Certain cancer hospitals that are exempt from the Medicare prospective payment system are paid substantially more than regularly paid teaching hospitals, although their cancer patients are not much sicker, according to a recent Government Accountability Office report.
The GAO estimated that in 2012, 11 cancer hospitals that are exempt from the prospective payment system received, on average, about 42 percent more in Medicare inpatient payments per discharge than what Medicare would have paid a local teaching hospital to treat cancer beneficiaries with the same complexity level.
The case was similar for outpatient payments. According to the GAO, Medicare outpatient payment adjustments to cancer hospitals resulted in overall payments that were about 37 percent higher, on average, than payments Medicare would have made to regularly paid teaching hospitals for the same set of services. Furthermore, the GAO found no association between the proportion of Medicare payments for cancer patient care and Medicare profit margins at regularly paid teaching hospitals, indicating that the prospective payment system or an alternative payment methodology may be reasonable for cancer care.
If, in 2012, beneficiaries at certain cancer hospitals had received inpatient and outpatient services at nearby teaching hospitals — and the forgone outpatient adjustments were returned to the Supplementary Medical Insurance Trust Fund — Medicare may have saved almost $500 million, according to the GAO.
The GAO ultimately concluded that Medicare remains at risk for overspending until it pays certain cancer hospitals to at least, in part, encourage efficiency.
More articles on healthcare finance:
3 emerging challenges for payment and delivery system reform
UCSF Medical Center, John Muir Health to develop accountable care network
The benefits of capturing waste heat