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MedPAC expands discussion of site-neutral payment policies

March 8, 2013

The Medicare Payment Advisory Commission yesterday considered several proposals to expand site-neutral payments, a discussion the commission expects to continue this fall. One proposal would expand the site-neutral policy to 66 additional ambulatory payment classifications, reducing hospital payments by another $900 million. Another more targeted proposal would equalize payment between physician offices and hospital outpatient departments for three high-volume cardiac imaging APCs, reducing hospital outpatient payments by $500 million. In addition, commissioners discussed equalizing payments for certain surgical services commonly furnished in ambulatory surgical centers, which would reduce hospital payments for 12 surgical APCs by $590 million. In January 2012, MedPAC recommended Congress reduce total payments for 10 hospital evaluation and management (E/M) services to the level paid under the physician fee schedule, a policy that would reduce payments to hospital outpatient departments by $1 billion. During the meeting, Joanna Kim, AHA vice president for payment policy, expressed concern about further payment cuts to hospitals. “Together, these policies would cut hospital outpatient revenue by at least 5.4% at a time when the Medicare hospital outpatient margin is already negative 11%,” Kim said. This margin does not take into account all of the additional cuts that hospitals face, such as the sequester, cuts in disproportionate share payments, increasing readmissions penalties, the hospital-acquired condition policy and meaningful use, she noted.