Lawmakers look to remove site of services differences.
Episode: #78 Podcast Recap
The discussion this week hits on some familiar themes, Medicare Fee Schedule, and some recent litigation. Matthew starts off the conversation by telling Ron that one of his clients has been watching some discussions on Capitol Hill regarding the Medicare Fee Schedule. Ron said that some elected officials are discussing the fee schedule and they might want to get rid of the regular cut, but others like to use the annual cut as a rallying cry to attract lobbying money. Although anything is possible, he said with this congress, one that is divided on a variety of big issues, he didn’t think that this important issue would get the attention it deserves and the current cut to Medicare Schedule Fees would stick, and physicians need to accept that for this year.
Matthew reminded us that some physician contracts are tied to “current year Medicare” reimbursement rates, which when a cut like this comes through impacts not only your Medicare patient reimbursement, it effects your payer reimbursements that are tied to the Medicare fee schedule. Ron pointed out that some in the media are talking about how inflation is coming down, but he said the recent numbers he looked at still had it at 3.1% and which is higher than what the Federal Reserve thought it was going to be. So, he said, “If you got 3% inflation and 4% revenue cut that’s a pretty bad situation to be in and a lot of physicians are finding themselves in that situation right now.”
Matthew shifts the conversation to a recent Kaiser Family Foundation article about the hospital lobbying effort to maintain the current status quo on Medicare payments called the site of service differential. Matthew asks Ron to explain what it is and why is this payment different.
Ron explained that hospitals argue that they should be reimbursed more for some Medicare services because they have a higher cost than an outpatient facility. They explain that they have to provide more “free” healthcare services, they have “higher quality or safety standards” and things of that nature. Although Ron agreed that these are likely valid to some degree, he thinks the main reason hospitals receive this higher reimbursement rate is that the hospital lobby is more organized and able to make the argument to Congress in a more consolidated manner, versus physicians who are not as well organized as the hospital lobby is. All that said, Ron pointed out that it’s not like hospitals are reaping huge profits from this differential, frequently they are using this to offset their Medicare inpatient costs, which are higher than what they are reimbursed for those services. Ron explained that this is a hard issue for doctors because they are getting paid half for the same services in their outpatient facilities.
Matthew brought up that in December a bill that required Medicare to pay the same amount for some medical infusions such as chemotherapy and a few other autoimmune conditions passed the U.S. House. Referred to as “site-neutral” he said the bill has not passed the Senate yet, but this is where some of the lobbying being discussed was active.
Matthew asked Ron what would happen to American hospitals if there were site-neutral payments. Ron speculated that the hospital lobby is likely concerned that if you passed site-neutral for one treatment then you are on the preverbal slippery slope. According to the Congressional Budget Office, Medicare would save over 3.7 billion over the next ten years if this was implemented. This nearly $4 billion savings to Medicare, Ron explained, is $4 billion dollars of revenue loss to someone else. He said first of all that revenue is not easy to replace and there is a legitimate argument here because when you cut reimbursement, whether hospitals or physician reimbursement, it is going to produce a negative impact somewhere else. He said that he thinks the hospital lobby is probably right because when you have that much revenue removed, you are likely going to see rural hospitals shut down.
Ron explained the difficulty in this situation for our elected leaders. He pointed out how one physician Senator, Bill Cassidy (R-La.) pointed out that in some cases the higher payments are “justified” and in other cases “it doesn’t seem to be.” “But he is right,” Ron said because in some cases these payments may be propping up a rural hospital and in other cases, the quality of care is really the same between the outpatient facilities and the hospital, and the hospital is getting twice the reimbursement.
The team pointed out that this issue is not so much a republican versus democrat issue. Where you have Senators on both sides of the aisle having the same opinion and concerns about passing something like this and its impacts on hospitals. Ron pointed out that this issue is falling more along the lines of how much it would impact rural healthcare in their respective states.
Matthew said that that is some talk about this issue being introduced in the U.S. House bill that will keep the government funded for the year and asked Ron his take. Ron said he thought it might get slipped in there because in budget discussions there are always conversations about how something will be paid for. Ron said that he could envision an elected leader pointing out that you could save $ 3.7 billion on this issue and pay for something else. The conundrum comes, he said, when you start tallying the votes with congressional leaders and start looking at their rural hospitals. The team dove into some speculative analysis on the possibility of changes in these Medicare reimbursement fees regarding geography and Ron said that he did not see where this aspect of Medicare reimbursement would be touched since they are grounded in some measurable data.
The conversation moved onto two other quick topics, a lobby group for the pharmaceutical industry’s lawsuit against the Biden administration was thrown out recently. They were suing over the government’s ability to negotiate prices. Ron did not think this was a big surprise. But, he said, they had to try and they went in to it with a constitutional argument, so we have not likely seen the last of this discussion.
The other story Matthew brought up was the Federal Trade Commission’s (FTC) case against Simple Health, where the government claimed Simple Health was misleading consumers on what and how much coverage they had. Ron said that Simple Health had broad clauses on pre-existing conditions, and misleading advertisements about what they claimed to cover and what they actually covered, and the FTC won and shut them down. He pointed out that in healthcare, buyers need to be aware of what they are purchasing because of the large expenses that can rack up when you have a health issue and there are products out there that look like insurance but are not. Some are very good, he said, but companies like Simple Health were unscrupulous. The Team wraps up by clarifying the risks and benefits of insurance and some of the faith-based medical programs. Read more on this article on Becker’s news site.
This closed out the discussion for this episode, you can listen to the full podcast and other episodes of FLATLINING here, and be sure to share with your colleagues and subscribe if you have not already.