Possible change in clinic visit billing may affect patients, hospitals

The Centers for Medicare and Medicaid Services announced a proposal on July 25 that would reduce payments for basic clinic visits in hospital outpatient centers.

If enacted, the move could result in savings for patients and could cause some amount of financial damage for hospital systems like Valley Health that have acquired physician practices.

According to Len Nichols, the director of the Center of Health Policy Research and Ethics at George Mason University, economists have long criticized the current payment system the Centers for Medicare and Medicaid Services uses at hospital outpatient facilities. Under current regulations, hospital outpatient centers tend to receive higher payments than independent doctors offices for the same services.

“The fundamental way to think about it is is it smart to pay people differently based on where they perform a service as opposed to what kind of service (they perform)?” Nichols said. “And most economists would argue no.”

This payment system, Nichols said, encourages physician offices to become acquired by hospital systems because they would receive better payments on visits from Medicare patients. Then, when hospital systems acquire these offices, they begin charging insurance companies — and, in turn, patients — more money.

So economists have argued that the Centers for Medicare and Medicaid Services should move toward issuing so-called “site-neutral payments,” where the same services cost the same amount of money.

And on July 25, the Centers for Medicare and Medicaid Services appears to have listened.

Their proposed change only starts site-neutral payments for one type of visit: basic clinic visits, which the agency described as “essentially check-ups with a clinician.”

That type of visit is the most commonly billed service from hospital outpatient centers to the agency, according to a news release from the Centers for Medicare and Medicaid Services. But it isn’t the most lucrative for the hospital systems.

Still, hospital groups have pushed back on the proposed change, saying that if the change is enacted it could make it harder for the systems to expand needed services. In a statement, Dr. Jeff Feit, the vice president of population health for Valley Health, said that he hadn’t fully studied the proposed changes but that he was concerned about what the changes could mean for the area.

“Typically, a hospital outpatient department treats sicker, more complex patients than an ambulatory or physician office setting,” the statement reads. “Valley Health is concerned about any measure that could negatively impact a patient’s access to needed care.”

Part of this pushback, Nichols said, may not be because of the impact that this particular change could mean. Instead, he said, hospitals are likely afraid that the proposed change is just the start of a larger push toward site-neutral payments.

“The way I would interpret it is it’s a walk-before-you-run policy of signaling an intent to move toward site-neutral,” Nichols said.

If the Centers for Medicare and Medicaid Services truly does make that move toward site-neutral payments, it could significantly affect hospitals’ finances.

That could also affect, as the hospitals argue, the ability of hospitals to expand or start offering needed services.

But Nichols argued that the agency should nonetheless move toward site-neutral payments. It just needs to do so carefully.

“The change is definitely going to cost hospitals money and some of what they spend money on would have been things we want them to do,” Nichols said. “The smart solution would be to pay them directly for the things we want them to do.”