View from the Hill - MedPAC's annual March report to Congress

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View from the Hill - MedPAC's annual March report to Congress

May 26, 2015
Jill Rathbun
From the May 2015 issue of HealthCare Business News magazine
Still pushing for site-neutral payments

By: Jill Rathbun

In its March 2015 Report to Congress, the Medicare Payment Advisory Commission (MedPAC) reiterated its recommend-ation from its 2014 report that Congress should direct the Secretary of Health and Human Services to reduce or eliminate differences in payment rates between outpatient departments and physician offices for selected ambulatory services.


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Unfortunately, some of these ambulatory services that were identified by MedPAC in its 2014 report were diagnostic imaging services. At least MedPAC does specifically state that the putting this principle in place of paying the same rate for the same service across settings into practice can be complex.

The policy, officially known as Site Neutral Payments, requires that the definitions of the services and the characteristics of the beneficiaries across the setting be sufficiently similar. For imaging services in particular, this is even more difficult given that changes that the Centers for Medicare and Medicaid Services have made to the Outpatient Prospective Payment System regarding packaging services that have a geometric mean of $100 or less.

This impacts several ultrasound and x-ray services, and packaging all add-on procedure codes affects some echocardiography services. No longer can you compare a single CPT code and its payment on the Physician Fee Schedule to a single service on the Hospital Outpatient Department Fee Schedule. In some cases you would have to compare several codes in the MD office to one payment in the hospital outpatient department and in some cases, you would have to “break out” packaged imaging services from the payment made to the hospital outpatient department for the entire claim. Also, hospitals are not required to bill the packaged imaging service on the claim to receive payment for the services with which the imaging was performed.

Then there is the concept of unit pricing and MedPAC’s belief that the unit prices by type of facility can be the same. However, these payment systems are not derived from the same data sources or from the same philosophy. The physician payment system is a system that is budget-neutral with the payments having to “fit” into the available amount of money.

This means that the data used to calculate payments can be reduced several times as part of the calculation of relative value units (RVUs). It is a relative system. It is neither a cost-based nor a charge-based system. Beyond that, for imaging services paid under the physician fee schedule, Congress and/or the administration has specifically, either through legislation or regulation, reduced payment 13 times in the last nine years to physicians when performing imaging services in their offices.

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