News & Updates

May 17, 2023

E&C Panel Passes Site-Neutral Pay For Rx Administration, McMorris Rodgers Says More Coming

Inside Health Policy, May 17, 2023

House Energy & Commerce Chair Cathy McMorris Rodgers (R-WA) ultimately pulled a Medicare site-neutral pay expansion amendment from consideration during the health subcommittee’s Wednesday (May 17) markup of wide-ranging health legislation, saying the committee had more work to do on the policies — but she implored hospitals to work with lawmakers as she said Medicare should not continue to overpay those providers for services that could be provided cheaper in a different setting.

Instead, the subcommittee-passed bill includes site-neutral pay policies tied to Medicare drug administration services – also opposed by the hospitals – as well as a delay of Medicaid Disproportionate Share Hospital pay cuts, a policy backed by the providers, and pharmacy benefit manager reforms. It also includes funding for community health centers, teaching health center graduate medical education, the National Health Service Corps and special diabetes programs.

“I reject the premise that the only way to make hospital financials work is to cross subsidize loss leaders by making patients and Medicare overpay on certain services, especially when we know that these policies come with unintended consequences of consolidation and less competition. Figuring out how to more directly and accountably subsidize hospital services without unintended consequences is difficult, and we have more work to do on these proposals to ensure access to care is preserved,” McMorris Rodgers said.

However, McMorris Rodgers said she remains committed to working on such policies with E&C ranking Democrat Frank Pallone (NJ). While she said hospitals’ concerns with site-neutral policies are no secret, the committee chair urged the hospitals to work with lawmakers on broader reimbursement changes.

Pallone thanked McMorris Rodgers for her work on site-neutral pay as he also raised concerns with hospitals being paid more for certain services that can be performed safely at other sites of care – and he pointed to drug administration as one example.

The Alliance for Site Neutral Payment Reform called the site-neutral payments for drug administration policies “a meaningful first step,” but also urged E&C to move on comprehensive legislation that would remove the grandfathering exceptions from the 2015 site-neutral pay cuts and implement site neutral payments more broadly.

The American Hospital Association, however, pushed back on site-neutral policies tied to drug administration.

“We are especially concerned that this would result in a major cut for hospital outpatient departments (HOPDs) that provide essential drug administration services, including for vulnerable cancer patients, who may require a higher level of care as they receive their essential treatments,” AHA says in a statement to E&C. “This legislative effort would expand existing site-neutral payment cuts, which have already had a significantly negative impact on the financial sustainability of hospitals and health systems and have contributed to Medicare’s chronic failure to cover the cost of caring for its beneficiaries.”

Pallone said the savings from the site-neutral policy included in the legislation allows for an investment in DSH pay, as the bill would push back Medicaid DSH cuts by an additional two years to fiscal 2026.

However, Stacey Hughes, executive vice president for AHA, said cutting Medicare hospital pay to prevent Medicaid DSH cuts is inappropriate.

“While we support the subcommittee’s policy on Medicaid DSH, robbing Peter to pay Paul is not the way to achieve the objective and would add to the financial fragility of many hospitals,” Hughes said in a statement.

Federation of American Hospitals President and CEO Chip Kahn agreed and said in a statement that FAH appreciates avoiding the Medicaid DSH cuts and understands the need for improved transparency, but now is not the time to cut hospitals’ pay.

“A key fact not considered during today’s markup – Medicare only pays hospitals 84 cents on the dollar for the patient care provided to beneficiaries. The cuts to hospital outpatient care included in today’s mark-up – and those proposed to be taken up later – are cuts that will slam patient care. These hits, on top of the escalating costs of care, could be a knockout blow for many hospitals – especially in rural areas,” Kahn said.

AHA also opposed policies in the bill that would require a separate identification number and attestation for each off-campus outpatient department or provider, as the group pointed out that attestations for those looking for a mid-build exception to previously enacted site-neutral pay cuts were administratively burdensome and difficult.

“CMS contractors did not complete their audits for the ‘mid-build’ exception to the current site-neutral payment rates until over two years after the statutory deadline. In addition, it soon became clear that these audits were conducted in an extremely inaccurate fashion – such an inaccurate fashion that CMS itself rescinded all audit denials and re-reviewed all exception applications,” AHA noted.

The hospitals also opposed policies in the legislation on mandatory reporting on certain health-related ownership information as AHA said it would be duplicative of other reporting and overly burdensome. AHA also said HHS would have unrestricted discretion to add additional reporting, which could prove burdensome for hospitals.

However, the group said tweaks to the hospital price transparency section of the bill, which is aimed at codifying and building on current requirements as well as increasing penalties for noncompliance, show lawmakers are working to improve it – though AHA wants to keep working with lawmakers and again said hospitals are committed to adhering to the current hospital price transparency requirements.

The bill also incorporated policies on clinical laboratory price transparency.

The House Ways & Means Committee recently held a hearing on price transparency, though some Democrats in that committee said transparency can’t fix a broken health care system.

The E&C health subcommittee also passed the Providers and Payers COMPETE Act, which would require HHS to consider the implications of proposals in its annual provider pay rules on health care consolidation. That legislation also passed the health subcommittee unanimously. — Michelle M. Stein