Hospitals are beginning to follow in the footsteps of the American Hospital Association and are suing the Trump Administration for its decision to institute site-neutral payments.
The change, which is part of the Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System rule-making for 2019, would lower reimbursements for hospital outpatient department services to match rates set by the physician fee schedule for clinic visits. This would mean lower costs for a patient’s insurance. However, hospitals would lose about $380 million in 2019 alone and possibly up to $760 million in 2020. The colossal loss of money is causing an uproar with (as of right now) 38 hospitals signing the lawsuit.
This isn’t even helping the patient from what CMS Administrator Seema Verma says, “It doesn’t make sense for taxpayers, and it certainly doesn’t make sense for patients because they end up having to pay more depending on the site of service.”
However, this can be looked at as taking down the money hungry hospitals. University of Michigan health law professor Nicholas Bagley was among the observers who praised the Trump administration for the proposal, saying CMS is “picking a fight with powerful hospitals because it’s the right thing to do.” The site-neutral payments would mean, hospitals would have to offer the same care at lower prices.
The previous system had Medicare paying higher rates for services provided at the hospitals outpatient facilities. The Centers for Medicare & Medicaid Services projects the policy change will save the beneficiaries $150 million in co-payments annually; dropping the average copay from $23 to $9.
“The different payment rates also pushed hospitals to purchase independent practices to increase their reach and take advantage of the higher reimbursement rates,” Verma said. “Neutralizing payments would increase provider competition.” Competition could potentially turn into one hospital bettering the others, just because they have more resources and more funding.
However, Farzad Mostashari, MD, co-founder, and CEO of Aledade, said in a series of tweets that hospitals will fight the OPPS rule “bitterly” but that there could be a long-term benefit for them in it.
“The truth is that this proposal could help hospitals be more competitive in value-based contracts/ alternative payment models, and they should embrace the changes,” Mostashari wrote. “If rural hospitals or AMCs need subsidies, then we should do it directly, not through distorting payment policies.”
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