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Hospitals air concerns over 'site-neutral' payment

July 26, 2013

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Three hospital leaders shared their concerns with federal legislators and their staff over proposals for Medicare to pay hospitals the same rates as physician offices and ambulatory surgical centers for certain services at an AHA-sponsored briefing Sept. 17 on Capitol Hill. The briefing was part of the AHA’s advocacy efforts to ward off a congressional move to cut funding for hospital services.

“This proposal to look at changing the nature of the payment structure totally overlooks the costs built into emergency care,” said Michael Sack, CEO of Hallmark Health System in Medford, MA. “The unintended consequences of these types of changes would be extremely detrimental.”

Reginald Coopwood, M.D., CEO of the Regional Medical Center at Memphis (TN), said his hospital’s “ability to continue to ensure that individuals have access to quality care at the right time, in the right setting would be considerably diminished with these cuts.”

In January 2012, the Medicare Payment Advisory Commission
recommended Congress reduce total payments for 10 hospital evaluation and management services to the level paid under the physician fee schedule, a policy that would reduce payments to hospital outpatient departments by $900 million per year and $9 billion over 10 years. The commission also is considering “site-neutral” payment proposals for other ambulatory payment classifications, including certain surgical and cardiac imaging services.

The AHA and hospital leaders are concerned that Congress could eye cuts in hospital outpatient department services as part of a possible debt-reduction agreement or as a way to offset
the costs of preventing a nearly 25% cut in Medicare’s physician payments beginning Jan. 1 (see related story on page 1).

In urging Congress to reject cuts to hospital outpatient services, the AHA points out that hospitals play a unique standby role as providers of around-theclock emergency, safety net and disaster response care. Hospital outpatient departments have higher costs than physician offices due to their standby and teaching roles, sicker patient population and greater regulatory requirements.

At last week’s Capitol Hill briefing, Alan Hoover, CEO of King’s Daughters Medical Center in Brookhaven, MS, described the reimbursement and staffing challenges hospitals face in providing these critical services. “The way health care is provided is totally changing,” he said. “If you keep cutting our payments, we won’t be able to change and adapt fast enough.”

By Meg Figley