OIG: Medicare Should Reduce HOPD Surgery Payments to ASC Rates

If Medicare lowered its reimbursement rates to hospital outpatient departments to what it pays ambulatory surgery centers, the program and beneficiaries could save tens of billions of dollars, according to a report from the HHS Office of Inspector General.

Medicare reimbursement for HOPDs and ASCs has been hotly contested from different sides of the healthcare industry for years. The Medicare Payment Advisory Commission has consistently called for site-neutral Medicare payments, citing the fact Medicare paid HOPDs 78 percent more on average than ASCs for the same procedure in 2013. A report from consulting firm Alvarez & Marsal has even said the higher payments to HOPDs are "not sustainable."

That has led some within the ASC industry to call for higher Medicare pay. However, hospitals have argued the increased reimbursements are justified because they are needed to subsidize a hospital's less profitable, but necessary, service lines like emergency departments and trauma care.

The OIG's report supports MedPAC's view and recommends CMS reduce hospital outpatient prospective payment system rates for ASC-approved procedures to ASC levels for low-risk patients. The OIG said such a measure could save Medicare as much as $15 billion from 2012 through 2017 in expenses, and it would also save beneficiaries between $2 billion and $4 billion in copays and coinsurance charges.

Despite the OIG's case, CMS Administrator Marilyn Tavenner disagreed with the recommendations, saying a change of that scope would require legislative approval. She also said most ASC payment rates are based on hospital outpatient rates, and therefore paying hospitals based on ASC rates would be challenging.

More Articles on Medicare and Outpatient Rates:
OIG: Incorrect Clinic Claims Rampant at Hospitals
HOPD vs. Physician Office: A Case Study in the Payment Gap
5 Observations on Hospital-ASC Joint Ventures

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