House Approves Relief Package for Hospitals

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By Nathaniel Weixel

June 7 — Certain outpatient hospitals would get financial relief from last year's budget deal under a bill passed by the House.

Lawmakers approved the bill (H.R. 5273) June 7 by voice vote. The legislation attempts to rectify several issues hospitals had with various Medicare payment issues. It contains a host of Medicare policy changes, including one that would allow hospitals that were already building off-campus outpatient centers at the time of last year's budget deal to be exempt from the law's site-neutral payment policy.

The bill also would exempt new off-campus facilities of cancer hospitals from the payment change.

The site-neutral policy was intended to save $9 billion over 10 years, but would have resulted in lower reimbursement rates. Fixing it would be the most expensive portion of the legislation, and would cost $750 million over the next 10 years, according to the Congressional Budget Office.

The American Hospital Association and other hospital industry groups support the measure. Payers, including the Blue Cross Blue Shield Association, oppose it.

Senate Action?

Despite the bipartisan support in the House, it's unclear when or even if the bill will be taken up in the Senate.

“We're going to be taking a close look at it,” Senate Majority Whip John Cornyn (R-Texas) told reporters June 7. “But it hasn't come over here yet, and I don't know how much time we're going to have. That's going to be the precious resource.”

The budget deal's site-neutral provision equalizes Medicare payment rates for hospital outpatient departments and hospital-owned physician offices, and was meant to address the practice of hospitals acquiring physician offices and then billing patients under the outpatient prospective payment system (OPPS), which has higher reimbursement rates than the Medicare physician fee schedule. The provision has drawn the ire of hospitals, which say they've seen dramatic pay cuts as it has been implemented.

Hospital Industry Support

The Helping Hospitals Improve Patient Care Act was sponsored by Reps. Pat Tiberi (R-Ohio) and Jim McDermott (D-Wash.). Tiberi is chairman of the Ways and Means health subcommittee, and McDermott is its ranking Democrat.

In a June 7 statement, the AHA praised the lawmakers' leadership.

“This legislation will help patients by mitigating some of the negative impact of the 2015 Budget Bill and will improve access to care. It also will ease penalties experienced by hospitals and health systems who treat the most vulnerable patients,” Richard Pollack, the group's president and CEO, said.

The Association of American Medical Colleges also heaped praise on the bill.

“A great deal of compromise and hard work went into crafting and passing this legislation, and we applaud Republican and Democratic leaders in the House for putting the health of all Americans first and working in a bipartisan manner to make this happen,” AAMC President and CEO Darrell G. Kirch said.

The Alliance for Site Neutral Payment Reform, which includes the BCBS plans, issued a statement June 7 opposing the bill. “Congress has already recognized the negative consequences payment disparities have on patients and Medicare, which is why site neutral payment policies were passed as an important part of the Bipartisan Budget Act last year,” Ted Okon, executive director of the Community Oncology Alliance, said in the site-neutral alliance's statement. “Any legislation that backpedals on this progress by giving hospitals exemptions to charge more than physicians for identical services only drives up costs for everyone.”

Implementation Cost

According to the Congressional Budget Office, nearly 100 hospitals have identified themselves as having off-campus facilities under construction at the time the budget deal was passed. Under the bill, those hospitals would be allowed to bill at the higher outpatient rate after meeting certain reporting requirements.

Based on that information, the CBO estimated that increasing payment rates for services provided in those facilities would increase net Medicare spending by $760 million over the 2017-2026 period, but the bill would provide for $10 million to help implement the change.

In addition, the bill would save $20 million by delaying the Centers for Medicare & Medicaid Services' authority to terminate certain low-performing Medicare Advantage managed care plans. Thus, enacting the legislation would permit certain plans that otherwise would not be renewed under current law to continue operating through 2019. Those plans tend to receive slightly lower payments than other Medicare Advantage plans in the same areas, in part because they do not receive bonus payments under the five-star rating system, the CBO said.

To contact the reporter on this story: Nathaniel Weixel in Washington at

To contact the editor responsible for this story: Brian Broderick at