Go to main contentsGo to main menu
Thursday, February 6, 2025 at 1:10 AM

Let's Make Sure Medicare's Latest Plan Doesn't backfire

Here’s a healthcare puzzle. When a doctor administers chemotherapy in their office, Medicare pays one rate. When the same doctor performs the same procedure in a hospital’s outpatient facility down the street, Medicare often pays more.

This disparity is at the heart of a push among some lawmakers for “site-neutral payments,” which would broadly require Medicare to pay the same rate for the same service regardless of where it’s performed. A bipartisan framework from Sen. Bill Cassidy, R-La., and Sen. Maggie Hassan, D-N.H., estimates that site-neutral payments could save Medicare over $100 billion in the next decade.

But in the rush to fix this genuine problem, policymakers risk creating another one. Site-neutral payment reforms, as currently proposed, could jeopardize the ability of super-specialty hospitals and their outpatient facilities to deliver the high-quality care they’re renowned for.

Super-specialty hospitals’ outpatient facilities aren’t converted doctor’s offices with a hospital logo plastered on the door. They’re purpose-built extensions of the main hospital, offering the same sophisticated care but in more accessible locations.

The difference matters for three key reasons.

First, super-specialty hospitals’ outpatient facilities are fully integrated with the main hospital to provide the same high-quality diagnosis and treatment of specific conditions. They do not provide standard primary care services.

Second, these specialty outpatient centers can actually save Medicare and other payers money in the long run, even if individual procedures cost more upfront. Studies show that high-volume specialty centers have significantly lower complication rates and longer survival rates across multiple types of procedures. Patients avoid the need for repeated procedures and extended hospital stays.

Third, super-specialty hospitals’ outpatient clinics offer patients better access to care. Many super-specialty hospitals are located in urban centers where it may not be possible to build within 250 yards of the main hospital location, as required by CMS to be considered part of the ‘main campus.’ Their outpatient facilities allow them to bring their superior care model closer to patients while maintaining the same rigorous standards their main facilities uphold.

Of course, narrowly tailored site-neutral payments make a good deal of sense. Medicare’s payment schedule should not incentivize hospitals to engage in regulatory arbitrage by buying up doctor’s offices, declaring them hospital outpatient departments, and then jacking up rates.

But applying the same logic to purpose-built specialty facilities risks undermining a model of care that actually works better for both patients and payers.

The solution is targeted exemptions for facilities that meet specific criteria: high volume in their specialty area, superior outcomes, and integrated care delivery systems that extend from their main hospital. Such a framework would preserve the cost-saving benefits of site-neutral payments while protecting centers of excellence.

Some will argue that any exemption would create loopholes that enterprising hospitals can exploit. But we can police potential malfeasance through rigid, data-driven qualification criteria and ongoing performance requirements. Site-neutral payment reform is a good idea that needs careful tuning to avoid unintended consequences. For super-specialty hospitals and their satellite facilities, paying more for better care isn’t waste -- it’s wisdom.

Mathias P. Bostrom, MD, is Associate Surgeon-in-Chief & Director, Quality & Safety at the Hospital for Special Surgery. This piece originally ran in RealClear.


Share
Rate

banderapaintandbody
hillcountryaudiology
picopropane
DOWNLOAD OUR APP
Google Play StoreApple App Store