6% of hospitals to shoulder 73% of payment cuts under proposed HOPD site-neutral rule

Two hundred hospitals could face a combined $628.5 million reduction in Medicare reimbursement in 2019 under CMS' proposed Outpatient Prospective Payment System rule, according to an analysis conducted by Dobson DaVanzo & Associates and commissioned by the Integrated Health Care Coalition, a group of integrated health systems.

The 2019 OPPS rule includes a provision that would reduce what CMS believes is an unnecessary increase in outpatient department use. The provision would make the most common service billed under OPPS — hospital outpatient clinic visits — site-neutral when performed off-campus, meaning those visits would be reimbursed at 40 percent of the OPPS rate.

Dobson DaVanzo & Associates looked at outpatient spending trends from 2012-17 to measure the potential effect of the off-campus site-neutral proposal. Using CMS data, the firm found the site-neutral proposal would disproportionately affect 200 hospitals, or about 6 percent of the 3,333 hospitals subject to OPPS. Those 200 hospitals would take on a 5.5 percent payment cut, or a combined $628.5 million in 2019. This accounts for 73 percent of the projected $864.1 million in cuts under the proposal. The remaining hospitals would experience an estimated 0.5 percent reduction in payment, according to the report.  

The analysis also suggests the basis for the payment cuts may not be sound. Dobson DaVanzo & Associates found outpatient expenditures are growing faster than inpatient expenditures, but not as fast as CMS believes. Dobson DaVanzo & Associates found the compound average growth rate of outpatient spending from 2012-17 was 6.5 percent, two percentage points lower than the CMS estimate of 8.5 percent. "Based on this analysis, it is clearly uncertain whether the growth in outpatient expenditures has been 'unnecessary,'" the report reads. Dobson DaVanzo & Associates suggests the growth may instead be due to changes in policy and regulation and technological advancement.

The Integrated Health Care Coalition plans to submit the findings of the analysis in its comment to CMS about the rule. Read the report here.

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