Doctors say Medicare pays three times more for care at hospital outpatient departments.

By Virgil Dickson | February 18, 2016

Medicare reimbursement for cardiac imaging isn’t just dramatically higher at a hospital outpatient department instead of a physician’s office, it’s an entire episode cost of care level higher. At least according to a Physicians Advocacy Institute-funded Avalere Health analysis released Thursday (PDF).

Payments for cardiac imaging at a hospital outpatient department were more than triple, or $2,100 vs. $655 for reimbursement to physician offices.

Researchers also looked at Medicare’s payments for an entire episode of care—the full 22-day period encompassing preparatory and follow-up care for a given procedure. Under this measurement, Medicare’s payments for echocardiograms averaged $5,148 when provided in hospital outpatient department instead, but were $2,862 when provided in a physician’s office.

PAI claims this is the first attempt to analyze the pay difference between hospital outpatient departments and physician’s office for a full episode of care versus procedure.

The study comes the day before the comment deadline (PDF) on how the House Energy and Commerce Committee should implement Section 603 of the Bipartisan Budget Act of 2015, which established a site-neutral payment policy for newly-acquired, provider-based, off campus hospital outpatient departments after November 2, 2016.

The provision sets the CMS definition for provider-based, off-campus hospital outpatient departments as facilities not on or within 250 yards of the main campus. The provision, meant to equalize payments starting Jan. 1, 2017, grandfathered existing outpatient buildings, but not those being built.

The point of the analysis is to further highlight the discrepancy of the payments. Also even if section 603 was fully implemented, the pay differences would still continue for older physician offices serving as off-campus hospital outpatient departments, Kelly Kenney, PAI’s executive vice president said.

Eliminating the pay differences all together is an opportunity for substantial savings, Kenney said.

She is hopeful that the report will be viewed as unbiased and informative. Even though PAI funded the research, Avalere had full editorial control, she said. Also the consulting firm risk adjusted for the patients being treated in the two settings. A common criticism has been that providers will complain about the pay differences between the two settings, without pointing out that patients seeking care at a hospital outpatient facility may be sicker.

Some still responded with skepticism at the findings. For instance, Lawrence Vernaglia, partner and Health Care Industry Team Chair, Foley & Lardner LLP wondered if Avalere performed its risk adjustment correctly and for all the differences that there may be between a patient that gets treatment at a physician’s office versus a hospital outpatient setting.

“The risk is that people will read the headline, not the data,” Vernaglia said. “Comparing payments for patients that may not be comparable isn’t right.”

Others had similar responses, with Julius Hobson, a senior policy advisor at Polsinelli PC wondering if the study also took into account that hospital outpatient facilities tend to include residency training in their costs.

Hospital groups slammed the report, saying it added nothing new to congressional review of hospital outpatient department (HOPD) payment cuts. “Rather, it states the obvious: HOPD payments exceed those to physician practices. But it leaves out the many valid reasons for this difference—reasons related to giving vulnerable patients and underserved communities access to needed care,” Beth Feldpush, senior vice president of Policy and Advocacy at America’s Essential Hospitals said in an email.

With it being an election year, and a shorter legislative session, its unlikely Congress will take any additional action on site neutral payments this year anyway, Hobson adde

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