Site Neutral Payment Reform

Hospital systems are paid substantially more than physicians by Medicare for the identical procedures. LUGPA is focused on Capitol Hill and in the Administration through rule-making on levelling the playing field and ensuring that independent physician practices can compete with mega-hospitals and offer more efficient, high quality care in patients’ communities.

In Medicare, hospitals and physicians are paid under two separate and fundamentally unrelated fee schedules, but hospitals have generally been paid more for performing services identical to those performed in physician offices. The recent substantial increase in physician practice acquisition by hospitals has resulted in increased costs to Medicare and commercial payers.


Hospitals vs. Independent Physician Practices

Patients undergoing outpatient procedures have multiple options to access healthcare. The main facility-based options for patients fall into two categories:

Hospital Outpatient Departments (HOPD)

LUGPA Member Practices

Facilities are owned by hospitals and can function within hospitals or at off-campus locations

Physician-owned and function as free-standing businesses

Paid under the Outpatient Prospective Payment System (OPPS)

Paid under the physician fee schedule, which is ultimately less than hospital outpatient department (HOPD) payment rates

Fully identify Medicare Physician Fee Schedule (MPFS)

LUGPA member practices are paid under the physician fee schedule for their professional services, but many groups also own and operate ambulatory surgical centers (ASCs). Facility fees for ASCs average 49 percent of HOPD fees for the identical services, resulting in higher health care costs and increased deductibles for patients when they are treated in HOPDs.



What are LUGPA’s Goals?

LUGPA’s Health Policy and Political Affairs Committees have continued to engage Congress to address this issue by:

1. Building on site-of-service reforms, so that Medicare pays the same amount for the identical service regardless of where it is performed or when a practice was acquired

3. Pushing for reform of the 340B drug discount program so that it benefits uninsured and indigent patients, not mega-hospital systems

2. Promoting reform of the Stark self-referral laws to allow more coordination of care by physician practices and strengthen integrated practices as an important competitive counterweight to mega-hospital systems

4. Promoting more aggressive FTC enforcement of anti-competitive provider mergers and acquisitions


LUGPA’s Actions and Resources

Court Reverses 340B Reimbursement Cut – January 30, 2019

LUGPA Comments to CMS on Hospital Outpatient Prospective Payment System (“OPPS”) and Ambulatory Surgery Center (“ASC”) Payment System Final Rule for 2019 – January 2, 2019

Consumers Worry About Hospital Mergers – December 6, 2018

Physician Practice Roundup—Study finds Americans concerned about hospitals acquiring independent practices – December 4, 2018

Hospital mergers seen as threat to affordable care, most U.S. survey respondents say – December 4, 2018

Americans concerned about how hospital mergers and acquisitions will impact their care – December 3, 2018

New Study Shows Americans Are Concerned About How Hospital Mergers and Acquisitions Will Impact Their Care – November 28, 2018

LUGPA Comments to CMS on Medicare Physician Fee Schedule and Quality Payment Program for Calendar Year 2019 – September 10, 2018

Medicare Program: Hospital Outpatient Prospective Payment and Ambulatory Surgical Center Payment Systems and Quality Reporting Programs; Short Inpatient Hospital Stays; Transition for Certain Medicare-Dependent, Small Rural Hospitals Under the Hospital Inpatient Payment System; CY 2016 Proposed Rule (CMS-1633-P) – August 31, 2015

Physician Fee Schedule CY 2014 proposed rule (CMS-1600-P) – September 6, 2013