Site-neutral cuts: Bad for providers, bad for patients
Ill-advised Medicare reimbursement cuts are being implemented.
Hospital outpatient departments, or clinics that are located off the main hospital campus, are key sources of primary care and other physician services throughout New York and the nation. They help people maintain good health, provide opportunities to identify poor health conditions early and lessen occurrences of preventable and costly healthcare issues.
This access to care is what patients deserve.
Unfortunately, “site-neutral” cuts reduce that access.
CMS’ site-neutral cuts ignore provider differences
CMS is currently implementing cuts that reduce hospital outpatient departments’ Medicare reimbursement by 60% to match the rates reimbursed to physicians’ offices. In its Medicare OPPS proposed rule for calendar year 2020, released July 29, 2019, the agency shared its intent to fully phase in these cuts.
Medicare will pay the same amount for a medical service regardless of where the care is delivered.
But a hospital-based clinic and a private physician office aren’t the same – in fact, there are key differences.
Compared to private practices, hospital outpatient departments tend to serve more low-income and medically-complex patients – something the existing payment rates help to address.
Hospital outpatient departments also provide access where others don’t – particularly in underserved urban and rural areas. When these outpatient cuts become a reality, it will be less feasible to keep these facilities open.
Reduced access to primary care or other services affects all patients in the local community: insured or uninsured, commercially covered or covered by Medicaid or Medicare.
Higher payment rates are merited – and needed
In New York, our not-for-profit hospitals strive for financial viability in the aggregate. Some services may be profitable, while other services (for instance, emergency room or mental health services) may not generate enough revenue to remain independently viable.
Hospital outpatient departments also face more stringent regulations than private physician offices.
This complex reality more than makes up for the need for higher payment rates, and it’s a reality most policymakers understand and recognize. Despite that, CMS is moving forward with these cuts.
These cuts are bad for patients – and politicians understand that
An overwhelming number of House and Senate members oppose the Trump administration’s action to cut hospital outpatient setting payments – and for good reason.
Cuts to payments don’t reduce the demand and need for healthcare services; they only reduce hospitals’ ability to provide those services.
Hospitals work hard to meet the demands of patients in their communities, regardless of their ability to pay.
Myopic, targeted cuts just make this mission harder to achieve.
Originally published June 19, 2019. Updated Aug. 14, 2019, to reflect new information with regard to CMS’ Medicare Outpatient Prospective Payment System proposed rule for calendar year 2020.