Site-Neutral Provisions Remain In Limbo As CR Clock Ticks

February 13, 2024 11:56 am

Stakeholders and congressional staffers remain unclear about the status and structure of hospital reform provisions that might be included in a bicameral health package as the countdown to Congress’ March 8 continuing resolution begins in earnest. The savings from hospital site-neutral provisions are entwined with a set of other extenders, including a so-called doc fix and a delay to the Medicaid Disproportionate Share Hospital cuts — and the ongoing lack of clarity about site-neutral complicates stakeholders’ lobbying for finite payment offsets elsewhere.

Existing health care extenders were temporarily extended at current funding levels — while others were left to expire — under the latest short-term continuing resolution (CR) stretching from mid-January through March 8 as lawmakers continue to hash out fiscal 2024 spending bills.

A significant part of the turmoil stems from uncertainty over what site-neutral provisions an eventual compromise package might contain.

The uncertainty leaves other policies, such as the doc fix and DSH cut delays, up in the air. Hospitals are vying for a tranche of non-earmarked funding transferred to the Medicare Improvement fund in late December to help delay DSH cuts — the same funding physicians have already staked a claim on as part of their efforts to stave off 2024 Medicare physician pay cuts, but which has rapidly become the focus of intense lobbying as the fate of site-neutral offsets throws other extenders into limbo.

Mark Miller, executive vice president of health care at Arnold Ventures and former executive director of the Medicare Payment Advisory Commission, said he anticipates that lawmakers will opt for a time-limited, smaller fix for DSH cuts and the sequester given the ongoing pressure from hospitals to avoid site-neutral requirements.

“I think the dynamic is this: The hospitals are very convinced they’re going to get DSH one way or the other, and so they’re opposing the site-neutral because they believe that the Congress will forestall the DSH cuts using some other mechanism,” Miller said. “It’s certainly not going to take the problem off the table, so I wouldn’t imagine that the physicians would be happy about it. But if the hospitals walked away with DSH cuts averted, no site-neutral, no NPI, no pricing obligations, they would clearly see that as a victory.”

Site-neutral debate

The House’s Lower Costs, More Transparency Act contained site-neutral provisions to Medicare for drug administration, while the Senate health committee’s Primary Care and Health Workforce Act would limit facility fees for certain services for patients with commercial insurance.

There’s some baseline overlap between the Senate and House packages, specifically a billing requirement to establish unique National Provider Identifiers, but the Senate package includes those billing requirements in the commercial market, whereas the House package would establish that requirement under Medicare.

The Congressional Budget Office on Tuesday (Feb. 6) issued a cost estimate for the Senate health committee’s Primary Care and Health Workforce Act with about $7.7 billion in estimated savings from hospital reforms under Title III of the package.

But a lobbyist noted that the Senate Finance Committee hasn’t formally weighed in this year on site-neutral reforms under Medicare — Finance Chair Ron Wyden (D-OR) said during a November markup that he wanted more time to work through the technical aspects of site-neutral reforms.

With weeks remaining until the continuing resolution expires on March 8, the lobbyist said that policymakers are mostly still unclear on the final direction of any health legislation, including whether site-neutral reforms will even make it into the package. It’s likely a solid set of provisions, as well as offsets, will begin to materialize during the week of Feb. 26, after the Senate returns from recess, the lobbyist said.

But other stakeholders feel differently. A staffer told Inside Health Policy on Wednesday (Feb. 7) that site-neutral provisions are expected to survive lawmakers’ ongoing talks despite the tumult.

A second congressional staffer on Tuesday (Feb. 6) said lawmakers were surprised by the strength of the support for site-neutral reforms from stakeholders across the health care sector, including insurers and doctors’ groups. The staffer told IHP that hospitals are putting considerable pressure on lawmakers to keep site-neutral out of the equation, but that eliminating the immense savings generated by those provisions would take a major bargaining chip off the table for negotiators.

The second staffer also said some lawmakers are skeptical about an argument from hospitals that site-neutral provisions would disproportionately harm rural hospitals.

The American Hospital Association in late January released a report noting that site-neutral funding cuts would have a direct impact on the level of care and services available to patients in rural and underserved communities, as hospital outpatient departments have stepped in to fill gaps in care that were otherwise causing access issues.

About 36% of outpatient visits in rural areas were to a hospital outpatient department between 2019 and 2021, AHA says, including about 40% of dually eligible beneficiaries.

AHA also doubled down on the ongoing threat to rural hospitals in a recent blog.

But Darbin Wofford, a health policy advisor for Third Way, said the House’s site-neutral provisions would have a minimal impact on rural hospitals.

“Site-neutral provisions only would apply to hospital outpatient departments located separately of the hospital campus,” Wofford said in an email. “Just 7% of Medicare’s total off-campus outpatient spending occurs in rural areas, and with exemption of Critical Access Hospitals, just 2% of rural facilities would see any effects.”

The House package’s site-neutral provisions also exempt Critical Access Hospitals, which account for over 60% of all rural hospitals, Wofford added — plus, Congress could include additional exceptions for the rural hospitals that aren’t already exempt if there are still outstanding concerns.

Future reforms

The first staffer said that any limited reforms that get looped into a health package ahead of March 8 would be a solid foot in the door for additional hospital oversight, an effort some senators are already beginning to push for.

During a November Senate Finance Committee markup of the Better Mental Health Care, Lower-Cost Drugs, and Extenders Act, Sen. Maggie Hassan (D-NH) introduced and withdrew an amendment to include the SITE Act in the package, which would establish site-neutral payments for drug administration services under Medicare, eliminate facility fees, and set up an NPI.

The SITE Act, which is cosponsored by Sens. Joe Kennedy (R-LA) and Mike Braun (R-IN), could lead to upwards of $100 billion in savings over the next decade, the first staffer said.

Hassan said during that markup that she was withdrawing her amendment as both Wyden and Ranking Republican Mike Crapo (ID) pledged to work more on the issue.

One element of the SITE Act, a provision combatting a loophole in the site-neutral policies of the Bipartisan Budget Act of 2015, would end grandfathering for existing and mid-build off-campus facilities — a priority that’s been especially pressing for stakeholders.

Arnold Ventures’ Miller said that the SITE Act would effectively end off-campus grandfathering, putting an end to what Wofford described as “a massive loophole.”

“Congress passed site-neutral payments in 2015, but those requirements only applied to newly built hospital clinics,” Wofford said. “There is a massive loophole that includes grandfathered-in clinics, and physician practices bought up by hospitals, creating an incentive for hospital takeovers.”

The SITE Act would result in more savings for taxpayers and beneficiaries, and potentially allow Congress to devote some of the dollars saved to other objectives, like higher payments for safety net hospitals, workforce aid and mental health, Miller pointed out. But there’s no scenario where the SITE Act would get picked up for the March 8 process, and there’s nothing in the Lower Costs, More Transparency Act that would remove grandfathering either, Miller said. —Bridget Early (