House passes bill adjusting Medicare hospital policies despite $50M estimated cost

Legislation changing several Medicare policies most affecting hospitals, including exempting “mid-build” off-campus outpatient facilities from the site neutral payment provisions in last year’s budget, has advanced out of the House.

Introduced by Rep. Pat Tiberi, R-Ohio, chairman of the House Ways and Means Health Subcommittee, the bill would allow outpatient facilities which are under construction or have binding contracts for constriction to remain eligible for reimbursement under Medicare’s outpatient prospective payment system (OPPS), rather than lower physician fee schedule or ambulatory surgical center payments.

The American Hospital Association has been among the medical groups supporting the legislation since it was introduced.

"This legislation will help patients by mitigating some of the negative impact of the 2015 Budget Bill and will improve access to care," AHA President and CEO Rick Pollack said in a statement. "It also will ease penalties experienced by hospitals and health systems who treat the most vulnerable patients."

An analysis by the Congressional Budget Office (CBO) found Medicare spending would increase by $750 million between 2017 and 2026 to cover the increased reimbursements for the nearly 100 facilities nationwide which would fall under the “mid-build” exemption. This extra cost would be offset by a slight reduction the planned increase to inpatient Medicare reimbursements.

CBO concluded the legislation would carry an overall price tag of $50 million in the 2017-2021 budget years.

While opponents didn’t bring up the additional spending, groups which supported the budget provision passed last year aren’t pleased with exemptions being created.   

“Congress has already recognized the negative consequences payment disparities have on patients and Medicare, which is why site neutral payment policies were passed as an important part of the Bipartisan Budget Act last year,” Ted Okon, executive director of the Community Oncology Alliance, said in a statement on behalf of the Alliance for Site Neutral Payment Reform. “Any legislation that backpedals on this progress by giving hospitals exemptions to charge more than physicians for identical services only drives up costs for everyone.”

The legislation’s other provisions include allowing socioeconomic status of patients to be considered under Medicare’s readmissions program, a five-year extension of the Rural Community Hospital Demonstration program and delaying CMS from being able to terminating Medicare Advantage contracts based on star ratings for three years.