PAI Backs Medicare Move Toward Site-Neutral Payments
By Joey Berlin

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A Texas Medical Association-backed not-for-profit is on board with efforts to reverse current Medicare policy that pays more for the same service when it’s provided in a hospital outpatient department versus a physician’s office.

TMA and other physician groups have complained for years that the site-of-service payment differential is unfair and that it needlessly drives up Medicare costs. The American Hospital Association and hospitals around the country have mobilized to keep their advantage.

In a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Seema Verma, the Physicians Advocacy Institute (PAI) urged adoption of a CMS rule proposal that would begin to eliminate the payment differential. 

“We believe these policies will increase the ability of independent physicians to deliver care to patients in more convenient and lower-cost alternative settings that reflect their choices,” said the letter from Kelly Kenney, the institute’s CEO. PAI, Ms. Kenney wrote, agrees Medicare payments should be site neutral “for services that can be safely and effectively provided in a variety of practice settings, including traditional ‘clinic visits.’ 

“PAI agrees that a patient-centered health system requires payment policies that do not artificially favor one service setting over another.”

TMA is a charter member of PAI, which also includes CEOs and former CEOs from eight other state medical associations. The institute works to advance fair, transparent health care policies.

PAI also supports the CMS proposal to eliminate incentives for hospital off-campus clinics to expand their service lines beyond those already performed there. 

“More broadly, PAI supports policies that help reverse Medicare payment disparities that have created a strong financial incentive for hospitals to build and acquire off-campus satellite offices to offer services traditionally provided in the physician office setting,” the letter said. “PAI urges CMS to continue to consider policies to extend site-neutral payments for Medicare services when there is no compelling reason for a higher payment rate, or when utilization trends indicate that certain entities are using the higher facility rates to maximize revenues.”

PAI submitted its letter on Sept. 24, the final day of the comment period for the proposed rule.

The fight over the site-of-service differential has been going on for years. In February 2016, PAI commissioned a 40-page report on the subject, entitled “Medicare Payment Differentials Across Outpatient Settings of Care.”


Last Updated On

October 04, 2018

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Joey Berlin

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Joey Berlin is associate editor of Texas Medicine. His previous work includes stints as a reporter and editor for various newspapers and publishing companies, and he’s covered everything from hard news to sports to workers’ compensation. Joey grew up in the Kansas City area and attended the University of Kansas. He lives in Austin.

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