Say it together one more time–provider consolidation is really bad for the health system!! A new presentation at the latest meeting of the Medicare Payment Advisory Commission gives more data on the effect of such consolidation on Medicare and on Medicare beneficiaries. (MedPAC Presentation) The data presented on consolidation is pretty well known, 57% of hospital markets are super-concentrated in 2017 as opposed to 47% in 2003 and there is almost no entry by new competitors into these markets. From a Medicare perspective, because CMS basically sets inpatient rates, there is not an effect of lack of competition on those rates, although there may be more political pressure from larger hospital systems. Commercial health plans, on the other hand, have definitely seen much higher prices due to hospital consolidation. And while larger organizations theoretically could lower their own costs of providing a service, it does not appear that greater scale has in fact led to lower inpatient costs for the super-concentrated systems. In fact the super-concentrated systems reported costs per discharge of $12,457 in 2017 versus $12,058 for less concentrated markets. So much for scale creating cost-efficiency. But on the outpatient side, right now CMS does pay more for physician services in an outpatient department versus an independent office. So as consolidation has become vertical as well as horizontal, more services are being billed as higher-cost hospital outpatient ones. The percentage of physicians employed by hospitals has increased from 26% in 2012 to 44% in 2018. As with inpatient services this causes higher prices for commercial health plans but the main impact for Medicare is the site of service payment differentials. For chemotherapy administration for example, service volume declined 16.6% in physician offices but increased 52.9% in hospital outpatient departments. Even for office visits, there was a 2% decline in physician offices but a 37% rise in the hospital setting. Physicians employed or owned by hospitals also have higher rates of referrals to other hospital-owned facilities and services, like home health. This can inconvenience patients. And as the MedPAC presentation notes, there is no evidence for better quality at hospital-owned physician practices. Finally, the higher prices for services in hospital outpatient departments results in higher cost-sharing for beneficiaries. The presentation makes a further case for site neutrality in payment policies and for reversing consolidation.
Provider Consolidation’s Impacts on Medicare and Medicare Beneficiaries
No Comments
✅ Subscribe via Email
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at khroche@healthy-skeptic.com.
Healthy Skeptic Podcast
Research
MedPAC 2019 Report to Congress
June 18, 2019
Headlines
Tags
Access
ACO
Care Management
Chronic Disease
Comparative Effectiveness
Consumer Directed Health
Consumers
Devices
Disease Management
Drugs
EHRs
Elder Care
End-of-Life Care
FDA
Financings
Genomics
Government
Health Care Costs
Health Care Quality
Health Care Reform
Health Insurance
Health Insurance Exchange
HIT
HomeCare
Hospital
Hospital Readmissions
Legislation
M&A
Malpractice
Meaningful Use
Medicaid
Medical Care
Medicare
Medicare Advantage
Mobile
Pay For Performance
Pharmaceutical
Physicians
Providers
Regulation
Repealing Reform
Telehealth
Telemedicine
Wellness and Prevention
Workplace
Related Posts
Commentary
November Non-Hysterical Climate Science
November 11, 2024
November Non-Hysterical Climate Science
Another climate study challenges the hysterical orthodoxy that CO2 is controlling termperature.
Commentary
Minnesota’s Education System Is in Massive Decline Under Wannabe Rockette Walz
November 10, 2024
Minnesota’s Education System Is in Massive Decline Under Wannabe Rockette Walz
Minnesota's education system is expensive and declining in student learning.
Commentary
A Little Economic News in the Midst of the Election Aftermath
November 8, 2024
A Little Economic News in the Midst of the Election Aftermath
Watch interest rates on US debt over the next couple of weeks to see what…