Hospitals hit by CMS site-neutral policy, but they dodge price transparency for now

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Crystal Yednak Senior Manager, Health Research Institute, PwC US November 08, 2019

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Medicare reimbursements for clinic visits at off-campus, hospital-based departments will be paid the same as visits to non-hospital physicians’ offices, under a final rule issued last week by CMS. The agency decided to continue with the phase-in of its controversial site-neutral payment policy despite a September ruling from a US district judge vacating the 2019 rule. 

One reprieve hospitals did win: CMS did not include a controversial provision on price transparency in the final rules issued last week, separating it out from the larger rule package. A final rule on “price transparency requirements for hospitals to make standard charges public” was sent to the Office of Management and Budget for review last week.

CMS says its site-neutral policy could lower copays and result in Medicare savings totaling $800 million for 2020. While acknowledging the ongoing litigation, CMS said it did not see a reason to halt the second year of the phase-in, as the increase in more expensive visits provided at off-campus hospital departments has increased overall spending. 

In addition to the action on site neutrality, CMS released final rules related to the 2020 Medicare Physician Fee Schedule, end-stage renal disease prospective payment system and home health prospective payment system

HRI impact analysis

The site-neutral approach has queued up a battle between providers of different types, as healthcare organizations try to capture higher reimbursement rates to bolster their bottom lines. Hospitals demanded that CMS restore the higher payment rate and repay the lost monies, with the American Hospital Association arguing that hospital outpatient departments see more complex patients because they are more equipped to handle emergencies. 

But family physician groups and some oncology and orthopedic providers that have seen care shifting toward the higher-paid sites have urged CMS to continue taking action to make payments more equal in the outpatient setting. “As MedPAC has repeatedly recognized, the payment differential between the [outpatient prospective payment system] and the [physician fee schedule] incentivizes hospitals to acquire freestanding physician practices to gain access to higher reimbursement rates,” the Alliance for Site Neutral Payment Reform wrote in its comment on the rule

CMS is not alone in trying to reduce costs by getting better control over where care is delivered. A national payer has taken a similar approach to steering patients to more economical locations for certain procedures, announcing that starting this month it will not cover certain surgeries taking place in outpatient hospital centers unless they are reviewed and deemed medically necessary.

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Trine K. Tsouderos

HRI Regulatory Center Leader, PwC US

Tel: +1 (312) 241 3824

Ben Comer

Senior Manager, Health Research Institute, PwC US

Crystal Yednak

Senior Manager, Health Research Institute, PwC US

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