November 2, 2022 – The healthcare sector has significantly consolidated in recent years. Large health systems have acquired smaller hospitals and the remaining hospitals have amassed existing outpatient facilities like urgent care, imaging locations and independent physician practices as outpatient care has become more popular. This has limited inpatient days and lowered hospital revenues, all while the healthcare sector tackles higher overhead and labor costs.
The preference for outpatient care is set to continue. Healthcare staff are encouraged to expand their abilities for a variety of alternative care sites and reimbursement models are being restructured to meet the shift toward outpatient services.
CMS implemented the Outpatient Prospective Patient System (OPPS) rule in 2019, extending a site-neutral payment policy to off-campus provider-based departments (PBDs). It reduced off-campus PBD payments to 70% of the full OPPS rate.
The OPPS rule was ruled to be invalid by a federal judge that same year, but the U.S. District Court of Appeals for the D.C. Circuit overturned the court’s ruling in 2020. The American Hospital Association (AHA) and the Association of American Medical Colleges (AAMC) are opponents of the site-neutral payment policy, but the U.S. Supreme Court declined to hear AHA’s appeal of the U.S. District Court of Appeals decision in 2021.
Melinda Hatton, general counsel for the AHA, said in a statement at the time, “America’s hospitals and health systems are disappointed in this decision because it will cause serious harm to their ability to provide care for patients. It fails to account for the fundamental differences between hospital outpatient departments and other sites of care. Hospitals are open 24/7, held to higher regulatory standards and are often the only point of access for patients with the most severe chronic conditions, all of whom receive treatment regardless of ability to pay.”
Read more in October’s issue of Journal of Healthcare Contracting.