More physician services performed in higher-paid HOPD settings, to Medicare's alarm

With the number of physicians employed by hospitals growing, a report from the Government Accountability Office recommends HHS consider paying the same rate for evaluation office visits at hospitals as at traditional physicians' offices.

The GAO examined vertical consolidation trends between hospitals and physicians from 2007 to 2013 due to a recent spike in Medicare hospital outpatient department payments. Between 2007 and 2013, HOPD spending rose more than $14 billion, according to the report.

The number of vertically consolidated hospitals increased from about 1,400 to 1,700, while the number of vertically consolidated physicians nearly doubled from about 96,000 to 182,000.

After consolidation, evaluation and management services performed in physicians' offices can be classified as being performed in a HOPD setting, which often receive higher reimbursement rates. The Medicare payment rate in 2013 for a evaluation and management HOPD visit was on average $51 higher than the same service performed in a physician office.

"Such a shift [in HOPD] could undermine Medicare's ability to be an efficient purchaser of healthcare services, given that Medicare often pays providers at a higher rate — sometimes twice as much — when the same service is performed in an HOPD rather than in a physician office," the GAO stated in the report.

The government agency requested Congress consider directing HHS to equalize payment rates between evaluation and management office settings and return the associated savings to the Medicare program.

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