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MedPAC Site-Neutral Payment Proposal Could Level Outpatient Reimbursement Playing Field

Posted in Medicare

It’s no secret that Medicare pays significantly more for certain services when they are performed in a hospital outpatient department than when they are performed in a physician office.  In fact, this is one of the reasons privately practicing physicians have been folding up shop in favor of hospital employment.  Hospitals can make more from these services than physicians and, therefore, can generally pay physicians more than they could earn in private practice. 

The Medicare Payment Advisory Commission (MedPAC) has taken notice of the discrepancy and recopmmended last month that the Centers for Medicare and Medicaid (CMS) consider adopting a policy of site neutrality when setting payment for outpatient services.  This means the payment would be the same regardless of where it is performed.  Presumably, however, the payment rates would gravtitate to the lower of the levels rather than the higher ones.

Not surprisingly, the American Hospital Association is none too happy about the proposal (see
MedPAC considers equal outpatient pay to hospitals, doc offices on Fiercehealthcare.com).  Although there is no telling whether CMS will adopt the proposal, physicians considering selling or joint venturing with a hospital to take advantage of the outpatient payment differential should consider the potential implications such a change would have on the future viability of these arrangements.