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Hospitals Fight MedPAC Plan to Reduce Outpatient Rates

Cheryl Clark, for HealthLeaders Media, March 13, 2013

"Because payment rates for most services are higher in OPDs than in offices, the result of services shifting to OPDs is higher program spending and beneficiary cost sharing," Hackbarth said. "Meanwhile, there may be no significant changes in patient care."

He said that if the same migration of services to more expensive settings were to continue unabated, that is absent a major payment policy change, "by 2021, Medicare spending on E&M (evaluation and management) visits would be over $1 billion higher annually due to the shift to OPDs, and beneficiary cost sharing would be about $300 million higher.

He said that if the same service could be safely provided in different sectors, "it may be undesirable for a prudent purchaser to pay more for that service in one setting than another. Therefore, Medicare should base its payment rates on the resources needed to treat patients in the lowest-cost clinically appropriate setting."

Of course, hospitals do have more costs. Frequently, it's advisable to have a patient undergo a relatively simple procedure — usually performed in the physician's office — to an outpatient setting because the patient is sicker, with more of a chance of complication that would require prompt acute care.

Commissioners recognize that in some parts of the country, the only place a patient can now receive such services is in a hospital outpatient department because private practices offering those procedures are too far away. For those hospitals, some "stop-loss" policies are in the works.

But it seems that the commissioners are strongly in favor of seeing Medicare make a site-neutral policy shift to avoid spending much higher amounts of money simply because a physician provider moved the procedure's location.

"I think these payment principles are sound," said MedPAC Commissioner Scott Armstrong of the group Health Cooperative in Seattle. "We've debated them for, it seems, at least a couple of years now…"

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1 comments on "Hospitals Fight MedPAC Rate Plan"


Steve Watkins (3/13/2013 at 12:04 PM)
Bunk! As a 'convincer' to private physicians thinking of selling their practices, many hospitals have been out there bragging to them on how much more cash they can generate by billing the identical E&M codes, in the identical buildings, with the identical staff, to the identical patients by billing M&M as 'outpatients of hospitals' rather than as standard physician offices. Hospitals across the land HAD to know there would be a day of settlement....