Flexible Reimbursement Models and Site-Neutral Payment Reform

Addressing Medicare Payment Disparities

Independent urologists face significant challenges due to the disparity within the Medicare payment system, which favors large hospital systems over independent providers. This inequity impacts reimbursement rates, encourages healthcare consolidation, limits patient choice, and drives up costs for patients and insurers. LUGPA is dedicated to advocating for equitable reimbursement policies that allow independent physician practices to compete with large hospital systems and provide efficient, high-quality care.

The Payment Disparity

Under current Medicare rules, hospitals are reimbursed more than independent physicians for the same procedures. This discrepancy has led to increased hospital acquisitions of physician practices, escalating healthcare costs for Medicare and commercial payers.

Site-Neutral Payments

Site-neutral healthcare payments are crucial for creating a fair and efficient healthcare system. These payments eliminate financial incentives that currently favor large hospital systems over independent practices by ensuring that Medicare reimburses the same amount for identical services regardless of where they are provided. This reform not only levels the playing field for independent physicians but also reduces overall healthcare costs, prevents unnecessary consolidation, and enhances patient choice. Additionally, site-neutral payments can save Medicare billions of dollars, which can be redirected toward improving patient care and expanding access to healthcare services.

Comparing Facilities

Hospital Outpatient Departments (HOPD)

• Owned by hospitals, operating within or outside hospital campuses.
• Paid under the Outpatient Prospective Payment System (OPPS).

LUGPA Member Practices

• Physician-owned, functioning as free-standing businesses.
• Paid under the Medicare Physician Fee Schedule (MPFS), often less than HOPD rates.
• Operate ambulatory surgical centers (ASCs), where facility fees average 49% of HOPD fees, reducing costs and patient deductibles.

LUGPA’s Goals

LUGPA's Health Policy and Political Affairs Committees engage Congress to:

1. Site-of-Service Reforms: Advocate for Medicare to pay the same amount for identical services, irrespective of the service location or acquisition date.
2. Stark Law Reforms: Promote changes to allow better care coordination by physician practices, strengthening them as competitive counterweights to hospital systems.
3. 340B Drug Discount Program Reform: Ensure the program benefits uninsured and indigent patients rather than large hospital systems.
4. FTC Enforcement: Push for aggressive action against anti-competitive provider mergers and acquisitions.

The Current Landscape

As of 2021, only 30% of physicians practice independently. This trend towards consolidation has serious implications for patient care and healthcare costs. A site-neutral payment model, where services are paid the same regardless of setting, could save Medicare billions. A 2021 report estimated $153 billion in savings over ten years from such reforms.

Advocacy Efforts

LUGPA is committed to advocating for fair reimbursement and competition in urology care through:

• Educating Congress and CMS about the benefits of independent urology and potential cost savings from site-neutral payments.
• Calling for legislative reforms to promote payment parity and market competition.
• Recommending measures to address healthcare consolidation and reforming the Stark laws and 340B program.
• Urging the FTC to enforce anti-competitive provider mergers more aggressively.

Moving Towards Value-Based Care

Medicare's fee-for-service model historically incentivized volume over value, leading to higher costs and inefficiencies. Medicare's shift towards value-based care focuses on improving care quality through specific quality measures tied to payments.

Value-Based Care Goals:

• Better individual care.
• Improved population health.
• Reduced healthcare costs.

Value-Based Models:

• Accountable Care Organizations (ACOs): Networks providing coordinated patient care, sharing savings from high-quality, cost-effective care.
• Bundled Payments: Single payments for all services related to a treatment episode, incentivizing cost control.
• Patient-Centered Medical Homes (PCMH): Centralized, coordinated care through a primary care physician, emphasizing patient-centered, team-based care.

LUGPA’s Efforts on Value-Based Models

LUGPA supports the development of specialty-focused value-based models. In 2017, LUGPA proposed an Alternative Payment Model (APM) for prostate cancer care to the PTAC, encouraging shared decision-making and active surveillance for low-risk patients. Despite PTAC's recognition of the model's benefits, CMS did not recommend it.

Recommendations to Congress

LUGPA recommends:

1. Payment Reform:
• Eliminate pending cuts to the MPFS.
• Repeal the 2% sequester cuts and pending PAYGO cuts.
• Replace the current system with one reflecting actual care costs.
2. Adoption of PFPMs:
• Reform PTAC to include independent physician input.
• Require CMS to test PTAC-approved APMs.
• Encourage CMMI to evaluate and adopt PFPMs.
3. MIPS Reform:
• Eliminate the winner/loser system in MIPS.
• Expand the bonus pool for exceptional performers.
• Create meaningful metrics that are not burdensome to providers.
4. Site-Neutral Payments:
• Move Medicare towards site-neutral payments for physician-administered drugs and outpatient procedures.
5. Stark and Anti-Kickback Reforms:
• Codify and build on recent administrative reforms to encourage value-based care models.

LUGPA remains committed to ensuring independent physicians compete effectively with hospital systems, improving access to high-quality urology care for Medicare patients. By promoting payment parity and competition, we aim to create a more equitable and efficient healthcare system for all.

Links to LUGPA Materials:

Medicare Fee Schedules  - updated occasionally 

Sustainable Physician Reimbursement - updated occasionally 

Promoting Payment Parity and Competition in Urology Care - March 2024 

The Lower Costs, More Transparency Act - Dec. 18, 2023 

Medicare Patient Access to Cancer Treatment Act of 2023 -  Nov. 29, 2023 

Value-Based Care Models - updated occasionally 

Update: Site-Neutral Payment Reform - June 2023 

Combatting Financial Toxicity in Healthcare - June 2023