Is CMS committed to site-neutral payments? What the proposed 2019 OPPS may indicate for ASCs

CMS aims to take a step closer to site-neutral payments for outpatient procedures with the 2019 Medicare Hospital Outpatient Prospective Payment System and Ambulatory Surgical Center Payment System. The agency released its proposed rule earlier this week, addressing the payment gap between sites of service.

The new rule takes aim at payments for clinic visits, reducing the payment rate for hospital outpatient clinic visits provided at off-campus provider-based departments to 40 percent of the OPPS rate. The rule does not directly tackle the payment gap between ASCs and HOPDs.

However, the new rule would align the payment rate update factors for ASCs and HOPDs by moving ASCs to the hospital market basket to update payments from 2019 to 2023.

"We are grateful that CMS, after years of urging by ASCA, is proposing to measure inflation in ASCs by using the hospital market basket," said Ambulatory Surgery Center Association CEO Bill Prentice in a statement. "ASCs use the same staff, services and supplies as hospital outpatient departments, so it only makes sense to apply the same inflation rate for our yearly update."

The proposed rule would provide a 2.8 percent inflation update for both ASCs and HOPDs, but the reduction rates mandated by the ACA would be different based on ACA mandated reductions. The effective updates for ASCs would be 2 percent and for HOPDs would be 1.25 percent.

The conversion factor for ASCs is $46.50 and for HOPDs the conversion factor would be $79.546. In its statement about the proposed payment update, CMS said this change would "help ensure that ASCs remain competitive by stabilizing the differential between ASC payment rates and hospital outpatient department rates."

Where the agency will head in terms of closing the gap between ASC and HOPD payment is an "open question," said Mr. Prentice, but it's more likely the HOPD rate would drop to the ASC rate instead of the reverse.

During remarks at the Commonwealth Club of California July 25, CMS Administrator Seema Verma made remarks on the healthcare system and addressed the agency's commitment to lowering costs through directing care to the appropriate site of service.

"Medicare pays for things differently based on the site of care, paying more or less for the same service but at different locations," she said. "Now sometimes it makes sense, as some facilities provide a higher level of service. But other times, it creates misaligned incentives; decisions about whether a patient receives a service in a hospital or in a doctor's office is influenced by how Medicare pays."

She went on to acknowledge that because Medicare pays more to services provided in hospitals, the agency is encouraging consolidation among providers and when consolidation increases, prices also increase.

"I have traveled the country and spent a lot of time with providers from a variety of different settings and one thing has become completely clear to me: CMS has to modernize and refocus our policies on realigning incentives so that providers deliver value and quality to their patients," she said. "CMS' central mission is to transform the healthcare delivery system to one that moves away from delivering volume of services to one that delivers value for patients; one that provides high-quality accessible care at the lower cost."

The American Hospital Association, however, does not support the change. The AHA Executive Vice President Tom Nickels said in a statement, CMS "has once again showed a lack of understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities."


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