Federal Panel: Hospitals Charging More Than Doctors Offices For Medicare Services

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In an eye-popping but little-discussed 300-page report, a federal advisory panel says the nation's hospitals are repeatedly charging Medicare beneficiaries more than doctors offices for the same services, and are inflating out-of-pocket expenses.

The Medicare Payment Advisory Commission points to the increasing trend of hospitals buying out physician practices and driving up costs. The panel is urging Congress to immediately begin cutting payments to hospitals for many of the same services that are available for lower cost in doctors offices.

The New York Times reports that a typical example of a 15-minute visit to a doctor's office, which typically costs $58, might be as high as $98.70—or 70 percent more—for the same consultation in the outpatient department of a hospital. Additionally, the Times reports, a patient pays more out-of-pocket: $28.68 versus $14.50.

The panel said the variations "urgently need to be addressed," but the American Hospital Association adamantly disagreed.

"Medicare already underpays hospitals for caring for patients in an outpatient setting," the AHA's Joanna Kim told the Times. "And the commission's proposals would worsen that. Hospitals might be foreced to curtail services, threatening access for the poor and patients with multiple chronic conditions."

The commission, also known as MedPAC, is an independent 17-member Congressional panel established by the Balanced Budget Act of 1997 to advise the U.S. Congress on Medicare issues.

In a separate chapter of its wide-ranging report, issued June 13, the commission explores a dramatic change to Medicare, under which each beneficiary would receive a fixed amount of federal money to purchase a private health insurance plan or to help pay for coverage under the Medicare program.

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