Relevant tickers: HCA, CYH, THC, LPNT, SEM, AMSG, SCAI, SGRY, CNC
Last November, as part of the FFY 2016 and 2017 budget deal crafted by outgoing Speaker of the House, John Boehner, Congress imposed site neutral payments on newly built or acquired hospital outpatient departments located more than 250 feet from a hospital’s main campus. Under this site neutral payment law, new hospital outpatient departments that exceed the distance requirement will be reimbursed under the Physicians Fee Schedule or the Ambulatory Surgical Center rates instead of the higher, Hospital Outpatient Prospective Payment System (OPPS) rates. One of the primary motivations for hospital acquisition of physicians' practices has been the enhanced reimbusement available by declaring the practice an outpatient department upon closing the deal.
The American Hospital Association had lobbied vigorously against the provision in the budget deal, to no avail. The Federation of American Hospitals which represents the investor-owned hospital companies issued a conciliatory statement suggesting they were unconcerned about the change at the time. Since then however, both organizations have made amending the law to grandfather projects “under development” a priority.
According to reports, the House Ways and Means Committee is crafting a bipartisan response to the AHA and FHA’s request but not without a price. As reported, the new bill would potentially do the following:
- Grandfather projects under development as of November 3, 2015 and that began billing Medicare under the OPPS within a certain time frame. The term “under development” and the deadline for bringing these projects online is not, as far as we can tell, defined.
- The cost associated with the grandfather clause would be offset with a cut to the annual hospital market basket adjustment.
- Outpatient cancer departments would be exempt from the site neutral requirement of the budget deal but would have a cancer department-specific budget offset.
Because no legislative opportunity should go unexploited, especially these days, there have been a few other provisions – in the form of filed bills - circulating that range from technical corrections to harbingers of long term trends. Those provisions being bandied about include:
- The Medicare Crosswalk Hospital Code Development Act (H.R. 3291) -This potential addition tops our list because it is authored by House Speaker Paul Ryan (albeit before he became House Speaker) who has quietly and rather effectively made site neutral payments a priority. This bill would create uniform codes for at least ten surgical procedures that are performed on an inpatient and outpatient basis. For the uninitiated, outpatient departments bill Medicare using different codes than inpatient departments even if the procedure is the same. Billing codes are one of the major obstacles of payment reform. The merging of billing codes between outpatient and inpatient systems sets the stage for greater site neutral payment by Medicare and commercial payers.
- Establishing Beneficiary Equity in the Hospital Readmission Program Act (H.R. 1343) – This possibility, if incldued, would adjust the hospital readmission program to account for the poor health of low income beneficiaries.
- The Rural Community Hospital Demonstration Extension Act (S. 607) - This Senate bill would extend this CMS demonstration program from five to ten years.
- The LTCH Technical Correction Act (H.R. 2580) - If added, this bill would make some technical corrections to how high cost patients at LTCHs are handled. Worth noting here is that LTCHs like SEM have lobbied for a change to the 25 percent rule which has an expiring implementation moratorium. As of this writing it is not included and does not appear to be a priority.
- Electronic Health Fairness Act of 2015 (HR. 887) –This possible provision would exempt ambulatory surgery centers like those owned by AMSG, SCAI and SGRY from meaningful use penalties. CMS and Congress have gotten out the coffin nails for Meaningful Use so this provision seems like an easy one given the rapidly changing philosophy on MU.
- Medicare Advantage Coverage Transparency Act (H.R. 2505) - Would require CMS to release enrollment data on Medicare Parts A, B, C and D by zip code. CMS currently releases data regularly on Medicare enrollment and this provision would allow Congress and others (like us!) to compare enrollment by type.
- Seniors Health Care Plan Protection Act (H.R. 2506) This provision would be welcome by Medicare Advantage providers with large number of low income,. chronically ill patients like Centene (CNC). It requires CMS to revise risk adjustment calculations to account for Medicare Advantage beneficiaries’ chronic conditions like diabetes and COPD. This addition would also require changes to the risk adjustment system. Risk Adjustment for the chronically ill and low income beneficiaries has recently become a priority for CMS.
All of the provisions reportedly under consideration appear to be selected largely for their technical nature, thus carrying relatively low price tags in terms of budgetary offsets. Those factors argue for relatively smooth passage. However, this is politics in a particularly peculiar election year, so we are not going to get too excited just yet. The Senate is especially hard to predict. We assume the best hope for passage is as an accompaniment to the Health and Human Services appropriations bill.
Stay tuned.