Policy & Regulation News

Why Site Neutral Payment Reimbursements Are Incomparable

By Jacqueline DiChiara

- Legislation is under review for site neutral payment reimbursements where identical reimbursement is offered for two starkly contrasting types of patient care and resources.

Congress will possibly implement a Medicare Payment Advisory Commission (MedPAC) proposal to cap payment for certain hospital outpatient department (HOPD) services at the physician rate, according to a recent KNG Health Consulting report.

Under such a proposal, Medicare payments to HOPDs will decline, states American Hospital Association president and chief executive office Rich Umbdenstock.

“Patients of higher complexity may require a greater level of care than patients of lower complexity. To the extent that these differences result in variations in the cost of care, site neutral payments may have adverse effects on patient access to care,” concludes the report.

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  • The general needs of patients receiving care at a hospital outpatient department versus a physician office are usually unrelated, states Umbdenstock. Higher complexity HOPD patients are generally uninsured or covered by Medicaid and require more intense care.

    The report’s key statistics demonstrate that patients’ racial and ethnic composition varies between physician offices and HOPDs. HOPD patients generally require more extensive levels of care.

    Seventy-five percent of patients receiving care in a physician office are white as compared to the patients cared for in HOPDs who are more likely to be black or Hispanic from low-income households with excessive poverty rates, the report reveals.

    Additionally, HOPD patients generally utilize self-pay, charity care, or Medicaid for severe chronic conditions. HOPD patients are 1.7 times more likely to reside in areas where the median household income is under $33K. In contrast, 33% of physician office patients live in an area where the median household income exceeds $52K.

    KNG reports a marked disparity in acquired education between the two analyzed groups. Adult patients receiving care in physician offices are 1.5 times more likely to possess a minimum of a Bachelor’s degree than adult HOPD patients.

    Patients receiving care in HOPDs also are hospitalized or in the emergency room more often and have higher Medicare spending leading up to ambulatory care, says KNG.

    HOPD care is more likely to be administered to new patient or new referrals for the receipt of treatment, says KNG. It also generally includes the administration of future treatments and services.

    Care from a nurse is most prevalent in HOPD care. HOPD patients who see a physician are 28% more likely to see an RN/LPN than those patients in a physician office.

    Patients who receive treatment within a hospital outpatient department are 2.5 times more likely to be on Medicaid, self-pay, or eligible for charity care, states KNG. Such patients generally reside in areas greatly stricken with poverty.

    Whereas only 14 percent of physician office patients had Medicaid, self pay, or charity, 37 percent of HOPDs did. Similarly, HOPD patients are 1.8 times more likely to be dual eligible for Medicare and Medicaid.

    Although the number of chronic conditions – i.e. congestive heart failure, obesity, alcohol abuse, depression, and liver disease — in patients seen in physician offices and HOPDs are similar, HOPD patients experience more severe conditions, reports KNG.

    Such an ill-fitting one-size-fits-all approach will jeopardize valuable healthcare access for the most unprotected patients, says Rich Umbdenstock, American Hospital Association (AHA) President and CEO. In recent blog post on AHA Stat, he maintains that hospitals sustain more substantial regulatory requirements and clinical capabilities than those of hospital outpatient departments. Moreover, under such a proposal, Medicare payments to HOPDs will decline.

    Umbdenstock concludes by pushing for sensible reimbursement with site neutral payment. “Let’s not threaten access to important services for the most vulnerable patients by mixing apples with oranges,” he writes.