ASCO Moves to Prevent Medicare Site-Neutral Payments

ASCO has issued a position paper against "site-neutral" Medicare payments that would reduce the wide disparity between hospital costs and physician practice costs for similar services.

Philip Stella, MD

ASCO has issued a position paper against “site-neutral” Medicare payments that would reduce the wide disparity between hospital costs and physician practice costs for similar services. The nation’s largest organization of oncology professionals contends that the thinking behind the site-neutral movement doesn’t take into account high overhead costs at large care facilities, and that a patient-centered approach is more advisable.

The idea that hospitals should be able to charge as little for services as private practices is flawed because hospitals not only have to support the costs of unique operations, such as emergency departments, but also provide a range of services for patients that aren’t available at private practices and that aren’t fully compensated by Medicare, said Philip Stella, MD, head of government relations for ASCO. “The real question is, ‘What does it take to appropriately treat a patient in this day and age?’” Stella said, noting that oncologists in private practice routinely refer patients to hospitals for care that cannot be provided at the clinic.

“Some practices are large enough to have a foundation and supply these much-needed services, but they don’t bill for it because they can’t bill for it. Other practices join with hospitals and send the patient over for the extra help that they need. What does it really take to care for these patients? We don’t believe the solution is taking more money out of the system by chopping the facility fees. We’re calling for a more logical approach to caring for these patients,” Stella said. “You should be covering these costs one way or another.”

Medicare has long allowed variable costs for treatment based on the type of care setting. In his budget for 2016, President Obama has called for much greater payment conformity, a message that was embraced by a group called The Alliance for Site-Neutral Payment Reform (ASNPR), which includes insurers and consumer health advocates as well as associations of community-based physicians, such as the Community Oncology Alliance and the American Academy of Family Physicians. ASCO, by contrast, represents a different membership, one that includes both private practice and institutional physicians.

In a January open letter, the ASNPR spoke in favor of site-neutral payments and against “rising and often unnecessary healthcare costs that pose a threat to the sustainability of Medicare and to the availability of affordable healthcare coverage.”

The group stated that a colonoscopy performed in an office setting costs $625 and more than twice as much, $1383, in a hospital outpatient department. “The facts show that payment disparities incentivize care in less efficient settings and increase patient costs,” the group said.

Reimbursement levels for drug administration costs are on average 189% higher than physician office reimbursement, the group said, citing a recent study by the IMS Institute. The report said that Americans are paying more for oncologic care as more private practices are acquired by hospitals and consequently bill at higher rates. In addition, critics have charged that factors described by hospitals as revenue drains are sometimes exactly the reverse, such as emergency departments.

Rather than a shift to site-neutrality, ASCO is advocating what it calls a patient-centered approach that would compensate physicians and institutions for aspects of care that would reduce hospitalization and increase the overall value of care delivered. Such payments would cover the costs of treatment planning, patient education and counseling, and care coordination, such as is provided by patient navigators and triage nurses, ASCO said.

Mental health services and the involvement of social workers would be included in this category of payment, as would financial, nutrition and genetic counseling. In addition, care center quality improvement initiatives also would be incentivized, ASCO said.

“As a number of initiatives in the private sector have demonstrated, the financial savings that can be achieved by transforming the oncology delivery model are significant, perhaps dwarfing any savings derived from traditional site-neutrality initiatives. In contrast, cutting existing reimbursement levels under site-neutrality rationales would exacerbate the underpayment by Medicare for the full scope of services that patients with cancer require,” ASCO said in its statement.

In a series of recommendations, ASCO asks that policymakers focus instead on value-based incentives that raise quality, provide full payment support for the full scope of services involved in care, and align Medicare coding and payment with oncology care models proposed by ASCO and the Centers for Medicare & Medicaid Services (CMS).

Concerns about possible implementation of site-neutral payment policy have grown with the advent of Obama’s efforts to tamp down Medicare spending and the leanings of the Medicare Payment Advisory Commission (MedPAC). In April, consulting business the Advisory Board Company, stated that it was more a matter of “when, not if” site-neutral payments would be established.

Innovation in cancer care and implications for health systems: global oncology trend report. IMS Health website. Accessed October 26, 2015.