An article published in Inside Sources calls out the Medicare program for paying hospital outpatient departments more for the same services provided at physician offices, thus increasing the total cost of care.
Here are five key notes from the report:
1. Evaluation and management services at hospital outpatient departments are higher than in physician offices, nearly doubling the cost for routine visits and the patient's 20 percent cost responsibility.
2. Medicare pays ambulatory surgery centers 67 percent of HOPD rates, making procedures like echocardiograms three times more expensive in the HOPDs compared with the physician office. Additionally, the HSS Inspector General found 68 percent of patients older than 65 that receive surgical care at HOPDs had low or no-risk medical profiles, according to the report, and could safely have their surgeries at ASCs.
3. The higher price for outpatient services incentivizes hospitals to acquire physician practices and hire physicians to perform the same services they did in their offices, but they reap higher pay. As it currently stands, any facility within 35 miles of a hospital can become an HOPD.*
4. From 2007 to 2013, the number of physicians working in hospital-owned facilities doubled. An Avalere Health report also found there is a higher rate of additional procedures performed in HOPDs than when the procedure was performed in other settings.
5. Last year, Medicare reported between 2006 and 2013 the outpatient payments per beneficiary were up 7.9 percent annually which outpaces other cost increases. At the same time, the GAO estimates Medicare and its beneficiaries could save $1 billion to $2 billion per year if the rates were equalized between physician offices and HOPDs.
*Last year Congress passed the Bipartisan Budget Act of 2015 addressing the payment variation. Section 603 states "payments for most items and services furnished at an off-campus department of a hospital that was not billing as a hospital service prior to the date of enactment will be made under the applicable non-hospital payment system," effective Jan. 1, 2017, according to a report from McDermott, Will & Emory. As a result, newly-developed off campus sites cannot bill higher rates.