Hospital Groups, Others Raise Concerns Over CMS Payment Proposal

Hospital groups and other organizations and individuals sent blistering comments to CMS for expanding its site-neutral payments between what Medicare pays for at physicians’ offices and off-campus hospital clinics, where rates are higher because of added hospital facility fees. It is also extending 340B drug discounts to off-site hospital clinics.

While many comments were critical, such as the ones from the American Hospital Association (AHA) and America’s Essential Hospitals, others, such as from surgery centers, supported the proposal. Comments were due Monday for CMS’ proposal for changes to hospital outpatient prospective payment system (OPPS), ambulatory surgical center (ASC) payments, and the 340B drug program.

The agency said it was making the moves to address concerns raised by healthcare consolidation among hospitals and providers, and that the action would save hundreds of millions of dollars. But the hospital groups called the changes arbitrary, capricious and even unlawful.

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America’s Essential Hospitals wrote that CMS is exceeding its statutory authority with a plan to change how Medicare Part B reimburses drugs for hospitals participating in 340B, undermines the Public Health Service Act, and is harmful to low-income patients.

The agency would pay nonexcepted off-campus hospital clinics average sales price minus 22.5% for drugs acquired through the 340B program. The agency said it has saved beneficiaries $320 million since it began the change earlier in the year. Other groups, like the Community Oncology Alliance, have long advocated for such a move.

AHA said it was concerned about the payment reduction for hospital outpatient clinic visits in certain off-campus provider-based departments (PBD). These visits would be reimbursed at the physician fee schedule rate, which equals 40% of the OPPS rate. The clinic visit is the most common service billed under the OPPS.

The hospital groups also are opposed to a payment reduction for a new service classification system called "services from expanded clinical families" in certain off-campus PBDs. This would also be set at 40% of the OPPS rate, but would also require hospitals to make operational and administrative changes by January 1, 2019, and increase regulatory burdens, America's Essential Hospitals wrote.

The proposal spurred Olympic Medical Center in Port Angeles, Washington, to generate individual letters from patients and staff, warning the changes would have a devastating financial impact on the rural hospital. One doctor wrote that the population is more than 80% Medicare or Medicaid.

One rheumatologist, practicing in Texas, said the payment changes would force her to consider early retirement, because it would become impossible to address the complex medical issues of her patients under the new CMS proposal.

“The only way for my clinic to survive financially will be to only address one issue per visit and have them come back repeatedly to address individual issues per visit. Obviously, this new system would clutter my schedule (which is already full with several week wait), further limiting access to patients,” wrote Carmen Perez-Masuelli, MD, FACP, FACR. “I would most likely be forced to limit the number of Medicare patients I can see.”

Another part of the proposal, designed to shift more services to ASCs, was praised by a group representing individual private practice surgeons. “Prudent use of financial resources for the Medicare Program does not permit a higher payment for one setting over another,” wrote the group, calling itself the Surgical Economic Think Tank.

CMS Administrator Seema Verma has warned that unless changes to Medicare are made, the program may not survive.