12 things to know about site-neutral payments

CMS began to incorporate site-neutral payments into payment policies for 2017 and hospitals are reconsidering their acquisition and partnership strategy with off-campus service providers — particularly imaging services providers — for the future.

Here are 12 things to know about site-neutral payments.

1. Medicare payment policies use two different payment methodologies for outpatient procedures based on the site of service. The hospital-based procedures performed at hospital outpatient departments are paid on the Hospital Outpatient Prospective Payment System while freestanding clinics are paid on the Medicare Physician Fee Schedule. As such, hospital-based procedures receive higher Medicare reimbursement than ambulatory and office-based procedures: In 2016, ASCs received 53 percent of the amount paid to HOPDs, according to the Ambulatory Surgery Center Association. Site-neutral payments seek to close that gap by lowering payment to HOPDs, with the most recent legislation focused on off-campus provider-based sites located 250 yards or more away from the hospital's campus.

2. President Barack Obama signed the Bipartisan Budget Act of 2015, which stipulates off-campus provider-based sites that began billing under the Outpatient Prospective Payment System on or after Nov. 2, 2015 won't be paid for most services under OPPS after Jan. 1, 2017. The facilities are now paid under the Physician Fee Schedule unless services are provided in a dedicated emergency department, which will still be paid under the OPPS. However, last year there were revisions to the Act addressing facilities that were in the planning phases when the bill was signed.

3. On Dec. 13, 2016, President Obama signed the 21st Century Cures Act into law, which revised the site-neutral payment policy in Section 603 of the Bipartisan Budget Act. The 21st Century Cures Act addresses newly built off-campus outpatient departments that were poised to accept patients before Dec. 2, 2015, and submitted proper attestation to CMS; those facilities are exempted from the Bipartisan Budget Act's site-neutral payment provisions. The Act also exempts facilities that had a concrete plan to build a new off-campus outpatient department before Nov. 2, 2015, if they met mid-build requirements. To qualify for the mid-build exemption, hospitals must have had a binding written agreement in place for the construction of the off-campus site before Nov. 2, 2015 and the hospital must submit the required attestation and certification to its Medicare Administrative Contractor by Feb. 13, 2017 to receive the exemption.

4. The American Hospital Association has advocated against site-neutral payments and maintained that stance after CMS announced the 2017 final OPPS payment rule on Nov. 1, 2016. "We continue to be concerned that site-neutral policies and CMS' implementation of them could impede patients' access to care, especially in the most vulnerable communities," said AHA President of Governmental Relations and Public Policy Tom Nickels in response to CMS' 2017 final OPPS payment rule.

However, the association was pleased with modifications CMS made from the proposed to final 2017 payment rules. CMS originally proposed requiring off-campus provider-based sites to offer the same services they did on Nov. 2, 2015, in order to be excluded from the site-neutral payment provisions, but opted not to include that requirement in the final rule.

5. CMS adopted the initial proposal to terminate an off-campus provider-based site's exempted status if the facility relocated, according to a McGuireWoods report. The move covers changing physical addresses, including moving suites within the same building, and such facilities would no longer be able to bill under OPPS unless the move occurred under "extraordinary circumstances" such as natural disasters.

6. Off-campus provider-based sites with the exemption are allowed to undergo ownership changes and retain their accepted status to continue billing under OPPS as long as the acquiring entity purchased the entire hospital and off-campus facility and the new owner accepts the hospital's Medicare provider agreement, according to the McGuireWoods report. However, the exempted off-campus provider-based sites cannot be transferred between hospitals and maintain the exempted status.

7. The American Medical Association supports site-neutral payments as an initiative to align payment policies for hospitals and independent physicians. "Providing similar payments for similar professional services located outside of a hospital regardless of facility ownership could lead to a more level economic playing field and help preserve independent practice," said then-AMA President Andrew Gurman, MD, in a statement last July. "The new policy is more equitable for patients, who, CMS notes, often pay more for the same services provided in an off-campus department of a hospital."

8. ASCA estimates Medicare already saves around $2.3 billion annually on surgical procedures performed in ASCs instead of HOPDs. An estimated 7 million procedures were performed on Medicare beneficiaries at ASCs in 2016.

9. Lawrence Vernaglia, a Boston-based attorney with Foley & Lardner, told Bloomberg that implementing site-neutral payments may not lower costs associated with HOPD operation and instead hospitals would shift costs to commercial payers or patients. Hospitals that aren't able to contract with payers to cover the cost may close off-campus outpatient sites or transfer them to the hospital's main campus, Mr. Vernaglia said.

10. The Alliance for Site Neutral Payment Reform, an organization in support of parity across sites of service, sent letters to House and Senate leadership urging Congress to further enact site-neutral payment reform due to potential cost savings. The group asked lawmakers to expand policies to equalize payments across all sites of service for outpatient care.

The letters state: "In addition to higher costs to the healthcare system, payment policies that support higher reimbursement in the HOPD setting encourage the acquisition of office-based physician practices, further restricting patient access to care in the lower-cost community setting. The alliance warns that unless steps are taken to stem consolidation in the healthcare marketplace through advancement of site neutral payment policies, healthcare spending will continue to increase while patient access to community-based care will decrease."

11. Hospitals across the country shifted their radiology center models in anticipation of the change, according to a Frost and Sullivan report summarizing trends at the 2016 Radiology Society of North America conference Nov. 27 to Dec. 2. Hospitals are transitioning from an outright acquisition model to partnerships and joint ventures and continuing with legacy systems. "With the anticipated reimbursement reductions for hospital-owned off-campus facilities, there will be a clear-cut preference toward continuing with legacy systems, coupled with judicious use of in-field upgrades whenever applicable over outright acquisition of new systems," according to the report.

12. The Advisory Board suggested in a December 2016 report that Medicare may continue expanding site-neutral payments. "This is almost certainly just the beginning of site-neutral payments in healthcare, as CMS still has the option of expanding site-neutral payment policy through its rulemaking cycle. Currently, CMS is collecting data it needs to implement MedPAC's more holistic approach to site-neutral payments."

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