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Analysis

Medicare Payments Higher at HOPDs than ASCs, Doc Offices

By Rene Letourneau  
   February 24, 2016

"If, in fact, patients in the hospital setting were much sicker, were older, or had more comorbidities, then there obviously would be justification for the price differential to recognize that sicker, older patients would need more services. But, we were able to account for those types of things [with the risk-adjusted methodology] and did not find much difference. It raises a policy question as to whether the payment differential is justified. We cannot say one way or the other that the delivery of care was different or the outcomes were improved in one setting."

Hospitals Should Be Concerned About Revenues
While HOPDs have traditionally received higher payment rates than other care sites for the same procedures, Medicare is clamping down on this with its site-neutral payment policy, which is slated to go into effect on Jan. 1, 2017.

Under this policy, newly acquired HOPDs will receive the same payment as ambulatory surgery centers and stand-alone physician practices. Existing HOPDs will not be affected.

Harry Nelson, founder and managing partner at Los Angeles-based law firm Nelson Hardiman, LLP, says hospital administrators should be concerned about shrinking revenues as CMS continues its push toward value-based care.

"The report should serve as yet another warning sign for hospitals about declining revenues from outpatient services. The past few years have seen increasing proactivity from Medicare about suppressing hospital inpatient utilization in favor of lower cost care settings, and this study gives good reason to think that hospitals can expect similar things in the area of outpatient procedures," Nelson says.  

In addition, he says, hospitals should also be concerned that patients with high-deductible health plans will become savvier about costs when making decisions about where to receive outpatient services.

"The trend of greater patient financial responsibility as well as greater price transparency tools will drive more market-oriented consumer behavior and greater price-shopping, which is good news for lower cost providers," he says.

"This is good news for everyone who wants to see more responsive market behavior from providers driving towards reduced cost."

Hospitals, however, should be worried, he says. "They have relied on lack of price transparency and are going to suffer unless and until they become price competitive." 

Rene Letourneau is a contributing writer at HealthLeaders Media.


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