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Medicare Modernization Act increased outpatient surgery payments by $1B — 3 insights

A study, published in Health Services Research, examined how Medicare's revised payment schedule affected overall payments for outpatient surgery.

John Hollingworth, MD, of Ann Arbor-based University of Michigan, and colleagues studied Medicare beneficiaries who underwent outpatient surgery in a hospital outpatient department, ASC or physician office between 2004 and 2011.

Researchers compared temporal trends in outpatient surgery before and after Medicare implemented its revised payment schedule in 2008.

Here's what they found:

1. Outpatient surgery payments grew by $334 million between the last quarters of 2007 and 2008. The amount was three times higher than what was expected pre-policy change.

2. Despite increased payments, the utilization rate was unusually low. Both average spending and average surgical episode payments increased only by 10.4 percent and 7.8 percent over the study period, respectively.

3. By the end of 2011, researchers noted Medicare payments for outpatient surgery reached $5.1 billion. They believe payments would have totaled only $4.1 billion if it wasn't for the policy change.

Researchers concluded, "Despite lessening demand, reduced ASC facility payments did not curb spending for outpatient surgery. In fact, overall payments actually increased following the policy change, driven by higher average episode payments."

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