Why There May Be Fewer Off-Campus Hospital Outpatient Departments in the Future

Picture of Tara Gibson By Tara Gibson

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shutterstock_1021932094Analysts predict that, due to changes in how hospitals are reimbursed by the Centers for Medicare and Medicaid Services for outpatient services, there may be fewer off-campus hospital outpatient departments in the future. However, the changes should not affect patient access to outpatient healthcare.

In 2015, Congress passed the Medicare Access and CHIP Reauthorization Act (MACRA). The Act requires the Centers for Medicare and Medicaid (CMS) to change the way in which healthcare providers are reimbursed for providing medical services, with the emphasis being on quality rather than quantity. The ultimate objective is to exchange the current fee-for-service system for a pay-for-performance system. In order to achieve the objective, CMS has to first resolve inequalities in the current system.

One of the biggest inequalities in the current system concerns how healthcare providers are reimbursed for providing outpatient services. Services provided at hospital outpatient departments and some “off-campus provider-based outpatient departments” (i.e. medical offices that have partnered with hospitals) are reimbursed under the Hospital Outpatient Prospective Payment System (HOPPS), while services provided at other locations are reimbursed under the Physician Fee Schedule (PFS).

CMS Introduces Site-Neutral Payment Program

As payments under the HOPPS system are considerably more than those under the PFS system, CMS introduced a site-neutral payment program that would level the playing field between hospital outpatient departments and outpatient departments run by non-hospital-based providers such as Ambulatory Surgery Centers. Initially, partnered medical offices were exempted from the new payment program; but, in 2017, CMS announced it was being extended to all off-campus outpatient departments.

A lawsuit against the changes was brought by the American Hospital Association and the Association of American Medical Colleges, and, in September 2019, a federal court found in the plaintiffs' favor. However, in her verdict, Judge Rosemary M. Collyer noted that CMS was correct in attempting to save “millions of taxpayer dollars for patient services in hospital outpatient departments that could be provided at less expense in physicians' offices” - it was just the process that was wrong.

Related Blog: What are CMS Hospital Star Ratings and How Are They Calculated?

Consequently the changes to the site-neutral payment program have been delayed until such time as an appropriate process for implementing the changes has been organized. Nonetheless, assuming that off-campus hospital outpatient departments will eventually be subject to the site-neutral payment program, analysts are predicting there may be fewer in the future due to hospitals reconsidering their acquisition and partnership strategies with off-campus service providers.

What Effect Might this have on Access to Healthcare

First of all it is important to note that, even if the changes to the site-neutral payment program are made, hospitals might maintain their current acquisition and partnership strategies. The provision of outpatient services has been increasingly lucrative for hospitals according to Deloitte's “Growth in Outpatient Care Report” (PDF); and although hospitals argue higher reimbursement rates are necessary to support innovation in healthcare, the most commonly billed Medicare services are check-ups.

If the analysts' predictions are correct, and hospitals do contract their off-campus operations in the future, the space will more than likely be filled by Ambulatory Surgery Centers and Urgent Care Centers (which are growing in number by 8 percent per year), plus new players in the healthcare market such as Walmart, Amazon, and Apple. Consequently, whatever hospitals decide to do with regard to off-campus hospital outpatient departments, there should be no difference in patient access to healthcare.

The only significant difference the changes to the site-neutral payment program will make is a reduction in the Medicare tax burden for taxpayers. Medicare spending in 2018 amounted to $582 billion, and although the proposed changes for 2019 and 2020 would have only reduced spending by an estimated $1.14 billion, these were only the initial steps towards exchanging the current fee-for-service system for a pay-for-performance system.

Ultimately we should all benefit from better healthcare for less.

CMS and Emergency Preparedness

In 2016, CMS developed their Emergency Preparedness Rule. This rule required hospitals and healthcare organizations in receipt of Medicare or Medicaid payments to plan for disasters, both natural and man made, and to coordinate with federal, state, tribal, regional, and local emergency preparedness systems to improve emergency response and recovery. 

Related Blog: Questions to Ask When Researching a Clinical Preparedness  Notification Tool

Healthcare institutions must have an effective and efficient emergency communication plan in place to comply with the Emergency Preparedness Rule, meaning employees, patients, and visitors are alerted in the case of an emergency in a timely manner.

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Written by Tara Gibson

Tara is a Marketing Coordinator on the Rave Mobile Safety marketing team. She loves writing about all things K-12 education, and manages the Rave social media channels. When she's not working, she's taking care of her smiley, shoe eating, Instagram-famous fur baby, Enzo!

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