Site-of-Service Medicare Reimbursement Led to More Hospital Testing
Researchers are suggesting site-neutral payments after their study found hospital testing increased after Medicare reimbursement increased for hospital outpatient providers.
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By - When Medicare reimbursement depended on location, greater hospital-based versus practice-based payments were associated with higher proportions of outpatient non-invasive cardiac tests performed in the more expensive setting, according to a new study published in JAMA Internal Medicine.
The observational claims-based study of Medicare fee-for-service claims from 1999 to 2015 found that the hospital-based outpatient testing to provider-based office testing payment ratio for non-invasive cardiac tests, which include echocardiography and stress testing with or without imaging, increased from 1.05 to 2.32 from 2005 to 2015.
That increase that was associated with the growing volume of hospital-based testing in Medicare fee-for-service organizations observed from 2008 to 2015, researchers from the University of Colorado and Northwestern University reported.
Hospital-based testing increased by 21.1 percent from 2008 to 43.2 percent in 2015 among Medicare fee-for-service providers, which correlated with the payment ratio between hospital-based outpatient testing to provider-based office testing, the study found.
Meanwhile, the control group – three Medicare Advantage health maintenance organizations for which CMS payments do not depend on testing location – experienced a decrease in hospital-based testing from 16.6 percent to 15.2 percent, and the volume change had no significant correlation with payment rates.
The shift of non-invasive cardiac services to the more expensive hospital setting resulted in greater costs to traditional Medicare, the study showed. Researchers estimated that the extra costs owing to tests shifting to the hospital-based outpatient setting in the Medicare fee-for-service group totaled $661 million in 2015, including $161 million in patient out-of-pocket costs.
“Site-neutral payments may offer an incentive for testing to be performed in the more efficient location,” suggested the study’s authors.
Site-neutral payments are not a novel concept in traditional Medicare. Section 603 of the Bipartisan Budget Act of 2015 enacted site-neutral payments for new, off-campus provider-based hospital outpatient departments.
The Trump Administration intends to continue on the path to site-neutral payment. The president recently signed an executive order directing the HHS Secretary to “ensure that Medicare payments and policies encourage competition and a diversity of sites for patients to access care.”
Under the president’s direction, CMS also sought to expand the use of site-neutral payments in 2019 by paying new and old off-campus provider-based hospital outpatient departments the same rate for certain clinic visits. The agency estimated the expansion to reduce Medicare spending by $380 million in the first year of implementation.
However, hospitals and other provider groups have fought to prevent expansions of site-neutral payment policies in Medicare fee-for-service.
The American Hospital Association (AHA), Association of American Medical Colleges (AAMC), and three other healthcare organizations sued CMS over the expansion of site-neutral payments for certain clinic visits, arguing that CMS exceeded its authority by applying the payments to hospital outpatient departments exempted under Section 603 of the Bipartisan Budget Act of 2015. Thirty-eight hospitals later filed a separate lawsuit against HHS alleging the same thing.
In September, a federal judge overturned the Medicare payment policy, ordering CMS to stop reimbursing hospital outpatient departments the lower site-neutral rate.
In general, hospitals oppose site-neutral payments because the lower Medicare fee-for-service rates do not account for the resources needed to run a hospital outpatient department versus a provider-based office. For example, hospitals abide by stricter regulatory requirements, such as having 24-hour nursing care and maintaining discharge planning protocols.
Research has also shown that hospital outpatient departments treat sicker, poor patients compared to provider-based offices, providing evidence for hospitals opposing site-neutral payments.
However, just this week, the American Academy of Family Physicians (AAFP) applauded President Trump’s site-neutrality provision in the recently signed executive order.
“Current policies that provide differential payments based solely on the site where services are provided are not warranted. Furthermore, these payment differentials create an imbalance in the marketplace which drives consolidation, reduces consumer choice and leads to higher prices for patients,” AAFP board chair John S. Cullen, MD, FAAFP, wrote in a letter to President Trump. “The AAFP and our members strongly support your efforts on this issue.”
The Alliance for Site Neutral Payment Reform, a coalition of patient advocates, providers, payers and employers who support payment parity across site of service, have also argued that site-neutral payments are key to cutting costs in healthcare and preventing hospitals from purchasing physician offices for financial gain.
