Attorney: Site-neutral payments will increase cost for other payers

CMS' proposed rule for site-neutral payments under the Medicare Outpatient Prospective Payment System and Ambulatory Surgery Center Payment System in calendar year 2017 would increase costs for other payers, an attorney told Bloomberg BNA.

Under the proposed rule, CMS would implement the site-neutral payment provisions of Section 603 of the Bipartisan Budget of 2015. This would eliminate most OPPS payments for off-campus provider-based departments that began billing under the OPPS on or after Nov. 2, 2015. In lieu of OPPS payments these facilities would be paid under other applicable Medicare Part B payment systems beginning Jan. 1, 2017. CMS proposed that the physician fee schedule be the applicable payment system for the majority of services provided in new off-campus PBDs in 2017. For more details on the site-neutral payment provisions, click here.

Lawrence Vernaglia, a Boston-based attorney with Foley & Lardner who represents hospitals, health systems and academic medical centers, told Bloomberg that implementing site-neutral payments as proposed would make it too difficult for hospital outpatient departments to add new services in response to marketplace changes.

He suggests in the final rule CMS loosen its interpretation of the statute that says grandfathered facilities need to remain in the exact same condition they were before the law was signed, otherwise hospital-owned outpatient facilities will be unable to add services or modify their structure, according to the report.                                                                                            

Moreover, Mr. Vernaglia argues the site-neutral payments won't actually lower the costs associated with operating a HOPD. Instead, they would cause hospitals to shift costs to commercial payers or individuals, because outpatient departments are more costly to run. Mr. Vernaglia added that if other payers can't pick up higher costs, hospitals may decide to close some off-campus outpatient departments or transfer them to a main hospital campus site, which would be an inconvenience to Medicare beneficiaries.

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