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    Budget deal cuts pay to hospital-owned practices

    2016 final rule includes new physician self-referral exception

    Bob GattyWashingtonThere was generally positive news for Medicare providers in the new 2-year budget agreement signed into law by President Obama Nov. 2 as well as the 2016 physician fee schedule just released by the Centers for Medicare & Medicaid Services (CMS). 

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    But hospital-owned physician practices will take a hit under the budget deal, and urologists will see an ever-so-slight average decrease in payments for their services under the new fee schedule.

    Hospital-owned practice pay rate changing

    Under the budget deal, beginning in 2017 Medicare no longer will pay hospital-owned physician practices higher rates than independently owned practices. Those changes will apply to hospital-owned practices acquired or opened since Nov. 2 that are located farther than 250 yards from a hospital’s main campus. Facilities in business before that time that were receiving hospital outpatient department rates will continue to do so.

    The new facilities, instead, will “be eligible for reimbursements from either the Ambulatory Surgical Center…or the Medicare Physician Fee Schedule,” a summary of the legislation states. That provision was hailed by the Alliance for Site-Neutral Payment Reform, although the group said that “while this provision shows great progress, significant disparities in reimbursement between hospital outpatient departments and freestanding, community-based care settings still exist and will continue to drive up prices and encourage consolidation of the healthcare marketplace.”

    Alliance members include the Men’s Health Network, U.S. Oncology Network, American Academy of Family Physicians, American College of Physicians, American Health Care Association, America’s Health Insurance Plans, Blue Cross and Blue Shield Association, Brain Tumor Alliance, Community Oncology Alliance, and the Lung Cancer Alliance.

    Also read: CMS targets ‘misvalued’ urology codes in rule

    The agreement also extends a 2% reduction from previous sequestration in Medicare payments to physicians and hospitals through the end of a 10-year budget. In addition, the AUA estimates that under the final rule, the national payment rate for most urology services will decline by about 0.03%.

    In a detailed summary of the 2016 fee schedule posted on its website, the AUA pointed out that it had successfully convinced CMS to remove two urology codes from the list of potentially misvalued services of $10 million or more because they do not fit the criteria. Those codes are 51728 (Insertion of electronic device into bladder with voiding pressure studies) and 51729 (Insertion of electronic device into bladder with voiding and bladder canal [urethra] pressure studies).

    However, several urology codes will be reviewed as potentially misvalued. They are 51700 (Irrigation of bladder), 51702 (Insert temp bladder cath), 51720 (Treatment of bladder lesion), 51784 (Anal/urinary muscle study), 51798 (US urine capacity measure) 52000 (Cystoscopy), and 55700 (Biopsy of prostate). In addition, CMS is creating two new CPT codes for penile trauma repair.

    The AUA pointed out that the fee schedule rule includes a new physician self-referral exception, permitting payments to physicians by hospitals, federally qualified health centers, and rural health clinics to physicians to compensate non-physician practitioners under certain conditions. It also establishes a new exception to permit timeshare arrangements for the use of office space, equipment, personnel, items, suppliers, and other services.

    NEXT: LUGPA praises deferral of IMRT cuts

    Bob Gatty
    Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.


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