Regulatory Decisions Inconsistent With High-Value Health Care System

Despite a desire to transition the United States to a health system that rewards value over volume, which was evidenced in the bipartisan approach to the Medicare Access and CHIP Reauthorization Act, too many regulatory decisions on issues of reimbursement still encourage high-volume, hospital-based providers over independent community physician practices. As the public conversation remains acutely focused on legislative efforts to repeal and replace the Affordable Care Act, important policy and statutory changes must occur in order to prioritize truly site-neutral payments and transform the U.S. health care system into one that optimizes the value care model.

A notable example of this type of biased policy, which restricts free market competition while augmenting more expensive site-of-service care, is the Centers for Medicare & Medicaid Services’s approach to the Final Rule for the Medicare Hospital Outpatient Prospective Payment System and the Medicare ambulatory surgical center payment system.

Specifically, the Final Rule creates an interim policy that appears to contradict the language and purpose of Section 603 of the Bipartisan Budget Act of 2015, which equalizes Medicare reimbursement between off-campus hospital departments and other sites of service. Without certain revisions, CMS will have created an exemption so large that “the exemption will swallow the rule” and prevent the implementation of a site-neutral payment structure as Congress directed.

The Final Rule appears to remove all limitations on the services for which an off-campus provider-based department — essentially a freestanding facility or practice purchased by a hospital — may bill under the OPPS, even if these services are entirely different from the types of services the PBD provided prior to Nov. 2, 2015. That means the physician practice I used to compete against that sold out to a hospital is now able to expand its services and get paid more for the same services. How does this further the goals of developing a high-value health system that controls cost?

Within the last several months, the failings of the government’s approach to site-neutral payments were highlighted with the release of the Medicare Payment Advisory Commission’s March 2017 Report to Congress on Medicare Payment Policy. Although overshadowed at the time by the frenzy of the repeal and replace debate, the report is important because MedPAC once again reiterated the site-neutral payment recommendations it has stated repeatedly over the years, which are different than CMS’s Final Rule.

Written after the adoption of the OPPS rule, MedPAC clearly felt CMS still did not go far enough with site-neutral payments. As a physician leading an independent, specialty medical practice I cannot stress how critical it is for policymakers to look closer at the disparity between the goals for a high-value system and the reality of CMS’s final OPPS rule. Every day my colleagues and I offer quality, cost-efficient care that produces excellent patient outcomes. We do this while competing daily with hospitals’ aggressive expansion plans and purchase of independent physician practices and off-campus service providers that limit patient choice and increase costs. There is no reason hospitals should be paid more to deliver the same care.

For physicians within the Large Urology Group Practice Association, the creation of a truly site-neutral reimbursement system is the only way to achieve Congress’s goal of curbing the practice of hospital acquisition of physician practices — a practice that results in additional out-of-pocket costs for Medicare beneficiaries and greater expenses for the healthcare system as a whole.

My colleagues and I, who provide high-quality care in independent settings, are hopeful that the new administration will work to resolve the inconsistent implementation of regulations that govern how we transition to a high-value care system. This issue is too important to get pushed aside. America’s independent physician group practices stand ready to assist.


Neal Shore, MD, FACS, is the president of LUGPA, a trade association representing the independent urology group practices in the United States, and more than 2,200 physicians who make up more than 25 percent of the nation’s practicing urologists and provide more than 30 percent of the total urologic care in the U.S.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult