Site-neutral payment proposals threaten access to care
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recent opinion piece in The Hill gives readers a one-sided, misleading and misinformed view on the issue of site-neutral payment proposals and consolidation in the health field. To start, the author fails to mention the fact that Americans rely on hospitals each day to provide 24/7 access to care for all types of patients, to serve as a safety net provider for vulnerable populations, including low-income people, children and the elderly, and to have the resources needed to respond to disasters. Hospitals’ focus on disaster readiness has been especially important recently, as seen by the prompt response to hurricanes in the Gulf of Mexico and Caribbean Sea, wildfires in California and tragic episodes of mass violence. 

These many critical roles that hospitals fulfill are not explicitly funded, but instead, are built into a hospital’s overall cost structure and supported by revenues received from providing direct patient care. Nevertheless, some policymakers have put forth misguided proposals to make payment for a service provided in a hospital the same as when a service is provided in a physician office or ambulatory surgery center (ASC). However, unlike these entities, hospital-based facilities provide access around the clock to critical services that are not otherwise available in the community and treat patients with very severe conditions. In addition, hospitals are subject to more comprehensive licensing, accreditation and regulatory requirements than other settings.

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The cost of providing care continues to rise for hospitals due to a range of factors including the skyrocketing costs of prescription drugs, increased regulatory burdens and because Medicaid and Medicare continue to pay less than the cost of care. According to an AHA analysis, Medicare margins in 2016 were negative 14.8 percent for hospital outpatient services, and AHA Annual Survey data illustrates that a staggering 66 percent, or 3,195 hospitals, received less than the actual cost of caring for Medicare patients in 2016. Implementing these “site-neutral” policy proposals could have a drastic impact on the ability of hospitals and health systems to carry out their mission - to care for their patients and communities.

As the health field moves from a volume-based to a value-based system, hospitals and health systems are leading the way by exploring new ways to enhance quality, reduce costs and provide more convenient access to care for patients. And, according to a 2017 study from Charles River Associates, consolidations can lead to substantial savings and provide the capital needed to fund the innovations and infrastructure improvements that are necessary to continue to enhance the care and access hospitals provide.

The author of the opinion piece specifically singles out oncology practices as a target for acquisition by hospitals and health systems. In reality, larger market forces have influenced independent oncology practices to merge with their community hospitals. In the move to value-based care, hospitals are strengthening linkages to each other, and to physicians, in an effort to improve quality and efficiency and to better coordinate patient care. In addition, unlike independent oncology practices, hospitals care for all patients who seek care, regardless of their insurance status or ability to pay, maintain standby disaster readiness capacity in the event of a catastrophic occurrence and treat patients who are sicker and require more complex services than those treated by private oncology clinics.

Hospitals providing care in their communities should not be reimbursed at the same amount as physician offices and other ambulatory facilities. Doing so fails to recognize the very different clinical capabilities provided by hospitals and would threaten access to care for the patients and communities that rely on that care each day.

Tom Nickels is Executive Vice President of the American Hospital Association.