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MedPAC Targets Stand-Alone EDs for Payment Cuts

Earlier this month, the Medicare Payment Advisory Commission (MedPAC) voted to cut reimbursement for some freestanding emergency rooms in urban areas. Industry analysts warned that the cuts could undermine access to care.


Freestanding emergency departments receive Medicare payments equal to hospital emergency departments even though they have lower standby costs than on-campus emergency rooms, do not maintain operating rooms, do not have trauma teams and do not have specialists on call 24/7. Ambulance companies typically bypass stand-alone emergency departments in favor of an on-campus one to ensure access to inpatient care if needed.


The MedPAC proposal asks federal lawmakers to reduce stand-alone emergency department payment rates by 30 percent for those that are within six miles of a hospital-based emergency department. This could save Medicare up to $250 million annually if adopted by Congress.


Of the approximately 575 freestanding emergency departments in 2017, two-thirds were hospital-owned versus independent centers without affiliation. In five large markets, for example, approximately 75 percent of the stand-alone emergency departments were located within six miles of the nearest hospital emergency department.


MedPAC noted that between 2010 and 2016, Medicare outpatient emergency department payments per beneficiary increased by 72 percent.


A payment policy executive at the American Hospital Association noted, “The [MedPAC] recommendation is not based on any analysis of Medicare beneficiaries, Medicare costs or Medicare payments, and would make Medicare’s record underpayment of outpatient departments and hospitals even worse . . . Even more troubling to us is that [the recommendation] has the potential to reduce patient access to care, particularly in vulnerable communities, following a year in which hospital EDs responded to record-setting natural disasters and flu infections.”


Congress tends to accept MedPAC recommendations to reduce payments for stand-alone facilities, most recently passing a site-neutral policy cutting pay for stand-alone hospital outpatient departments.


(Source: “MedPAC votes to cut payments for free-standing ERs,” Modern Healthcare, April 5, 2018)





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