New Medicare rule will cut payments to hospitals for some surgeries

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A cost-cutting change in Medicare policy will reduce payments to hospitals for some surgical procedures and increase costs for patients, according to a March 21 report from the The Washington Post.

Before the change, CMS categorized 1,740 surgeries and other services as "inpatient only," meaning they were eligible for Medicare payments only if they were performed on beneficiaries who were admitted to the hospital as inpatients.

The new rule phases out this requirement. On Jan. 1, 266 musculoskeletal surgeries were taken off the inpatient-only list, and by the end of 2023, the list is scheduled to no longer exist. 

Then-CMS Administrator Seema Verma said the change would give seniors and their physicians more care options "without micromanagement from Washington," according to the Post.

Although the government is phasing out the inpatient-only list, CMS has yet to approve many of the services on the list to be performed in other settings. As a result, patients will still visit hospitals to receive these services. However, with the reclassification, patients who have the procedures in hospitals would be billed for the services on an outpatient basis. 

The agency pays hospitals less for services provided to outpatients, so the elimination of the list means CMS can pay less than it has been for the same surgeries at the same hospitals. Most of the time, it also means Medicare beneficiaries will be responsible for a larger portion of the bill, according to the Post.

Patients who are admitted to a hospital usually receive a package of services and are responsible to pay for 20 percent of physicians' charges and Medicare's hospital deductible, which is $1,484 for a stay of up to 60 days this year. 

On the other hand, patients receiving outpatient services typically pay 20 percent of the Medicare-approved rate for each service and 20 percent of physicians' charges, according to the Post

In most cases, each charge cannot exceed the Medicare deductible, but CMS told beneficiaries that "the total copayment for all outpatient services may be more than the inpatient hospital deductible."

Patients who receive care as outpatients at hospitals could also be hit with a separate fee for overhead costs and higher charges for drugs because Medicare prescription drug plans don't pay for routine medications ordered for hospital patients, according to the report.

Editor's note: This article was updated at 12:15 p.m. central March 23. 

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