CMS Payment Change for Noninvasive Cardiac Tests Backfires

Megan Brooks

October 17, 2019

The change in Medicare reimbursement rates for noninvasive cardiac tests (NCTs) that provide higher payments for hospital-based outpatient (HBO) locations than for provider-based office (PBO) settings has led to more testing and increased costs, including patient out-of-pocket costs, according to a new analysis.

"Our study finds that CMS [Centers for Medicare & Medicaid Services] is paying substantially more for noninvasive cardiovascular testing when it is performed in the hospital-based outpatient setting compared with the physician-based office setting," Frederick Masoudi, MD, MSPH, University of Colorado Anschutz Medical Campus, Aurora, told | Medscape Cardiology.

"The payment differences between settings could in theory be addressed by site-neutral payments, a policy that has been supported by MEDPAC [Medicare Payment Advisory Committee] and proposed by CMS," he said.

The study was published online October 14 in JAMA Internal Medicine.

Unintended Consequences

Echocardiography, stress testing, and other NCTs are a target for reducing Medicare fee-for-service (FFS) costs because they are common and relatively expensive. In the hope of cutting costs, starting in 2005, CMS cut payments in the PBO setting by half, from $600 to $300 per test on average, with no change in the HBO rate.

To evaluate how this change influenced rates of NCTs being performed in HBO and PBO settings, Masoudi and colleagues analyzed Medicare FFS claims from 1999 to 2015 (5% random sample) and Medicare Advantage claims data from three health maintenance organizations (HMOs) for the same time frame to serve as a control group because reimbursement for these claims was not dependent on where the test was performed.

The data included a mean of 1.72 million patient-years annually in Medicare FFS and 142,230 patient-years annually in the HMO control group, on average.

According to the results, cutting the PBO rate resulted in more than a twofold increase in the HBO-to-PBO payment ratio — from 1.05 in 2005 to 2.32 in 2015 — effectively making it much more lucrative to perform NCTs in hospital-based settings.

In fact, Masoudi's team found that the overall proportion of HBO testing rose from 21% in 2008 to 43% in 2015 and was correlated with the payment ratio (correlation coefficient with a 1-year lag, 0.767; P < .001).

In contrast, in the HMO control group, the proportion of HBO testing fell from about 17% in 2008 to 15% in 2015, with no significant correlation with payment rates (correlation coefficient, –0.024; P = .95).

The estimated extra costs owing to tests shifting to the HBO outpatient setting in the Medicare FFS group was $661 million in 2015, including $161 million in patient out-of-pocket costs.

"Although we cannot determine the optimal reimbursement rate for these tests, it is difficult to justify the marked differences between the two rates," Masoudi told | Medscape Cardiology.

"From the perspective of CMS and the patient, the location of testing alone has important implications for how much each pays to have the test performed. It is worth noting that noninvasive cardiovascular tests are but one type of medical service where setting-based differences in reimbursement exist, so there are broader implications for CMS and patients," he added.

Concerning Findings

Site-neutral payments may provide an incentive for testing to be performed in the more efficient location. "This policy would essentially equalize what CMS pays for a medical service regardless of the location in which the service is delivered," said Masoudi.

"Needless to say, the beneficiaries of markedly higher hospital-based outpatient payments have understandably been resistant to the idea, which they defend based upon the overhead costs of operating hospital facilities. This has, thus, become a fairly contentious political issue," he acknowledged.

The findings of this study are "concerning and hold important lessons for policy makers," write Jose Figueroa, MD, MPH, Brigham and Women's Hospital, Boston, and Karen Joynt Maddox, MD, MPH, Washington University School of Medicine, St. Louis, in a linked editorial.

They say the reimbursement policy change had three unintended consequences.

The first is that total costs related to NCTs rose in contrast to the intent of the policy. The second "even more concerning" unintended consequence is that patients are paying more out of pocket.

Finally, Figueroa and Joynt Maddox think the payment differences between HBO and PBO locations may drive greater consolidation of the healthcare market. "During the past 2 decades, hospitals have increasingly acquired physician practices that can then receive the higher HBO rate for providing the same care to the same population," they point out.

The editorialists also favor site-neutral payments. "By enacting site-neutral payments, requiring transparency of healthcare prices, and continuing to incentivize value-based care models, policy makers can ensure that patients are receiving the right care without needlessly paying more for it," they conclude.

The study was funded by the National Heart, Lung, and Blood Institute (NHLBI). Masoudi received grants from NHLBI during the conduct of the study. Joynt Maddox has received research support from NHLBI, National Institute on Aging and the Commonwealth Fund, and has performed contract work for the US Department of Health and Human Services.

JAMA Intern Med. Published online October  4, 2019. Abstract, Editorial

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