When hospitals buy physician groups, Medicare spending increases, study finds

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Medicare spending on lab and imaging services increases after a physician practice becomes part of a hospital or health system, according to new research published May 3 in Health Affairs.

The study, led by researchers at the Rand Corp., Boston University and Baylor University in Waco, Texas, looked at changes in site of care and Medicare reimbursement for 10 lab and imaging services. The researchers used a 100 percent sample of Medicare fee-for-service claims data that spanned 2013 to 2016.

The study found after a primary care group was acquired by a hospital or health system, the number of hospital-based imaging tests for 1,000 Medicare patients performed a month grew by 26.3 per 1,000. At the same time, the number of nonhospital imaging tests fell by 24.8 per 1,000, according to the study. The change was even more pronounced for hospital-based labs. Those increased by 44.5 per 1,000 post-integration, with nonhospital labs decreasing by 36 per 1,000.

These changes generated an increase of $40.2 million in Medicare spending for imaging tests and $32.9 million for labs, the authors said. 

"Our findings admittedly do not rule out potential positive impacts of vertical integration along other clinical dimensions, but they do highlight an example of where long-standing reimbursement practices likely require review and refinement in light of evolutions within the contemporary U.S. healthcare marketplace," the authors concluded.

Read the full study here

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