- - Monday, December 9, 2019

Obamacare, which has been the law of the land for almost a decade, has failed to live up to most all the promises its proponents made. The health care cost curve has not been bent downward. People cannot, despite the former president’s repeated statements to the contrary, keep the plans they had, whether or not they liked them. And we’re still debating ways to increase access, improve quality, and create an environment in which every American, whether they want it or not, has insurance.

It’s no wonder, therefore, that the Democrats are finding so much support for the various Medicare for All proposals their presidential candidates have put on the table. It’s not so much that they’re better — it’s easily argued they’re not — as it is the idea that one more step toward socialized medicine would simplify things and lower or eliminate premiums that people find attractive.

Blame the government for this. When it comes time to find savings, it’s almost always the lower-profile government-funded services that are first on the chopping block. And not because that’s where the savings are. They come first because the political constituencies backing them up are the least powerful among those with skin in the game.

This is actually counterproductive. It’s often the case that the low-profile programs provide the most benefit to the most consumers. Consider the recent efforts by the Centers for Medicare and Medicaid Services (CMS) to scale back spending that has led to cost-cutting for services paid to hospitals by misrepresenting the efforts by Congress to ensure access for patients in low-income and rural areas.

Trying to force a square peg through a round hole, the bureaucrats inside CMS are expanding the use of something called “site-neutral payments” so they have to pay out less money to doctors and health care providers. Simply put, the formulas they’re using now assign a value to an outpatient visit to a physician’s office and that becomes the amount at which the payment is set even if the services are provided in a costlier setting like a hospital.



America loves its doctors. And we love our hospitals. They do a lot of the same things, but they are not the same. Physicians only employ a few people on site in their offices, have set hours of operation and provide limited onsite treatment options. Hospitals are open 24 hours a day, seven days a week and are staffed around the clock by doctors, nurses, administrative personnel, janitorial services, and others involved in the care and maintenance of patients and facilities. That means one has higher operating costs than the other — meaning the expense involved in administering services, even on an outpatient basis, are not site neutral.

Congress tried to fix the problem by exempting existing hospital outpatient departments or HOPDs but only made matters worse. And it did this by doing what government does: Try to cut costs without offending special interests or understanding the consequences, apply a patch after the initial fix failed, and then layer on more red tape making things more difficult for all involved.

In this instance what it did means existing HOPDs would lose their exemption from the site-neutral formula if they move, are renovated, rebuilt or expand. To keep from losing money they have to stay just the way they are, which means medical innovations, which it is in the best interests of everyone to pursue, are largely off the table because of how much they’ll cost.

That’s exactly the wrong way to go, especially if the objective is still to bend the health care cost curve down. Rather than continue to tinker on the margins, Congress should direct CMS to abolish the site-neutral payments formula. Hospital overhead costs and the costs borne by smaller, independent medical providers like physicians in private practice is an apples-to-trees comparison. The discrepancy in payments is forcing hospitals to increase their indebtedness at a time when many, especially those in rural communities, are struggling to stay open.

It’s widely accepted that the rapid pace at which rural hospitals are closing severely limits treatment options for at-risk populations. Since 2010, 80 rural hospitals have closed, 16 in the last year alone. Moreover, 40 percent of those left are, according to The Boston Globe, “operating in the red.” The importance of cost-covering payments to hospitals is all-important. They rely on them to keep their doors open, and residents rely on them to keep their access to care. The current system offers unfair, even unreasonable, subsidies to private providers.

The continued use by CMS of the site-neutral formula is a threat to patients and hospitals. No one should allow the reimbursements and payments made to hospitals to be cut because they’re easier to hide than other reforms that could be made. Congress should step in and take things back to the drawing board.

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