Experience. Integrity. Advocacy.
Experience. Integrity. Advocacy.

MedPAC Recommends Payment Cuts for Some Freestanding EDs

The Medicare Payment Advisory Commission (MedPAC) recently voted to recommend that payment rates for off-campus stand-alone EDs located within six miles of an on-campus hospital ED be cut by 30 percent. This change would result in a possible savings of up to $250 million annually for the Medicare program.

Free-standing EDs now number more than 500 across the country, but the growth has not necessarily addressed the problems of access, according to James Mathews, executive director of MedPAC.

“There has been a growth in free-standing emergency departments in urban areas that does not seem to be addressing any particular access need for emergency care,” Mathews said. In fact, according to Kaiser Health News’ Michelle Andrews, “the convenience of a neighborhood ER may even induce demand,” creating what Mathews describes as an “if you build it, they will come” effect.

The American Hospital Association (AHA) is arguing against the decision. In a letter to MedPAC, Ashley B. Thompson, AHA Senior Vice President of Public Policy Analysis and Development, called the recommendation “unfounded and arbitrary.” She writes, “The Commission has presented no analysis to support its concerns or specific recommended payment cuts.” Most notably, Thompson said that MedPAC included “no analysis of Medicare beneficiaries, Medicare costs or Medicare payments” and based their recommendation “on data from only three states that are not representative of the nation.”

The recommended change, if passed into law by Congress, would affect only hospital-based Off-Campus Emergency Departments (OCED), which are owned and operated by hospitals and are treated as hospital outpatient departments. Independent Freestanding Emergency Centers/Departments (IFEC or IFSED), which make up one-third of all free-standing EDs, are owned and operated by non-hospital entities and are considered “non-provider-based EDs.” According to Advisory Board, this means they are not recognized by the Center for Medicare and Medicaid Services (CMS) as emergency departments and cannot bill Medicare or Medicaid.

MedPAC also voted to allow rural hospitals located more than 35 miles from another ED to convert to stand-alone EDs. Currently, the guideline requires an OCED to be “located within a 35-mile radius of the affiliated hospital.” This recommendation, supported by AHA, would allow free-standing EDs in more isolated areas to bill under the outpatient prospective payment system. These EDs also would be provided with annual payments to assist with their fixed costs.

Both of these recommendations will be included in the MedPAC report submitted to Congress in June.

For more information about the MedPAC votes and recommendations, review the transcript from their April 2018 meeting.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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