This has always struck me as one of the most insane policies that contribute to excess health spending in the US. The exact same health service, a diagnostic or a surgical or other procedure, will be reimbursed at substantially different rates depending on where it is performed–a physician’s office, a surgi-center, a hospital outpatient department. Hospitals have created and taken advantage of this unjustifiable practice to make billions. Medicare and private insurers have attempted to limit the practice but intensive lobbying and political contributions by hospitals have rendered those attempts largely ineffective. A study in Health Affairs reveals just how pernicious and costly to the system this is. (HA Study)
According to the researchers, across 13 common procedures performed either in a hospital outpatient department or in an ambulatory surgi-center, it cost an average of about $1500 more to use the hospital outpatient setting, or 78%, for commercial insurance patients, and about $633 more for Medicare patients. There was variation in difference across major insurers, with UnitedHealth having the greatest differential and Cigna the lowest. Cigna simply refuses to contract with many hospital outpatient departments, which is saving it a lot of money. Hospitals often try to blackmail health plans into using their HOPDs by saying they won’t contract for basic inpatient services if the plans don’t use them. The health system as a whole would save billions of dollars annually by only paying HOPDs what it pays surgi-centers.
