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Budget deal cuts payments to hospital-owned practices, advances site-neutral payment

Bill stops CMS from paying hospitals outpatient rates at newly-acquired off-site locations.

Susan Morse, Senior Editor

The Senate passed a budget deal early Friday morning that cuts revenue to providers seeking to acquire physician practices and clinics.

It stops the Centers for Medicare and Medicaid Services from paying hospitals for outpatient services at newly-acquired off-site locations as though these clinics were part of the main hospital campus.

Currently, Medicare pays outpatient clinics at the main hospital more than it pays off–site clinics and physicians for the same services.

While current physician practices and clinics owned by hospitals are grandfathered, the provision would effectively prevent hospitals from gaining revenue by acquiring future off-site locations.

That these site-neutral payments pertain only to new acquisitions was seen as a compromise in the bill.

[Also: Clinics, tech, physician practices acquisitions to outpace hospital deals]

The American Hospital Association, in a statement made prior to Friday's budget vote, spoke against the site-neutral payments.

"Congress and the Administration should not balance the budget on the backs of patients and we urge them to strike the site neutral provisions from the package," said Thomas Nickels, executive vice president of Government Relations and Public Policy.

"The proposal would cut funding for healthcare services provided in a hospital's outpatient department – also known as "site neutral" payments," Nickels said. "This untested idea may endanger patient access to care, especially among patients who are sicker, the poor, minorities and seniors who often receive care in hospital outpatient departments. Moreover, rural communities will be most adversely impacted, as hospitals will no longer be able to help physicians in these communities continue to provide access to their patients."

The Medicare Payment Advisory Commission had earlier estimated that site-neutral payments would decrease hospital revenue by $1.4 billion a year.

The Congressional Budget Office has estimated the new provision would save $9 billion over 10 years.

The bill also includes a 2 percent cut in Medicare payments.

Nickels said that continuing to raid the Medicare Trust Fund was irresponsible.

"The package also extends the sequester cuts to Medicare, which continues to erode the program at a time when more seniors depend on Medicare for care," he said.

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It also prevents a 52 percent increase in Medicare Part B premiums for seniors.

The budget eliminates a mandate of the Affordable Care Act that would have required large employers to automatically enroll new employees in health plans.

The Senate around 3 a.m. Friday approved the budget bill in a vote of 63 to 35.

Earlier this week, the House of Representatives voted 266-167 in favor of the budget that extends the debt ceiling to March 2017 and raises spending caps under sequestration by $80 billion above current limits, according to published reports.

Twitter: @SusanJMorse

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