Site-Neutral Payment Policy at Risk After Federal Court Ruling

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ACP concerned about attempts to reinstate ‘facility fees' at hospital-owned outpatient clinics, which inappropriately put the extra cost on patients

Oct. 4, 2019 (ACP) – The American College of Physicians is carefully monitoring legal proceedings regarding site-neutral payments after a federal judge overturned the site-neutral pay policy finalized last year.

The Centers for Medicare and Medicaid Services in November finalized its site-neutral payment policy to eliminate “facility fees” at hospital-run outpatient clinics. CMS further “expanded the so-called site-neutral pay policy to evaluation and management services at off-campus hospital clinics” earlier this year, Modern Healthcare reported. But in September, a U.S. District Court judge overturned the CMS rule stating that the Trump administration exceeded its authority when it expanded the policy. The judge ruled that if CMS wants to change the way Medicare pays for office visits, it must be done without increasing or decreasing Medicare spending.

“We're concerned about any attempt to reinstate these fees in outpatient clinics because they're simply not appropriate from a patient perspective,” said Shari Erickson, ACP's vice president for governmental affairs and medical practice.

As Erickson explained, the facility fee is designed to help hospitals get reimbursed for the cost of providing their facilities. “It is typically used by hospitals to provide funding for the services that they provide to the underserved and uninsured and to provide training,” she said. “Essentially, it helps subsidize other services provided by the hospitals that don't have funding streams.”

A founder of the Alliance for Site Neutral Payment Reform, ACP objects to imposing the facility fee on patients who seek care at outpatient clinics that are owned by hospitals. Last year, the College applauded CMS's proposal to move toward site-neutral payments.

Robert B. Doherty, ACP's senior vice president for governmental affairs and public policy, has explained the fee using this scenario: “One day, you go to your primary care doctor in her office to get medical care, and you are billed only for the medical care you received from her. Under Medicare law, you would be responsible for 20 percent of the cost of the billed services.” Then, six months later, “you end up going to the same doctor, in the same office space, for the same kind of services, and you are billed the 20 percent share for the medical care you receive plus 20 percent of the facility fee.” Nothing has changed, he said, except that now a hospital owns the practice.

ACP believes the government should pay hospitals appropriately for uncompensated care. “They need to get direct funding, so patients don't pay the price,” Erickson said.

What happens now? “We'll continue to advocate for CMS to be able to make this change,” Erickson said. “We believe it's appropriate and within their regulatory authority. Our hope is that CMS will continue to try to address this issue. If necessary, we may need to consider working with Congress on this issue in the future.”

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