Further Hospital Reimbursement Costs Cuts?

There may be more bad news for hospitals on the horizon.    A recent article in The New York Times highlighted the latest move by the federal government to further cut hospital reimbursement.
A federal advisory panel is pushing Congress to cut reimbursements currently made to hospitals for a number of medical services that can be provided by physicians in their offices at much lower costs.

This advisory panel, entitled The Medicare Payment Advisory Commission, has notified Congress that after review of the current payment disparities, they feel that incentives were created for hospitals to acquire physician practices.  The Commission states that these resulting hospital acquisitions have in fact increased costs for the Medicare program and its beneficiaries.

The Commission has also noted that once these acquisitions have been completed, the once independent practitioners will be hospital employees and lead to higher spending by private insurers and higher co-payments for their policyholders.

Suffice to say that hospital executives across the nation should be fearful as in the past, Congress had adopted ideas and made rulings which were pushed by this Commission.  

Reimbursement by Medicare to hospitals and physician offices is based on different, separate fee schedules and respective formulas.   An example quoted by the article states that “Medicare pays $58 for a 15-minute visit to a doctor’s office and 70 percent more — $98.70 — for the same consultation in the outpatient department of a hospital. The patient also pays more: $24.68, rather than $14.50.” So when a physician’s practice is acquired by a hospital, its location and patient base usually remains the same; however Medicare now has to pay more for the same services.

We will continue to watch this unfold as the Commission urges Congress to “equalize payment rates,” which would ultimately result in hospitals losing 5 percent of their Medicare revenue, according to changes being requested by the Commission.

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