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Eric Lewis & # 39; plans to expand his reach of the local hospital have been tracked.
As CEO of Olympic Medical Center, he oversees efforts to provide about 75,000 people in Clallam County in the isolated rural northwest corner of Washington state.
Last year Lewis planned to build a primary care clinic in Sequim, a city approx. 17 miles from the medical center's main campus in a hospital and clinics in Port Angeles.
But these plans were set aside, says Lewis, due to a change in federal reimbursements this year. Medicare has chosen to pay hospitals that have out-of-school outpatient facilities a lower rate – similar to what it pays independent doctors for clinic visits.
Over the past ten years, hospitals have quickly built up outpatient clinics or purchased existing independent ones. It was a lucrative business strategy because such clinics could charge higher rates, provided they were part of a hospital.
With its new policy, Medicare essentially states that an off-campus office is an off-campus office, whether owned by a hospital, a group of doctors, or a solo practitioner.
By taking this position you will save Medicare – and possibly patients – money.
The federal insurance company bears the bottom of the members' additional costs, but the beneficiaries sometimes incurred part of this expense through deductions and repayments. Patients with commercial insurance were often blindsided by high bills – what apparently was a normal primary care clinic, only to discover that they were being charged a hospital facility fee.
Health policy analysts say the new policy is an important step in the rationalization of payments. Part of a strategy called "site neutral" payment, the new policy has its roots in the Obama administration and was included in the 2015 bipartite budget law.
"You don't care where [your treatment is] happens that it is a safe and inexpensive procedure, "says Gerard Anderson, director of Johns Hopkins Center for Hospital Finance and Management. "And the facility fee only adds the cost with very little added value."
The new payment structure may cause some hospitals to suffer damage that he and other experts acknowledge. But making reimbursements more uniform across providers facilitates competition and can result in commercial insurance follow-up – which can translate into more savings for patients.
This year, the dual-phased Medicare payment policy for clinical visits to outpatient wards is 30%, according to the rule completed in November. In 2020, payment rates are lowered by 60% compared to what they were last summer.
The centers of Medicare & Medicaid Services estimate that the change will save the federal government $ 380 million this year and patients on average $ 7 each time they visit a hospital-owned clinic. Clinic visits are the most commonly used medical care service for medical treatment under Medicare.
It can also reduce industry consolidation, says health economists by closing the loopholes, which provided incentives for hospitals to purchase independent medical practice and charge higher rates for taxpayer benefits.
The US hospital association filed a lawsuit late last year claiming that the CMS overruled its authority when setting the new reimbursement plan. Olympic Medical Center is among the applicants.
The hospital association claims that the new rule violates a precedent congress set out in the 2015 Budget Act. This legislation standardized Medicare payments for clinic visits to doctors' offices and new hospital outpatient facilities, but allowed most hospital-affiliated departments that existed at that time to continue receiving a higher rate, according to a comment letter from the Medicare Payment Advisory Commission. The group is a nonpartisan agency that advises the congress.
The difference in location-based payments was originally designed to help hospitals offset the higher costs they incur in maintaining staff and equipment to handle a wide range of treatments, says Christopher Whaley, an associated policy researcher at the Rand Corp. Research Organization.
But the financial relief became an incentive for hospitals to buy independent methods, says Dr. Ateev Mehrotra, Associate Professor of Health Care and Medicine at Harvard Medical School. Hospitals were able to charge higher prices for services performed at newly acquired clinics.
Mehrotra says the new CMS rule could be a way to slow down the trend.
"This won't slow it down completely," he says, "but it could be a boost on the brakes here – too little to push this consolidation down."
Some health analysts have urged the government to expand the number of services that is covered by the site-neutral policy, including paying hospitals on-site clinics a rate similar to what independent doctors receive.
Hospitals acknowledge that the change implemented by CMS can result in healthcare savings, but they say it comes at the expense of patients' practical access to medical care. In the Washington state, Lewis expects a $ 1.6 million loss to his hospital.
The lack of a Sequim clinic means that patients with illness will not be able to look close to their home, Lewis says.
"If you" It's good to do financially, it's not big trouble, "Lewis adds." But I think the poorest, older, sick in our society will pay the price of this policy. " Melinda Hatton, director general of the Hospital Association, agrees, "I think access is a few extra dollars in copays every single time," she says.
On the other hand, many independent doctors support the change. Carey, MD of the Independent Doctors Association, says she hopes the rule will slow down consolidation.
According to a recent report from the consulting firm Avalere, the number of hospital-run doctors has more than doubled from 35,700 to 80,000 between July 2012 and January 2018. Hospitals own more than 31% of all medical practices, the report noted.
Jameson Carey says such mergers can also cause problems for the local economy when a nonprofit hospital buys An independent clinic, it effectively removes a tax-paying company from the area. This is because nonprofit hospitals are exempt from paying certain federal, state, and local taxes – in exchange for social benefits.
"So not only [hospitals] gets the facility fee," says Jameson Carey, "they don't have to pay taxes."
Kaiser Health News is a nonprofit news service and editorially independent program by the Kaiser Family Foundation. KHN is not affiliated with Kaiser Permanente.