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Medicare payment advisory panel recommends cuts to stand-alone emergency rooms

Troubled by a proliferation of stand-alone emergency rooms that receive the same Medicare rates as those at hospitals but offer fewer services, a federal advisory committee is recommending the Congress give some of them less money.

A majority of Medicare Payment Advisory Commission, or MedPAC, members said at a meeting March 1 that they will back a proposal in April recommending urban, stand-alone emergency rooms have their Medicare payment cut, maybe by 30%.

The commission is also recommending the stand-alone emergency rooms, which are being opened by large hospital chains, receive the lower rates given to smaller hospitals which are not running full time. That would mean about 28% less in Medicare funding for the emergency rooms, according to a MedPAC presentation document.

But some commission members were worried that full-time, stand-alone emergency rooms would respond by cutting back their hours.

The idea could also face opposition from the American Hospital Association, or AHA, which had said in a Dec. 1, 2017, letter to the commission that reducing payments to the facilities was "premature" and not "completely thought through."

At issue is what the MedPAC members called the "relatively new phenomenon" of stand-alone emergency departments being set up away from hospitals like traditional emergency rooms.

Treating lower-severity patients

Commission members told the panel in presentations in November 2017 and again on March 1 that ambulances tend to bypass the stand-alone emergency rooms and take the most serious cases to hospitals.

MedPAC's principal policy adviser, Zach Gaumer, said March 1 that studies had shown the stand-alone emergency rooms serve lower-severity patients than those at hospitals.

They also have lower costs than the traditional emergency rooms because they typically don't have operating rooms, trauma teams or specialists on call, he said.

Yet under federal policy, some stand-alone emergency rooms — those affiliated with a hospital and within 35 miles of a hospital — receive the same Medicare rates as the departments at hospitals.

That's made it "financially attractive" for hospitals to open the off-campus emergency rooms, particularly in urban areas, Gaumer said.

While the emergency rooms had been springing up largely in Texas, Gaumer told the commission that many "large hospital systems are seeing them as a good strategy."

"So, it's growing outside of Texas," he added.

Hospitals owned roughly two-thirds of the stand-alone emergency rooms in the U.S. in 2017, according to MedPAC.

But while they may be lucrative for hospitals, they also raise the concern of creating "excess capacity and unnecessarily increases [Medicare] spending," the presentation document said.

The issue is primarily in urban areas, because under federal policy, stand-alone facilities receive less Medicare payments if they are more than 35 miles from a hospital emergency room. The reductions under consideration would be limited to those within 6 miles of a hospital emergency room.

The AHA in its December letter, however, objected to the off-campus emergency rooms receiving less payments, saying they had an important role to play — keeping hospital emergency rooms from getting even more crowded.

MedPAC also did not have enough data to conclude that the stand-alone facilities treat less serious cases, wrote Ashley Thompson, AHA's senior vice president for public policy analysis and development.