• Elimination of Differential in Medicare Payment for Clinic E&M Services Furnished in Hospital-Based Outpatient Departments Proposed
  • December 20, 2011 | Author: Dennis M. Barry
  • Law Firm: King & Spalding LLP - Washington Office
  • One of the “pay-fors” in the House Bill for suspending the SGR for another year was eliminating the difference between Medicare payment for Evaluation & Management (E&M) services furnished in physician offices and hospital outpatient departments (HOPDs).  The suggestion that this should possibly be considered was made by Medicare Payment Advisory Commission (MedPAC) staff in September, and was not discussed at a MedPAC meeting until very recently.  The two-month extension of the suspension of the sustainable growth rate did not include this provision.  Presumably, however, the issue will arise again when the “doc fix” is addressed in the next session of Congress, especially in light of Speaker Boehner’s stated desire to resolve issues for more than a two-month period.

    In a December 14, 2011 letter to Senate majority leader Reid and minority leader Mitch McConnell (R-KY), the Association of American Medical Colleges (the AAMC) expressed strong opposition to the proposed changes to the E&M payment rates in for services furnished in HOPDs.  The AAMC urged the senators to reject the proposed changes included in H.R. 3630, “The Middle Class Tax Relief and Job Creation Act of 2011,” which passed in the U.S. House of Representatives on December 13 by a recorded vote of 234-193.

    According to the AAMC letter, “cutting Medicare payments to [HOPDs] to pay for an SGR patch is counter-productive and would reduce teaching hospitals’ ability to cover necessary training costs and could impact health care access for Medicare beneficiaries across the nation.”  The AAMC offered the following detailed objections in support of its position:

    • Changes Must be Appropriately Targeted.  According to the AAMC, H.R. 3630 would unfairly build on the September discussion by MedPAC staff to equalize Medicare reimbursements for E&M services.  The AAMC believes that a change of this nature should be further studied so as to be appropriately targeted rather than applied across the board.
    • No Formal Recommendation from MedPAC; Recognition of Higher Costs in HOPD Settings.  MedPAC has not made a formal recommendation regarding HOPD changes, and has noted higher costs in HOPD settings, including additional costs related to the unique mission of hospitals and regulatory requirements that do not apply to physician offices.  Additionally, the AAMC states that Congress has acknowledged that teaching hospitals treat complex patient populations with greater severity of illness, and provide highly specialized services unavailable elsewhere in the community.  The AAMC notes that the practice expense component of the physician fee schedule in non-facilities does not reflect practice expenses of teaching HOPDs, and urges that the legitimately higher costs of providing E&M services in HOPDs continue to be recognized.
    • No Clear Understanding of Impact.  According to the AAMC, the proposed HOPD changes could lead to unintended consequences, including a disproportionate impact on academic medical centers (AMCs).  The AAMC states that a “full understanding of the consequences of eliminating the payment differential is needed so that those patients who are most in need of the services provided at HOPDs are not adversely affected.”
    • Partnership Between Faculty Physicians in HOPDs and Teaching Hospitals Could be Jeopardized.  HOPDs must meet extensive regulatory requirements designed to ensure that HOPDs meet certain standards and encourage teaching hospital and outpatient department integration.  According to the AAMC, these care coordination and integration requirements improve patient care, but could be jeopardized if necessary funding is reduced.