Hospitals push for bigger federal payments for outpatient care

Health systems say proposed CMS payments for outpatient care in 2024 are inadequate and don't reflect the rising costs hospitals are facing. (Image credit: ©sofiko14 - stock.adobe.com)

Hospitals are making it clear that they aren’t happy with the proposed 2024 Medicare payment rates for outpatient care.

Advocates for health systems have submitted letters to the Centers for Medicare & Medicaid Services calling for more funding for outpatient care. CMS has proposed a 2.8% increase in outpatient payments for 2024.

In a letter to CMS Administrator Chiquita Brooks-LaSure, the American Hospital Association says the outpatient payment proposal is inadequate, especially as health systems continue to struggle financially and are facing higher costs in their operations.

The CMS proposal “does not capture either the unprecedented inflationary environment or the other persistent financial headwinds hospitals and health systems are experiencing,” Stacey Hughes, the AHA’s executive vice president, wrote in the letter.

“It also fails to account for the fact that labor composition and costs have remained extraordinarily high and that as a result, the hospital field has continued to face sustained financial pressures and workforce shortages,” she wrote.

America’s Essential Hospitals, the organization representing safety-net hospitals, also asked CMS to reconsider its planned outpatient payments. The organization cites projections that labor costs are rising higher than the rate of inflation and could increase by 6-10% over the next two years.

“Hospitals continue to incur soaring costs as they recover from the COVID-19 pandemic, feel the effects of inflation, experience unprecedented increases in labor costs, and encounter supply chain issues and shortages,” Bruce Siegel, president and CEO of America’s Essential Hospitals, wrote in a letter to CMS.

Health systems have been fighting proposals to change Medicare’s reimbursement rates for outpatient treatment. Some in Congress have backed “site-neutral” policies, arguing that Medicare could save billions of dollars if hospital outpatient departments and physician offices were reimbursed at the same rate.

Hospitals argue that they have greater regulatory requirements and also handle a higher mix of patients with lower incomes and underrepresented communities. Health systems say moving to site-neutral policies would reduce patient access to care.

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In its letter, America’s Essential Hospitals also says CMS should define a special category for safety net hospitals that serve primarily patients from marginalized groups and offer more robust funding to those institutions. The organization suggests that CMS should define those safety net hospitals with a high percentage of patients with lower incomes.

“In crafting a definition of safety net hospital, we urge CMS to look beyond the limited context of Medicare policy and create a definition applicable across all payers, agencies, and policymakers so that CMS and other stakeholders can consistently identify this singular group of hospitals for targeted support,” Siegel wrote.

This week, hospitals, doctors and medical groups also sent letters to CMS imploring them to avert planned cuts in Medicare payments to doctors next year.

Hospitals have also criticized CMS’ planned increase of 3.1% in payments for inpatient care at general acute care hospitals for the 2024 calendar year.