The Medicare Payment Advisory Commission (MedPAC) is considering asking Congress to cut Medicare payments for off-campus emergency departments located in urban areas and increase payments to stand-alone outpatient and emergency services in rural areas. The draft recommendation is designed to “ensure appropriate access to and use of hospital emergency department services” under the assumption that current Medicare payment policy is encouraging the overuse of emergency department services in urban settings.
Under the draft MedPAC recommendation, emergency departments that are more than 35 miles from another emergency department would be reimbursed under the Medicare outpatient prospective payment system (OPPS) and receive annual payments to assist with fixed costs, such as physician recruiting. For urban areas, Medicare payments could be reduced by up to 30 percent for off-campus departments that are located within six miles—or a 10-minute drive—to an on-campus hospital emergency department.
The impetus for MedPAC’s recommendation was fueled by concerns related to emergency department service access in isolated, rural areas, as well as the purported overutilization of emergency services in urban markets, where emergency departments are more concentrated. MedPAC analyzed data from 112 off-campus emergency departments in five U.S. markets. The data showed that the off-campus emergency departments tended to be located in higher income areas and the majority of facilities were in close proximity to existing on-campus emergency departments. Besides proximity concerns, MedPAC indicated that urban off-campus emergency departments appear to have lower patient severity—thus, lower resource use needs—than on-campus emergency departments, yet both receive payment under the OPPS.
Section 603 of the Bipartisan Budget Act of 2015, along with CMS’s CY 2017 OPPS Final Rule, restricted OPPS reimbursement to a limited number of off-campus provider-based departments. However, Congress exempted all services furnished by dedicated emergency departments from Section 603’s payment changes and instead directed the agency to continue paying hospitals full OPPS rates for services furnished at those facilities.
While a vote on whether to recommend the policy to Congress will not likely occur until April, MedPAC panel members appear to largely support the measure, particularly the component regarding rural emergency departments. Support among the panel members for the cuts to urban off-campus emergency departments appears less than resounding. Commissioner Brian DeBusk reportedly said, “I support the rural solution, but on the urban side, I'm not quite there yet . . . . I'd like to see us consider that more carefully,” perhaps taking into account the quality of the facilities.
A MedPAC slide deck outlining the draft recommendation is available here. The Bloomberg Law report is available here.
