Senators pitch site-neutral payment policy framework

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Site-neutral payment by Medicare would reduce health care costs for patients and taxpayers and create other benefits, according to a bipartisan pair of senators.

Sen. Bill Cassidy, MD (R-Louisiana) and Sen. Maggie Hassan (D-New Hampshire) published “Lowering Health Costs for Seniors Framework,” a policy paper with options for payment reforms. They said the reforms would improve the financial stability of Medicare while reducing provider consolidation and assisting hospitals in rural and high-needs areas.

The senators take aim at hospital facility fees that patients are paying as hospitals expand ownership of doctors’ offices and outpatient care facilities. Patients must pay more when they receive basic care, such as a steroid injection or an allergy test, in the settings that previously had lower costs.

Sen. Bill Cassidy, MD (R-Louisiana)

“As a doctor, my focus is always providing the best care at the most affordable cost,” Cassidy said in the senators’ joint news release. “If the same care can be safely provided in different settings, patients should not pay hundreds more simply because their doctor works in a hospital. Our framework provides a path to ensure that.”

Sen. Maggie Hassan (D-New Hampshire)

“Patients should not be forced to pay higher bills just because their regular doctor’s office was purchased by a hospital,” said Senator Hassan. “Our bipartisan site-neutral payment framework demonstrates how we can significantly lower health care costs for seniors on Medicare – which in turn will save taxpayers billions of dollars. Our bipartisan framework would also make significant investments in rural and high-needs hospitals that serve their local communities.”

Destabilizing care?

The leader of the American Hospital Association (AHA) panned the plan.

“Simply put, this framework from Senators Hassan and Cassidy will limit and eliminate critical hospital-based care, resulting in increased wait times and decreased access to care for patients,” AHA Executive Vice President Stacey Hughes said in a statement. “It is irresponsible to think that clawing back up to $140 billion of Medicare spending for seniors won’t destabilize access to care.

“Rather than addressing the root causes driving physician acquisitions, this framework instead proposes dramatic and untenable Medicare cuts, reducing seniors’ access to critical hospital-based care,” Hughes said. “We urge Congress to address the true drivers of physician acquisitions, which include significant underpayments to providers and persistent delays and denials of care by commercial insurers.”

Policy options

The senators’ framework outlines two potential site-neutral reforms:

Establish site-neutral payments in off-campus hospital outpatient departments (HOPDs). The Bipartisan Budget Act of 2015 excluded some HOPDs that existed or were under construction at the time. If that provision were eliminated, it would extend site-neutral payment to hospital-owned sites away from a hospital’s main campus. The senators said this option would not have a substantial effect on overall revenues of rural and high-needs hospitals.

Establish site-neutral payments for common outpatient services. The U.S. Secretary of Health and Human Services would use four years of data to determine settings where procedures were most commonly performed, then set reimbursement rates accordingly.

Hospital investment

For the second option, Cassidy and Hassan proposed a hospital reinvestment mechanism for three designations of rural hospitals: sole community hospitals, low-volume hospitals, or Medicare-dependent hospitals. High-needs hospitals would be measured by variables such as percentage of total payer mix, total uncompensated care per bed or locations with high numbers of disaster declarations.

Medicare also could offer bonuses for hospitals that invest in services that are essential, but costly. Those could include trauma centers, obstetrics and neonatal intensive care units, burn units and emergency psychiatric services.

Accountable care scenarios

The senators also included two options for value-based reimbursement:

• Hospitals in two-sided risk advanced alternative payment models could receive an increase in reimbursement, or higher capitated payment rate per member per month.
• Rural and safety-net hospitals could enter new accountable care models, with Medicare spending benchmarks based on the time before enactment of site-neutral payments. The model would transition to two-sided risk and the benchmark would phase out in following years.

The senators’ plan included a rural and high needs hospital case study, and a table with estimated costs to patients and Medicare for a sample anesthetic injection at an independent physician’s office, a hospital-owned physician’s office, a HOPD and when a patient is admitted to the hospital. Currently, the hospital-owned doctor’s office, HOPD and admitted patient all collect a $644 facility fee for that procedure. Under a site-neutral payment policy that includes on-campus HOPDs, that facility fee would be eliminated for all cases except for when a patient is admitted.