FHA Opposition to Site Neutral Payments

FHA Opposition to Site Neutral Payments

September 18, 2013

Page 1

September 18, 2013

The Honorable Corrine Brown

2111 Rayburn House Office Building

United States House of Representatives

Washington, DC20515

Dear Representative Corrine Brown:

While the Congress works to pass a continuing resolution for fiscal year 2014, authorization of an increase in the debt ceiling, and a fix for the physician payment formula, the Florida Hospital Association (FHA) is extremely concerned that lawmakers are considering three site neutral payment changes proposed by the Medicare Payment Advisory Committee (MedPAC). The proposals would:

• Pay hospitals for evaluation and management (E/M) services in the hospital outpatient department setting at the physician fee schedule (PFS) amount;
• Pay hospitals for 66 specified ambulatory payment classifications (APCs) at the PFS amount; and
• Cap hospital payments for 12 proposed APCs at the ambulatory surgery center (ASC) rate.

Together, these proposals would cut payment for services provided in hospital outpatient departments by more than $2 billion nationally in a single year and represent deep cuts to routine outpatient services that are integral to the service mission of hospitals. In Florida, the proposals would reduce hospital outpatient payments by more than $1 billion over ten years.

The FHA strongly opposes implementing any of these site neutral payment proposals. Unlike physician offices and ASCs, hospitals provide a wide range of acute care and diagnostic services, support public health needs, and offer many other services that promote the health and well-being of the community. We do not agree that the total amount of payment when a physician performs a service in a hospital outpatient department should be the same as when a physician performs the service in his or her office or in an ASC.

Hospitals are not physician offices and play a very different role in their communities. Hospitals provide care, including specialized resources, 24 hours a day, seven days a week, 365 days a year. They care for all patients who seek emergency care regardless of ability to pay and ensure that their staff and facilities are prepared to care for victims of large scale accidents, natural disasters, epidemics, and terrorist attacks. The critical role of hospitals cannot be taken for granted.

Hospitals also furnish services to higher acuity patients than those seen in physician offices and ASCs. It should be noted that community physicians refer more complex patients to hospital outpatient departments for safety reasons, as hospitals are better equipped to handle complications and emergencies. Hospitals are subject to more comprehensive licensing,

accreditation and regulatory requirements than other clinical settings. As a result of these differences, hospital outpatient departments have higher cost structures than physician offices and ASCs.

MedPAC’s proposals assume that the Medicare PFS and ASC payment rates reflect the “correct” rate to pay for outpatient services. Only the hospital outpatient department payments, however, have any basis in cost derived from provider data and audited by contractors for the Centers for Medicare & Medicaid Services. MedPAC has found these payments to be significantly below a hospital’s cost. Neither physicians nor ASCs are required to report their costs to Medicare; therefore, the adequacy and appropriateness of their payment rates are unknown. The physician payment schedule, specifically the practice expense component, is based on voluntary responses to physician survey data held flat for a number of years due to the cost of various physician payment fixes.

Making any additional cuts to hospital outpatient department payments threatens beneficiary access to these services. As Congress looks for ways to reduce spending, address the deficit or offset the physician fix, we urge you to reject any proposals to implement site neutral payments for hospitals. If you have questions on these proposals or their impact, please do not hesitate to contact me at or at 407-841-6230.

Sincerely,

Kathy Reep

Vice President/Financial Services