Groups to Sue CMS Over Site-Neutral Payments

Alicia Ault

November 05, 2018

The American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) say they will file a legal challenge to Medicare's just-issued final rule on payment for outpatient care — and they are not alone in their dismay over the site-neutral scheme the government said it will phase in over 2019-2020.

The payment plan would pay physicians who practice at hospital-owned off-campus clinics at a rate equivalent to that  for physicians in the community who are not affiliated with a hospital — thus flattening out what have been higher rates paid to hospital-affiliated clinics.

The initial proposal from the Centers for Medicare & Medicaid Services (CMS) was backed by the American Academy of Family Physicians, the American College of Physicians, the American Academy of Family Physicians, the American Academy of Orthopaedic Surgeons, and the Community Oncology Alliance, among others, all members of the Alliance for Site Neutral Reform.

But others have been vocal in their opposition. "The AHA, joined by the AAMC and member hospitals, intends to promptly bring a court challenge to the new rule's site-neutral provisions," said the AHA, in a statement after the final rule was issued.

AAMC President and CEO Darrell G. Kirch, MD, said in a statement  that CMS "exceeded its regulatory authority and ignored feedback from a bipartisan group of nearly 200 members of Congress and stakeholder opposition by finalizing the expansion of flawed site-neutral payment policies."

The policy essentially amounts to a 60% cut in Medicare reimbursements to off-campus provider-based outpatient departments, said AAMC.

AHA and AAMC said that the rule will also hurt the disadvantaged. "Congress recognized the crucial role of hospital outpatient departments in the communities they serve and, in 2015, specifically protected existing facilities from unwarranted payment reductions," said AHA Executive Vice President Tom Nickels in a statement

Mixed Bag for Oncology

The American Society of Clinical Oncology (ASCO) has also indicated its extreme dislike of the site-neutral policy. In September comments on the proposed rule, ASCO urged the agency not to employ the payment scheme.

CMS said that it is aiming to curb "unnecessary increases in the volume of covered hospital outpatient department services" and noted that such clinic visits are the most common service billed under the outpatient payment system.

Under the current scheme, both the Medicare program and beneficiaries can pay more for a clinic visit in the outpatient setting than for one in the physician office.

CMS said the new site-neutral policy — outlined in the November 2 final rule on Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs — would save Medicare $380 million in 2019. Beneficiaries would have smaller co-pays, which would drop from about $23 to $16 for a clinic visit, no matter the site.

ASCO said the policy could result in patients being shoved to the cheapest — not necessarily the best — providers, and that it could reduce access to care.

"Arbitrary and overly-simplistic cuts based on finding and applying the lowest payment rate across all ambulatory settings undermine access in predictable and unpredictable ways and remove resources from cancer care without any consideration of the value or sufficiency of current payment levels," said ASCO President Monica M. Bertagnolli, MD, in a September 24 letter to CMS.

An ASCO spokesperson told Medscape Medical News that the organization is still reviewing the final rule but will likely have more to say to CMS.

Community oncologists, however, are pleased. Higher payments for hospital-owned clinics have acted as a strong enticement for hospitals to buy up oncology practices, said Ted Okon, executive director of the Community Oncology Alliance (COA). Okon told Medscape Medical News that with less consolidation, patients will have more, not fewer, places to get care.

Okon also applauded another aspect of the new CMS rule: the extension of payment cuts for Medicare Part B drugs acquired under the 340B program to the outpatient clinics.

Under the 340B program, manufacturers provide drugs to eligible facilities at a deep discount. The idea is that hospitals will use the savings to fund care for the underserved. A study in the New England Journal of Medicine in February  found that this is not usually the case — instead, the savings are often used by hospitals for other purposes.

The federal government has been gradually winnowing reimbursement for those 340B-discounted pharmaceuticals — to average sales price minus 22.5% — and will do so for the outpatient clinics.

ASCO and the AHA both object, as does a coalition of hospitals that participate in the 340B program. "Cutting Medicare payments for drugs for patients treated in 340B hospitals by nearly 30% will damage the healthcare safety net that serves uninsured, underinsured, and Medicaid patients across the country," said Maureen Testoni, interim president and CEO of 340B Health, in a statement.

Pain Questions Off Hospital Assessment Survey

The sprawling outpatient and ambulatory surgery center rule covered several topics, including quality-of-care measures.

CMS said that to comply with the new Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and Communities Act, and to avoid any potential unintended consequences under the Hospital Inpatient Quality Reporting Program, it was also making final an update to the Hospital Consumer Assessment of Healthcare Providers and Systems patient experience of care survey.

The final rule removes three recently revised pain communication questions, effective with October 2019 discharges. CMS also said it will not publicly report the three revised "Communication About Pain" questions. 

For ambulatory surgery centers only, the agency is also breaking out payment for nonopioid pain management treatments that previously have been bundled into surgical procedure payments. Currently, only one such product is eligible: bupivacaine liposome injectable suspension (Exparel, Pacira). Another may come on the market in 2019.

CMS said it is still seeking comments on whether evidence shows that use of nonopioid alternatives for acute or chronic pain leads to a decrease in opioid prescriptions and addiction and may, therefore, warrant separate payment, as an incentive to steer clear of opioids.

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