Congress Should Scrap Some Medicare Pay Changes in Cures Bill, Group Says

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By Michael D. Williamson

Nov. 28 — Congress should keep a Medicare site-neutral payment policy for certain hospital outpatient departments, a coalition representing insurers, providers, patient advocates and employers said Nov. 28.

Hospital industry groups, however, have welcomed the partial rollback of Medicare site-neutral payments.

Site-neutral payments are set to take effect Jan. 1, 2017, and they mean certain items and services provided by some hospital off-campus outpatient departments will no longer be paid under the hospital outpatient prospective payment system, which has higher reimbursement rates than the Medicare physician fee schedule. Provisions in the latest version of the 21st Century Cures legislative package, which is expected to be voted on by the House Nov. 30, would allow some off-campus departments to continue billing Medicare under the more lucrative hospital outpatient payment system.

Congress should remove provisions in the Cures bill that would exempt cancer hospitals and certain hospital outpatient departments from site-neutral payment policies signed into law as part of the Bipartisan Budget Act of 2015, the Alliance for Site Neutral Payment Reform said in a letter to the Republican and Democratic leaders of the House Energy and Commerce Committee.

Members of the alliance include the Blue Cross and Blue Shield Association, an insurer; the American Health Care Association, a nursing home trade group; and the National Restaurant Association, an employer organization for eatery owners.

America’s Essential Hospitals (AEH), an industry group for safety-net hospitals, and the Association of American Medical Colleges (AAMC), a trade group for teaching hospitals, support the site-neutral payment changes in the bill, executives from the trade associations separately told Bloomberg BNA Nov. 28.


The Centers for Medicare & Medicaid Services, in a final payment rule published in the Nov. 14 Federal Register, specified that site-neutral payments would apply to hospital-owned physician practices acquired or opened since Nov. 2, 2015, and that are located farther than 250 yards from a hospital’s main campus. The Bipartisan Budget Act (BBA) of 2015 required the CMS to adopt the policy.

Congress included the site-neutral payment policy in the 2015 law to discourage hospitals from acquiring doctors’ offices in order to receive the higher rate under Medicare’s payment system for physicians.

The revised Cures legislation, which is primarily aimed at speeding drug and device approvals and increasing medical research funding, would exempt hospital outpatient departments that are defined as “mid-build” prior to Nov. 2, 2015, a summary of the bill said.

In addition, the bill would define mid-build as a provider that had a binding written agreement with an outside, unrelated party for the actual construction of the hospital outpatient department before Nov. 2, 2015, according to the summary.


“When Congress passed the BBA, stemming consolidation in the healthcare marketplace was a key driver in the creation of the site neutral payment provision,” the Alliance for Site Neutral Payment Reform letter said.

Data continue to demonstrate the negative effects that hospital acquisition of independent physician practices has on health-care costs and access to community-based care, according to the alliance. For example, over a three-year period, Medicare paid $23.29 million more for chemotherapy services solely because they were administered in hospital outpatient departments, and cancer patients were out an additional $4.05 million in out-of-pocket costs because of the higher patient copayment at those facilities, the group’s letter said.

Hospital industry groups took a different view. AEH is pleased to see that the Cures bill would exempt more hospitals from Medicare’s site-neutral payment policies, Beth Feldpush, the senior vice president of policy and advocacy at the group, told Bloomberg BNA.

However, Congress should fully repeal the policy, Feldpush said.

The AAMC also welcomes the site-neutral changes and wants to Congress to make other changes to the policy, Len Marquez, the group’s director of government relations, told Bloomberg BNA. For example, he said, Congress should alter the policy to make it easier for hospital to relocate their outpatient departments.

As a result of the CMS payment rule, many hospital outpatient departments won’t be able to move in the future unless they take a Medicare pay cut, several industry groups told Bloomberg BNA earlier this month.

Adjustments for Socioeconomic Status

The revised Cures bill also includes provisions that would say the CMS can adjust for a patient’s socioeconomic status when accounting for readmissions, Marquez said. This issue has been very high on the AAMC’s legislative agenda for quite some time, he added.

The CMS lowers Medicare payments to hospitals if patients are readmitted within 30 days after being discharged. Hospital industry groups have long advocated that the CMS needs to account for a patient’s socioeconomic status when determining readmission penalties.

There is growing evidence showing that hospitals treating a large number poorer patients are unfairly penalized by not having a payment adjustment for socioeconomic status, Feldpush said. “We’re strongly supportive of these provisions,” she told Bloomberg BNA.

The new Cures bill maintains much of the same language from the version the House passed in 2015 (H.R. 6), and the reintroduction largely centers around changes in how to pay for the legislation and how much funding to provide the National Institutes of Health and the Food and Drug Administration (see related article) .

To contact the reporter on this story: Michael D. Williamson in Washington at

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

For More Information

The Alliance for Site Neutral Payments letter is at

The revised Cures legislation is at

A summary of the revised Cures bill is at

The rule outlining the site-neutral payment changes is at

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