Site neutral payment reform is a winning issue for patients – unless Congress rolls it back
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Data show that the majority of Americans experience stress tied to medical costs for treating illnesses or purchasing medications. Premiums for most health insurance plans continue to increase as more patients find themselves paying more out-of-pocket in the form of higher co-pays and deductibles.

Cancer patients face particular hardship. A recent survey found that 70 percent of cancer patients face financial difficulty related to their treatment expenses and only one-quarter of patients said they had a full understanding of the out-of-pocket costs they would incur during treatment. In another recent survey, three-quarters of responders said a cancer diagnosis would have a catastrophic impact on their finances.

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However, proposed payment reforms offer hope for reduced costs for both patients and taxpayers. Over the summer, the Centers for Medicare & Medicaid Services (CMS) unveiled a new set of reforms that would enormously benefit patients, lower out-of-pocket costs, and reverse a growing trend of practice consolidation that limits patient access to care – all while saving the Medicare program millions of dollars each year.

The reforms come as a part of the agency’s 2019 Outpatient Prospective Payment (OPPS) system proposed rule which included a proposal to close a loophole that allows hospitals to overbill Medicare by exploiting payment disparities between different reimbursement schedules. Most independent physician offices are typically reimbursed through the Medicare Physician Fee Schedule (PFS) which pays less than OPPS for the exact same services. For example, Medicare’s OPPS schedule pays $123 for basic services such as Evaluation and Management (E/M) office visits, while the PFS only pays $72 – a difference of $51. Reimbursements for other common services such as chemotherapy, colonoscopies and even basic blood tests are also substantially higher when performed in the hospital outpatient department setting.

These payment disparities are the primary driver behind a recent wave of oncology practice consolidation, motivated by hospitals buying up physician practices and converting them into outpatient departments. Studies show over 1,200 community oncology practices have either closed, been acquired by hospitals, or been part of a merger over the last decade.

When access to community cancer care is impacted in this way, patients are left on the hook for increased costs. Studies show that patient co-pays are higher in an off-campus outpatient facility and the average out of pocket cost for commonly used cancer drugs is $134 more per dose if delivered in a hospital outpatient setting.

Congress sought to fix this issue in 2015 when it passed the Bipartisan Budget Act, which equalized payments for services delivered in newly-built or newly-acquired hospital outpatient facilities. The legislation aimed to remove the incentive for hospitals to consolidate smaller, private practices into their larger health care systems. However, the bill contained a “grandfather” clause that allowed all existing hospital outpatient departments to continue billing at the higher OPPS rate for their services. 

Unfortunately, many hospitals are abusing this grandfathering privilege by expanding the list of services they are able to offer patients at the higher OPPS rate. Allowing these facilities to expand into new “clinical families” of services defies congressional intent at the expense of patients and taxpayers.

CMS’s proposed rule would end this practice by equalizing reimbursement for all new clinical families of services and clinic visits at grandfathered hospital outpatient departments. This would be an enormous win for cancer patients and would lay the groundwork for expanding payment parity to other common outpatient services. According to CMS’s own estimates, site neutral payment reform could save patients $150 million in lower co-pays in 2019 alone. 

Unfortunately, the powerful hospital lobby is fighting hard to get CMS and Congress to drop these proposals before they are implemented, thereby preserving the unnecessary higher payment rate for hospital outpatient departments grandfathered under the Bipartisan Budget Act. If they get their way, patients will continue to be saddled with higher out-of-pocket costs and fewer provider choices.

Congress must recognize that opposing efforts to lower health care costs is a losing issue every time. As the midterm elections fast approach, lawmakers should understand that patients will be watching their votes closely to see who’s on their side and who’s on the side of special interests.

Marcus Neubauer, MD is Chief Medical Officer of The U.S. Oncology Network.