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New Study Reinforces Importance of Appropriate Reimbursement for Hospital-level Care

October 03, 2018

A new study exploring the characteristics of Medicare patients receiving care in hospital outpatient departments reinforces concerns that new payment proposals—which would significantly cut hospital payments—could threaten access to care for the most vulnerable patients and communities.

The analysis, conducted for the American Hospital Association (AHA) by KNG Health Consulting LLC, validates that Medicare patients who receive care in a hospital outpatient department (HOPD) are more likely to be poorer and have more severe chronic conditions than Medicare patients treated in an independent physician office.

According to the study, relative to those seen in an independent physician office, Medicare patients (including cancer patients) seen in HOPDs are more likely to be:

  • From lower-income areas
  • Under 65 (individuals with disabilities, end-stage renal disease, or amyotrophic lateral sclerosis)
  • Burdened with more severe chronic conditions
  • Previously hospitalized
  • Eligible for both Medicare and Medicaid
  • Previously cared for in an emergency department, thereby having higher Medicare spending prior to receiving ambulatory care

A policy proposed by the Centers for Medicare & Medicaid Services (CMS) in the annual outpatient payment regulation would expand the application of “site-neutral” payments that reimburse hospitals at a “physician office equivalent” rate. Specifically, the proposal would cut the reimbursement for certain services provided by hospitals—in HOPDs—by 60 percent.

HAP and the hospital community have urged federal policymakers to ensure that the payment rates reflect an appreciation for the cost of supporting hospital-level care in community settings, arguing that the fundamental underpinnings of site-neutral payment policies are erroneous. Specifically, HAP has asked policymakers to consider that:

  • Hospitals treat sicker, medically complex patients, for whom the hospital is the appropriate setting
  • The hospital has 24/7 emergency stand-by capacity that provides a safety net for vulnerable patients, and provides specialized services such as trauma, psychiatric, obstetrics, and pediatric emergency care
  • Hospitals play a crucial role in our emergency preparedness structure. They are prepared to respond to natural disasters, public health crises, and mass casualty events
  • Hospitals have more comprehensive licensing, accreditation, and regulatory requirements

Last week, U.S. Senator Bob Casey (D–PA) joined 47 Senate colleagues in sending a letter to CMS that expressed disappointment that CMS has proposed significant cuts to HOPDs, and stating concern that the policy “comes at the expense of seniors’ ability to access the right care in the right setting.” Members of the U.S. House of Representatives currently are circulating a similar letter which states “The facilities impacted by this rule provide care to some of the most vulnerable patient populations in difficult to serve areas.” HAP is working to build support from members of the Pennsylvania Congressional delegation on that letter to CMS.

In addition to working with Congress to express the importance of appropriate payment, HAP provided comments directly to CMS regarding the proposed cuts for HOPDs.

Please contact Laura Stevens Kent, vice president, federal advocacy, or Kate Slatt, senior director, health care finance policy, with questions regarding advocacy efforts or specifics of the proposed payment policy.

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