Congressional subcommittee takes up the 'hospital premium'

The idea of equalizing prices between inpatient and outpatient sites has hovered over the hospital industry like a dark cloud in recent years; on Wednesday, a House subcommittee on Health heard input from a variety of interested parties, including MedPAC, which has recommended site neutral-payments for over a decade.

Currently, two bills that would address the issue—one that would equalize payments for cancer care between hospital outpatient departments (HOPDs) and office based settings (H.R. 2869) and another that would bundle payment for episodes of post-acute care (H.R. 3673)—have been introduced in the House. The trend in hospital acquisition of physician practices is bringing the issue into sharper focus for policy makers.

“MedPAC has estimated that seniors could save hundreds of millions of dollars a year if a site-neutral payment system were instituted,” Rep. Joe Pitts, R-Pa., chair of the House Energy & Commerce’s subcommittee on Health said in his opening remarks. “In addition, MedPAC cites the urgent need to address the issues because service has been migrating from physician’s offices to the usually higher paid outpatient department setting as hospital employment of physicians has increased.

“These policies have arisen as potential pay-fors for SGR reform and other healthcare reform.”

Mark Miller, PhD, executive director of the Medicare Payment Advisory Commission (MedPAC), expressed deep concern about the trend in hospital acquisition of physician practices. “The Commission is concerned that part of the motivation is that they can bill for the same service at a higher hospital payment rate, resulting in more Trust Fund expenditures and higher out-of-pocket for the beneficiaries, but no change in the service provided.”

Implications for Medical Imaging

Miller reviewed the commission’s recommendation in its June 2013 Report to Congress, which made three recommendations (one of which directly impacts medical imaging):

1. Equalize payments across settings for E & M office visits.
2. Align payment rates between HOPD and physician offices in for 66 categories of service (identified by APC code).
3. Equalize payment rates between HOPDs and ASCs for certain ambulatory surgical procedures.

The 66 APCS identified by MedPAC are divided into two classes: Payment rates would be equalized for the 24 services in Group 1 that meet all five criteria established by the commission; and difference in payment rates would be narrowed for 42 services in Group 2 that meet four of the five criteria, to allow for differences in packaging of those services.

Among the Group I services are the following APCs:

• 265 Level I diagnostic and screening ultrasound

• 267 Level III diagnostic and screening ultrasound

• 269 Level II echocardiogram without contrast

• 336 MRI and magnetic resonance angiography without contrast

• 288Bone density: axial skeleton

Among the Group 2 APCs are:

• 2 Fine needle biopsy/aspiration

• 300 Level I radiation therapy

• 383 cardiac computed tomographic imaging

MedPAC estimates annual savings of $1.1 billion in program spending and $180 million in beneficiary out-of-pocket spending.

While some providers of outpatient imaging may welcome the parity in playing fields that site-neutral payment policy offers, The Access to Medical Imaging Coalition (AMIC) issued a strong statement opposing MedPAC’s proposal to reduce HOPD rates to physician office payment levels on the grounds that imaging reimbursement rates in the Medicare Physician Fees Schedule have been reduced to unsustainable levels.

“We agree with the American Hospital Association’s position: that we must question whether payment is truly adequate in the setting that is paid the lower amount. With the repeated payment cuts over the last eight years slashing physician office payments to inadequately low levels, and given the recent proven reduction in imaging utilization in the Medicare program, any further cuts will impair the value early detection brings to patient care,” said Tim Trysla, executive director of AMIC, in a prepared statement.