Proposed payment changes likely to ding hospital margins

Proposed hospital reimbursement changes included in CMS' Outpatient Prospective Payment System rule for 2019 would generally be credit negative for nonprofit and for-profit hospitals, according to a Moody's Investors Service report.

Under the proposed rule, CMS would make payments for clinic visits site-neutral by reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments to 40 percent of the OPPS rate. This change, amid other revenue pressures, would further constrain hospital margins, according to Moody's.

"Over the years, hospitals have been actively acquiring independent physician practices and subsequently were able to benefit from higher OPPS off-campus PBD rates," said Moody's. "Hospitals that acquired large numbers of medicine-based or primary care physician practices, which would be associated with these clinic visits, would be particularly vulnerable to revenue reductions if CMS cuts these visit fees."

The clinic visit is the most common service billed under the OPPS, and CMS estimates the payment proposal would save the Medicare program and Medicare recipients a combined $760 million in 2019.

The proposed OPPS rule also adds certain cardiac procedures as covered services at ambulatory surgery centers. The effects of this proposed change vary by hospital, but the proposal would likely have the most significant effect on the hospital sector, according to Moody's.    

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