2019 Proposed Outpatient Prospective Payment System

AAFP Supports CMS Move Toward Equitable Payment Rules

September 26, 2018 12:07 pm News Staff

The AAFP recently told CMS that the agency should finalize a policy proposal in its proposed rule on the 2019 hospital outpatient prospective payment system (OPPS) that would reduce payment differences between sites of service as a step toward saving money for Medicare and patients, and then suggested a way to improve payment for independent practices.

[Hospital outpatient facade]

The Academy, responding to a proposed rule published in the July 31 Federal Register,(www.gpo.gov) made the comments in a Sept. 19 letter(2 page PDF) to CMS Administrator Seema Verma, M.P.H., that was signed by AAFP Board Chair John Meigs, M.D., of Centreville, Ala.

The AAFP was supportive of CMS' proposal to reduce payment disparities across different sites of services, pointing out that the move would, in 2019, save Medicare $610 million and reduce patient copays by $150 million.

Taking that notion a bit further, the AAFP encouraged CMS to "create incentives for services to be performed in the most cost-effective location, such as a physician's office," and called the differences between inpatient, outpatient and other sites of service an "artificial distinction" that springs from the "equally artificial distinction" between Medicare parts A and B.

Those site-of-service payment differences cause financial stress on the Medicare program and on patients who pay more for clinic visits provided at a hospital outpatient department than for those in a physician office setting, said the Academy.

Furthermore, many community clinics have been forced to shut down as result of "vertical integration," and those closings have undermined the right of patients to choose where they want to receive their health care, the letter continued.

The AAFP strongly recommended that CMS finalize the proposed policy to reduce payment differences between sites of service and effectively make costs more transparent to Medicare beneficiaries who are trying to make informed health care decisions.

"The AAFP calls for policies that progress beyond this silo mentality and instead pay for health care services in a more consistent and equitable manner," said the letter.

Referring to the Bipartisan Budget Act of 2015, the AAFP noted that the intent of section 603 of that legislation was to "curb the practice of hospital acquisition of physician practices" for the purpose of increasing Medicare payments.

The AAFP pointed out that CMS' payment methodology proposed for 2019 "will not assure equal payments for the same service regardless of site of service," due to a "relativity adjuster" in the Medicare physician fee schedule.

"The actual relativity for individual items and services may vary," said the AAFP. And unfortunately, that variance would encourage hospitals to continue to buy physician practices based on the mix of services they provide.

The hospital could then bill for those services as provider-based departments at higher Medicare rates than if the practice were not hospital-owned, explained the AAFP.

In light of that, the AAFP supports a different approach -- similar to what CMS initially proposed for 2017.

Specifically, said the AAFP, CMS would pay nonexcepted off-campus provider-based departments for nonexcepted items and services at true Medicare physician fee schedule-based rates in an effort to reflect the relative resources involved in providing the services.

In fact, said the AAFP, CMS could extend that rate to all off-campus provider-based departments -- just as it suggested for clinic visits. The letter goes on to provide additional details about how this system would work under a variety of circumstances.

The AAFP said such an approach would "equalize payment rates between physician offices and off-campus provider-based departments on a procedure-by-procedure basis."

That would, in fact, be "consistent with the AAFP's vision for how Medicare payment should be designed," the letter concluded.

Related AAFP News Coverage
Proposed 2019 Medicare Physician Fee Schedule

AAFP Digs In, Gives CMS Comprehensive Comments on MPFS

(9/6/2018)

Additional Resources
CMS Fact Sheet(www.cms.gov)

CMS Press Release(www.cms.gov)