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House Subcommittee Holds Hearing on Site Neutral Payment and Post-Acute Care Reforms

May 23, 2014— The House Energy and Commerce Health Subcommittee May 21 held a hearing entitled, “Keeping the Promise: Site of Service Medicare Payment,” focused on the Medicare Payment Advisory Commission’s (MedPAC) site neutral payment policy recommendations, various legislative proposals to equalize and/or bundle payments between various care providers including post-acute (PAC) and oncology, and whether these actions would reduce Medicare spending without compromising access or care.

Subcommittee Chair Joe Pitts (R-Pa.) opened the hearing expressing his overall support for proposed Medicare payment reforms, especially if the reforms would create savings, but did highlight concerns heard in the provider community.

He said, “While stating the benefits of site neutral payments and Post-Acute Care (PAC) reform, MedPAC has also expressed some concern that these policy changes could cut access to physician services for low-income patients,” and continued, “These policies have arisen as potential pay-fors for SGR reform and other health care reforms. As the Subcommittee with the largest health jurisdiction of any committee in the House, we are charged with safeguarding the Medicare program and preserving it for future generations.”

Ranking Member Frank Pallone (D-N.J.) praised the committee’s interest in PAC reform stating, “The Affordable Care Act recognized the need for reform in the PAC setting and put in motion a number of initiatives that will build towards PAC reform. Medicare is testing a number of payment system reforms such as bundled payments, value based purchasing, and accountable care organizations that will inform and help improve care.” He further emphasized the need to ensure “current payment systems are providing the right incentives for quality care rather than encouraging care delivery that maximizes profits.”

In his testimony, Mark Miller, Executive Director of the Medicare Payment Advisory Commission (MedPAC), highlighted MedPAC’s site neutral payment policy recommendations and other PAC payment reforms. He also stressed MedPAC’s mission “to assure beneficiaries have access to high quality, coordinated care, to protect the tax-payers dollars, and to pay providers in plans in a way to accomplish these goals.”

In explaining the commission’s continued work on improving the Medicare program, he stated, “The commission would create policies to encourage care coordination, pilot projects to develop various bundled payment strategies and for the development and implementation of a common assessment instrument for PAC. This would allow us to consistently assess patient needs to track their change in functional status and quality, and to move towards a unified payment system on PAC payment side.”

A witness on the second panel of health provider stakeholders, Reginald Coopwood, M.D., President and CEO, Regional Medical Center in Memphis, Tenn., urged members to recognize the devastating consequences Medicare patients would face if certain site neutral payment policy proposals are enacted saying, “It’s important to know that hospitals are already losing money providing outpatient service to Medicare beneficiaries. Medicare Payment Advisory Commission (MedPAC) data says that hospitals’ outpatient Medicare margins are negative 11.2 percent. To make matters worse, if site-neutral payment proposals under consideration by some policy makers were enacted it would result in outpatient department payment margins of nearly negative 20 percent. This could force hospitals to curtail these vital outpatient service and threaten seniors’ access to care.”

Dr. Coopwood also explained and emphasized the distinct difference between care offered in different sites of services stating, “When compared to patients treated in physicians’ offices, hospitals serve more medically complex patients as well as a higher percentage of patients who are eligible for both Medicare and the Medicaid program and a higher percentage of disabled patients. Our ability to continue to improve the health status of our communities by ensuring that individuals have access to the right care, at the right time, in the right setting would diminish if those cuts were made. We also would have to evaluate our existing services as well as any plans to expand our service capacity. This would disproportionately affect the most vulnerable and elderly patients we serve.”

In response to questions from Reps. Tim Murphy (R-Pa.) and Renee Ellmers (R-N.C.) raising concerns on transparency and accountability in the Health Resources and Services Administration’s 340B discount drug pricing program, Miller told the committee “this is an issue that we’ve not come forward on because there’s still a fair amount of staff work to be done on it, but we have started to try and look at it.”


Len Marquez
Director, Government Relations
Telephone: 202-862-6281

Courtney Summers
Senior Legislative Analyst
Telephone: 202-862-6042


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Jason Kleinman
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Telephone: 202-903-0806