Hospitals criticize policy for ‘site neutral’ Medicare payments

Two senators are proposing changes in the way Medicare pays for outpatient procedures, and hospitals are pushing back against the effort.

U.S. Sen. Bill Cassidy, R.-La., who is a physician, andU.S. Sen. Maggie Hassan, D-N.H., have crafted a policy framework calling for "site neutral" Medicare payments for outpatient services. Hospitals say the policies would hurt health systems and reduce access to care.

U.S. Sen. Bill Cassidy, R.-La., who is a physician, has teamed with U.S. Sen. Maggie Hassan, D-N.H., in a bipartisan policy proposal endorsing “site neutral” payments from Medicare for certain services. They said it would save billions for Medicare and lower costs for consumers.

The lawmakers are aiming to change Medicare payment policy so that Medicare would pay the same rate for outpatient services, whether the services are delivered in a hospital, or an ambulatory surgery center or some other outpatient clinic. The lawmakers say that hospitals have charged rates that are too high and patients are paying more than they should. Other lawmakers have shown support for “site neutral” Medicare payments for outpatient services.

“If the same care can be safely provided in different settings, patients should not pay hundreds more simply because their doctor works in a hospital,” Cassidy said in a statement. “Our framework provides a path to ensure that.”

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Hospitals have been pushing back against efforts from lawmakers to implement “site neutral” policies.

Health systems have long argued that site neutral policies would be unfair to hospitals, which face greater licensing and regulatory requirements. They also point out that they routinely serve more patients from underserved communities and patients with greater health complications than other outpatient clinics or surgery centers. And they also have to provide capacity 24/7.

Stacey Hughes, executive vice president of public policy for the American Hospital Association, said in a statement that the policy proposed by Cassidy and Hassan would “limit and eliminate critical hospital-based care, resulting in increased wait times and decreased access to care for patients.”

“Rather than addressing the root causes driving physician acquisitions, this framework instead proposes dramatic and untenable Medicare cuts, reducing seniors’ access to critical hospital-based care,” Hughes said in a statement. “We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers.”

Charlene MacDonald, executive vice president of public affairs for the Federation of American Hospitals, also said the proposal could lead to reduced services. She also noted that site neutral policies are favored by insurance companies.

“Site neutral policies equate to Medicare cuts that threaten access to 24/7 hospital care – a framework Congress has rejected time and again,” MacDonald said. “Seniors deserve better than tired old policies pushed by the insurance industry that just threaten access to reliable hospital care.”

The lawmakers note that hospitals are increasingly taking ownership of physician practices and ambulatory surgery centers.

“Patients should not be forced to pay higher bills just because their regular doctor’s office was purchased by a hospital,” Hassan said in a statement accompanying the proposal.

“Our bipartisan site-neutral payment framework demonstrates how we can significantly lower health care costs for seniors on Medicare – which in turn will save taxpayers billions of dollars,” Hassan said. “Our bipartisan framework would also make significant investments in rural and high-needs hospitals that serve their local communities.”

The lawmakers introduced their proposal as a policy framework for lowering costs for consumers.

The ERISA Industry Committee and the Blue Cross Blue Shield Association are among others who have endorsed the Cassidy-Hassan policy proposal.

David Merritt, senior vice president of external affairs at Blue Cross Blue Shield Association, said the lawmakers’ policy would help ensure patients don’t see higher costs if a health system acquires a clinic or doctor’s office.

“It ends the practice of hospitals gobbling up independent physician practices and then charging patients as much as five times more for the same service simply because the office changes names,” Merritt said in a statement. “This an important step toward making health care more affordable for all Americans.”

In fighting against efforts to institute site neutral payments, hospitals argue that they continue to see insufficient reimbursement from Medicare for the services they provide.

It’s a safe bet the issue will remain a contentious one when the next Congress and president takes office. Hospital leaders have urged lawmakers to reject site-neutral provisions.

Sr. Mary Haddad, president and CEO of the Catholic Hospital Association of the United States, warned against such policies in a Dec. 7 letter to lawmakers.

“The cost of care delivered in hospitals and health systems must take into account the unique benefits that they provide to their communities, such as round-the-clock access to critical care,” Haddad wrote.