Protectionism has been lingering in the background of health care policy for 20 years. In response to shifts of procedures to outpatient, the Centers for Medicare and Medicaid implemented a payment system for Ambulatory Surgery Centers that has guaranteed them about 60% of the hospital outpatient rate. It also created the Inpatient Only List in 2000 that provided a list of procedures that should only be performed on an inpatient basis.
The Trump administration tried to revive the progression of procedures and the accompanying advances in technology and patient care to the outpatient setting by eliminating the Inpatient Only List in 2021. They also de-linked the ASC payment update from CPI_U and adopted the OPPS market basket. As part of waivers associated with the Public Health Emergency, the Trump administration essentially dissolved the regulatory distinctions between ASCs and inpatient hospitals.
The Biden administration reversed the policy eliminating the Inpatient Only List but left the OPPS-linked annual payment update unaffected. As far as we can tell, the Medicare Advantage plans continued to optimize for site of care for with the Public Health Emergency waivers providing cover for much of the previous three years.In response, CMS released guidance that instructs the MA plan carriers to adhere to the Inpatient Only List in October that becomes effective this year.
This tension is the manifestation of an underlying theme in American health care which is the protection of the hospital sector. Hospitals are significant local employers in most Congressional districts. In certain parts of the US, hospital labor is organized, a powerful constituency of the White House. There is no contra-force in the ambulatory sector whose decentralization does not lend itself to labor organization.
At least not yet.
Emily Evans
Managing Director – Health Policy
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