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Analysis

Medicare Overpaid for Postoperative Care by $2.6B in 2018

By Jack O'Brien  
   January 22, 2020

Less than 40% of postoperative visits paid for by Medicare were provided following major surgical procedures.

Medicare could have reduced reimbursements for undelivered postoperative care by $2.6 billion in 2018, according to a RAND Corporation study released Wednesday afternoon.

Researchers found that between 2017 to 2019, Medicare paid for postoperative visits for nearly all minor surgical procedures, even though only 4% of those procedures resulted in a postoperative visit. Similarly, 39% of postoperative visits paid for by Medicare were provided following major surgical procedures.

Researchers estimated that if Medicare adjusted its payment structure to remove spending on postoperative visits that went unfulfilled, the program would have saved $2.6 billion in 2018, a 28% reduction. 

"There is a growing body of evidence that suggests that Medicare pays surgeons for postoperative care they mostly do not provide," Andrew Mulcahy, PhD, a senior policy researcher at RAND and lead author of the study, said in a statement. "Medicare should adjust payments to reflect the care actually provided."

Related: Private Insurers Paid Hospitals 241% of What Medicare Would Have

The study found that most surgical procedures result in Medicare providing physicians with a bundled payment for the procedure and postoperative visits. Around 25% of Medicare payments for procedures are for bundled postoperative care, according to the study.

RAND's models revalued procedures and calculated that most specialties, such as cardiac surgery, surgical oncology and thoracic surgery would see decreases above 15%.

However, the study also indicated that neurology, primary care, cardiology, and diagnostic radiology would see positive changes above 2.5%.

Related: Insurers Paid California Hospitals Twice as Much as Medicare

Mulcahy urged federal health officials to revise reimbursement rates that pay for undelivered postoperative care.

In 2015, the Centers for Medicare and Medicaid Services (CMS) considered removing postoperative visits from bundled payments, Mulcahy said, which would have made surgeons bill Medicare for individual postoperative visits.

Instead, physician groups lobbied Congress to pass a regulation that barred changes to the reimbursement formula until CMS gathered additional information about the frequency of postoperative visits.

The RAND study stated that most estimates pertaining to information about postoperative visits comes from physician surveys, which does not allow CMS to confirm that the data is wholly accurate.

Mulcahy and researchers also recommend that additional data points, such as billing claims, quality-improvement databases and electronic health records, be incorporated to determine the accurate number of postoperative visits. 

Related: Private Insurers Pay Dialysis Providers Four Times Above Medicare

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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