Wednesday, March 2, 2016

Physician Office, Hospital Outpatient and Other Payment Differentials: Avalere Study

On November 2, 2016, the President signed the Bipartisan Budget Act which included Section 603, blocking future conversions of physician practices into hospital outpatient centers (here).  As a flurry of debate on the implementation of this law continues, Avalere publishes a comparison of Medicare's site of service payment differentials.  I have included the Avalere study and about ten other relevant documents in one 10 mb zip file in the cloud, here.  Details after the break.

Section 603: Site Neutral Payments for New Off Campus Facilities
Section 603 of the BBA states that if a location has not billed as a hospital outpatient off-campus center (under hospital outpatient fees and rules) by November 2, can't.  Not if the location is acquired by a hospital, nor if a new off-campus site is built from scratch by a remote hospital.   The go-live date for forcing such centers into Part B billing is January 1, 2017.

To illustrate the rules, a physician practice acquired by a hospital and rebranded as a hospital clinic on October 1, 2015, can keep billing under hospital rules indefinitely.   But a clinic so acquired on December 1, 2015, can only bill under hospital rules under December 31, 2016.  A clinic built and opened in July 2015 can bill as a hospital outpatient center indefinitely, but one built and opened in July 2016 can only bill that way under December 31, 2016.

While the law requires considerable policymaking to implement, a new emergency or urgent care center is exempted and remains a hospital-type institution; but a surgicenter would bill under ASC rules in 2017 and forward, and a physician clinic type of center would bill under regular Part B office rules in 2017 and forward.

February 2016: The Paper Trail Explodes
Generally, hospitals are paid more for similar services, for example, a hospital-based outpatient colonoscopy pays much more than a physician-office-based colonoscopy.  For a December 2015 GAO report on the topic, see here. [*]   The implementation of the new law has been such a hot topic for several months that the House Energy & Commerce committee issued a detailed explanation of the legislation's purpose and a request for public comment on February 5, 2016 (here).  The AHA, which is devoting much attention to this topic, responded to the House with a 13-page letter within a week (here).  AHA also sent CMS a detailed letter under separate cover, with even more intricate policy concerns (here.)  The AHA is "deeply disappointed" that the law was passed at all, but assuming it won't be reversed, is focusing on implementation.

Some Support the Law
Some parties like the law.  The Energy & Commerce public letter of February 5 remarks that someone recommended that that site-neutral payments be applied to all hospital owned off campus facilities, with no exemption for older centers (with no grandfather clause).  The AAFP has written Congress that the law, as-is, is a very good idea and that the site-neutral payments should be broadened by additional laws (here).  The AAFP has held this position since at least 2014 (here.)  Private insurers have raised concern about "system owned physician offices" billing at "hospital outpatient center rates" (herehere).

Avalere's Report
All that gives you a setting for the new, February 2016 43-page Avalere report, which is online here.

A number of open access trade journals are discussing the report, for example, Healthcare Dive here, Hospital CFO here, AJMC here.  Avalere's short discussion of its own report, here.

The Avalere report is also archived online at the Physician Advocacy Institute, PDF here.  For the PAI's home page, land here.

[*] Zip File in the Cloud
I have included the Avalere study and about ten other relevant documents in one 10 mb zip file in the cloud, here.   This ZIP includes among other items the 2011 RAND report (here), the December 2015 GAO report (here), and the 2014 Cassidy Health Affairs briefing (here).