Site-Agnostic Payment Policy Could Save Medicare $471 Billion

Adopting a site-agnostic Medicare payment policy will save program, private insurance premiums, and out-of-pocket costs for members, totaling about $471 billion over the next decade, according to a new analysis by Blue Cross Blue. Shield Association.

Medicare’s savings will be about $202 billion between 2024 and 2023, while Medicare members will save about $67 billion in Part D premiums and another $67 billion in cost-sharing. And private health insurance premiums over this period will be approximately $107 billion, representing a 0.75% reduction in total premiums.

This reduction in private insurance premiums, the BCBSA found, would increase federal tax revenue by about $29 billion, resulting in total federal savings from adopting this neutral payment policy of $231 billion.

And those private plan members will save another $18 billion in cost-sharing savings due to lower payment rates, bringing the total out-of-pocket savings for Medicare and private plan members to $152 billion.

WHAT IMPACT

Medicare pays more for services provided in hospital outpatient departments than for the same services provided in a doctor’s office or elsewhere outside the hospital. This discrepancy affects private health plans’ pay rates, according to the BCBSA, as these plans typically use the Medicare system as the basis for paying hospitals and doctors, albeit typically at higher pay rates.

The BCBSA cited experts who recommended that Medicare adopt a fee policy for services normally provided outside the hospital, subject to lower rates applicable in non-hospital settings, with exceptions for rural hospitals.

Adopting this approach, the Association said, would not only substantially reduce Medicare costs, but also reduce the costs and premiums of private health plans due to the link between Medicare rates and private payment rates.

More complex services may require treatment at a facility, but Medicare still pays significantly more if the facility is a hospital outpatient department rather than an outpatient surgical center. For example, in the case of a colonoscopy, the Medicare-allowed amount for a hospital was 67% higher; in the case of an MRI, the total hospital payment was 62% higher.

For many services, there is little evidence that the quality of care is better when provided in a hospital setting. In some cases, doctor’s offices have been bought by hospitals and re-branded as an off-campus hospital outpatient department. The resulting higher payouts are one of the incentives for this organizational change, the BCBSA said in a statement.

BIG TREND

The BCBSA has acknowledged that much of the hospital industry tends to oppose location-neutral policies, with many seeing such policies as a blow to their financial stability.

In 2020, an appeals court overturned a lower court decision and upheld a lawsuit by the Department of Health and Human Services to pay for pre-existing off-campus outpatient departments operated by hospitals at the same, lower rate than physician clinics.

In November 2019, the Centers for Medicare and Medicaid Services decided to move to a two-year phase-in of neutral payments, despite a district court decision earlier that year in which they sided with hospitals in their fight to maintain higher outpatient treatment fees. facilities off campus.

In a 2020 ruling, the U.S. Court of Appeals for the District of Columbia said HHS has the right to cut payments to off-campus facilities to bring them in line with other outpatient payments.

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