Spending on outpatient care—the care sufferers obtain in a hospital outpatient division (HOPD), ambulatory surgical middle (ASC), or a free-standing doctor workplace—is without doubt one of the quickest rising elements of well being care prices. A brand new proposal in New York State seeks to rein on this spending for business payers, employers, and the tens of millions of shoppers they insure.
Background
One cause for elevated spending on outpatient care is the vertical integration of well being care markets, which happens when hospitals purchase unbiased doctor practices or different outpatient suppliers. As soon as acquired, these newly affiliated practices successfully grow to be off-campus HOPDs which might cost considerably greater costs for a similar providers, because the well being system they now belong to can leverage its market energy in charge negotiations with insurers. These greater charges are usually break up between two payments for normal workplace visits, with one invoice overlaying the well being care skilled’s price and one other invoice purportedly overlaying the hospital’s overhead, which might embody intensive sources that these sufferers are unlikely to want. These mixed fees are significantly greater than the invoice for an workplace go to at a free-standing observe and drive up spending on outpatient care.
Policymakers have recognized site-neutral fee as a potential answer to this dynamic. The underlying precept of site-neutral fee is that insurance coverage firms, public packages, and different payers would pay the identical charge no matter whether or not the affected person receives care at an HOPD, an ASC, or a free-standing doctor’s workplace. This single fee quantity for a given service is predicated on the quantity insurers pay for care within the most-efficient, lowest-price setting and due to this fact displays the sources suppliers want to offer protected and applicable care, however not the upper overhead prices or pricing energy emblematic of hospital-affiliated settings. Amongst main medical health insurance packages, solely Medicare makes use of site-neutral fee in restricted circumstances—however new laws within the New York State Senate would introduce site-neutral fee to the New York business market for a subset of outpatient care.
New York’s Laws
As launched by State Senator Liz Krueger, S 9952 would require well being care suppliers, together with hospitals, doctor workplaces, and pressing care clinics, to invoice not more than 150 % of what Medicare would pay for an outlined set of outpatient providers which might be protected and applicable to offer in lower-cost settings, comparable to a doctor’s workplace or ASC. (Suppliers would invoice on the charge they’ve negotiated with business payers if this charge is lower than 150 % of Medicare’s fee degree.) The invoice would additionally prohibit suppliers from charging a further facility price for coated providers. These billing limits apply to in- and out-of-network care and to care offered to individuals with out medical health insurance.
Providers recognized for site-neutral fee embody analysis and administration providers, wellness visits, and the 66 ambulatory fee classifications (APCs) the Medicare Fee Advisory Fee (MedPAC) recognized in a 2023 report as applicable for site-neutral fee. APCs, which group providers based mostly on medical and price similarity with a single fee charge assigned to every APC, are the muse for Medicare’s outpatient potential fee system (OPPS). The invoice additionally anticipates that ought to New York State, the federal authorities, or MedPAC determine extra providers which might be protected and applicable to offer in lower-cost settings, these providers can be enfolded into the state’s site-neutral fee requirement.
This proposal additionally stipulates that community contracts between well being care suppliers and well being profit plans—outlined within the invoice as a plan provided by an insurance coverage provider, a third-party administrator performing on behalf of a plan sponsor, comparable to an employer or a labor union, or a nonfederal public plan comparable to a state worker well being profit plan—should specify that plans won’t pay greater charges for this outlined set of outpatient providers. Payers additionally wouldn’t be allowed to pay facility charges for coated providers. To make sure that hospitals can not shift these fees to sufferers, S 9952 would require community contracts to ban suppliers from gathering uncovered fees associated to the power price prohibition and site-neutral fee necessities from sufferers themselves.
A standard concern with facility price bans or different reimbursement adjustments for outpatient care is the affect these coverage adjustments might have on the viability of rural and safety-net hospitals and different suppliers who might depend upon income from institutional fees for HOPD-based workplace visits to stay solvent. Beneath this proposal, new site-neutral billing and fee necessities wouldn’t apply to public hospitals, sole group hospitals, crucial entry hospitals, rural emergency hospitals, and safety-net hospitals, nor to federally certified well being facilities.
Potential for Shopper, Employer, and Well being Plan Financial savings
As launched, the invoice is more likely to generate financial savings for business insurers and New York employers and supply necessary protections for shoppers. In keeping with an evaluation by RAND, costs for outpatient providers in New York State averaged 304 % relative to Medicare in 2022. A fee cap of 150 % of Medicare charges is due to this fact more likely to cut back business spending on the outpatient providers focused by this proposal, though precise financial savings will depend upon each present negotiated charges for this set of providers, and whether or not negotiated charges for different providers, not included on this reform, finally improve in response. These financial savings would accrue to insurance policy, employers, and different plan sponsors. For instance, 32BJ Well being Fund, a union-sponsored profit plan, estimates that it will have saved $31 million, or two % of its whole well being profit expenditures, in 2022 if this charge cap had been in place.
This proposal may additionally present actual monetary safety to shoppers. Customers with high-deductible well being plans, who will be chargeable for all allowed fees earlier than they attain their deductible, would straight profit from the proposal’s cap on funds for these outpatient providers in addition to the ban on facility price fees. Equally, sufferers with plan designs that embody separate cost-sharing obligations for outpatient hospital fees would now not owe that fee given the prohibition on facility charges. Customers can also see reductions of their medical health insurance premiums ought to this reform end in important reductions in outpatient spending. Submit-implementation evaluation of this proposal’s financial savings results on insurers, employers, and shoppers would inform future site-neutral fee efforts.
Monitoring Results on Well being Care Suppliers
Equally, enactment and implementation of S 9952 would supply necessary insights on site-neutral fee’s impact on hospitals and well being methods. As launched, the proposal exempts rural and financially susceptible suppliers from site-neutral fee necessities, whereas making use of these necessities to the kinds of well being methods which have pushed vertical integration of the supply system. The invoice’s reporting necessities for pricing and utilization knowledge, and its associated name to the state that these knowledge be made publicly accessible, will assist reply questions on how these entities reply to site-neutral fee and what affect it might have on facility funds.
Takeaway
If enacted into legislation, S 9952—the primary detailed state-level site-neutral fee proposal for the business market—wouldn’t solely create a brand new mannequin for different states to contemplate however would additionally present important real-world expertise with site-neutral fee. Whereas it’s too early to know whether or not S 9952 will cross the New York legislature, and what adjustments it’d undergo earlier than enactment, it creates an necessary marker for different states grappling with elevated spending on outpatient providers. Ought to this proposal be carried out, employers, well being plans, and shoppers might notice financial savings and new monetary protections.
