday the office is designated an independent, free standing office and on Tuesday the same door/exam room is now designated an outpatient clinic of the hospital with no other changes should there be a differential pay rate?

  5. 5
    Barbara says:

    @Ella in New Mexico: Did your salary go up when the freestanding doctor’s office became a hospital clinic?

  6. 6
    Barbara says:

    @Ella in New Mexico: I am not indifferent to the argument that hospitals have a higher cost base because they are open 24/7, disproportionately serve low income populations, train new doctors, and so on. The problem with that argument when it comes to this kind of service is that these particular locations are not open 24/7 and do not disproportionately serve a low income population and rarely serve as the site of any kind of medical education. Yet, they are still paid as if they do. And we already do adjust payments to hospitals under the Medicare program to reflect the disproportionate share of services provided to low income populations and the provision of medical education. The place to adjust is for those payments for those public good activities that we want hospitals to engage in, not to impose a rather substantial penalty on payers and consumers for everything that happens to touch a hospital, including things that having nothing to do with its non-profit mission.

  7. 7
    TomatoQueen says:

    2nd try, this is nuts. After using all my allotted home care wound treatment visits (calendar, not need-based), I’ve been forced to attend a hospital based wound care center. On the initial visit day, the hospital computer system was down, so billing was a mystery, and it still is, after seeing the EOB for treatment and for labs, with hideously high fees, all completely covered by my screwball fancy pants federal employee insurance, which has otherwise decreed preauthorization necessary for METFORMIN all extended release doses for next year ffs, and has no participating wound care doctors listed on the website. Website and member services also deny this wound care center participates in my network. Comparing the prices of services rendered by this center to what I’ve been receiving at home since January (wound care is unbelievably slow) makes me think my insurance is paralleling Medicare. Can I expect to be kicked in the teeth any further? I’m enjoying the headspinning so far.
    YES I have voted, absentee, owing to crippling arthritis, I’m in the safest blue district on the planet.

  8. 8
    Lewis from Gopher Prarie says:

    Here is some support for Ella. While it may be true in the research triangle there are medical offices on both sides of a hallway doing the same thing, this in not true in rural America. There are economic reality issues that affect a medical practice with an 80% government payer population like the ones where Ella and I live, and they do not allow for big raises for providers who sell to a hospital for doing the same work. It is the difference between not being able to have your practice survive and being able to keep your door open. CMS touts saving patients 14 dollars for co pays, but out here that 14 dollars disappears pretty quickly when you have to drive a hundred miles to find a provider who accepts your government pay rate. My understanding, subject to correction by someone like David who knows more about the details, is that site neutral payments initially did not apply to rural facilities who were the sole providers in a community, but the Trump administration expanded this to all hospital providers. Much as I enjoy the GOP sticking it to their own voters, there is a difference between health care in big cities and small towns.

  9. 9
    Ella in New Mexico says:

    @Lewis from Gopher Prarie: thanks!

    @David Anderson: @Barbara: @Barbara:

    Lewis is spot on: Rural and underserved areas like ours desperately need these teaching and non-profit hospital healthcare systems, particularly for specialty care. The providers that are qualified to do stuff like neonatal cardiac care or management of severe neurological disorders cost money and they are in outpatient clinics.

    Our hospital’s costs are also about the massive amount of healthcare infrastructure we can provide to patients, like case managers, therapists, and educators, as well as having readily available support services like quicker access to imaging or lab services for our patients-whether they’re down the hall or across the street, or in a nearby hospital-based location vs. a primary care setting that doesn’t do those things and likely doesn’t want to.

  10. 10
    Barbara says:

    @Ella in New Mexico: @Lewis from Gopher Prarie: Then the problem is associated with geographic parameters and should be addressed by enhanced payments aimed at those parameters. Critical Access Hospitals (CAHs) and Sole Community Providers (SCPs) are in fact paid on a COST BASIS, and there are additional add on fees for health worker shortage areas. Solving that problem should not require the misdirection of money across the entire country just because the add on is critical for locations serving less than 20% of the population. Think about the amount of money that might become available for enhanced funding if urban locations that don’t need the additional money didn’t get it.

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