Some Face Dire Consequences for Delaying Care During Pandemic

Mammogram

Throughout the COVID-19 pandemic, experts have been warning of the dangers of postponed health care services. In January, the American Cancer Society, the National Comprehensive Cancer Network, and 73 other organizations, including many major health care systems, issued a statement stressing the urgency of preventive care. “We urge people across the country to talk with their health care provider to resume regular primary care checkups, recommended cancer screening, and evidence-based cancer treatment (PDF) to lessen the negative impact the pandemic is having on identifying and treating people with cancer,” the groups said.

Essential Coverage

That was sound advice not everyone could follow, as ProPublica’s Duaa Eldeib reported last week in a tragic story about Teresa Ruvalcaba. The 48-year-old single mother of three worked for 22 years at a candy factory on Chicago’s West Side. During the pandemic, disaster struck. “For more than six months, the 48-year-old factory worker had tried to ignore the pain and inflammation in her chest. She was afraid of visiting a doctor during the pandemic, afraid of missing work, afraid of losing her job, her home, her ability to take care of her three children,” Eldeib reported.

“Even though her chest felt as if it was on fire, she kept working. She didn’t want to get COVID-19 at a doctor’s office or the emergency room, and she was so busy she didn’t have much time to think about her symptoms,” Eldeib wrote.

Ruvalcaba’s pandemic fears were typical of patients across the nation, surveys revealed. A 2020 CHCF poll of 2,249 California adults revealed that even when people wanted to see a doctor for an urgent health problem, one-third did not receive care. Nearly half of those surveyed didn’t receive care for their nonurgent health problems.

Nationally, more than one in three people delayed or skipped care because they were worried about exposure to Covid-19, or because their doctor limited services, according to an Urban Institute analysis of a September 2020 survey.

The toll of this disruption in care — the forgone cancer screening, the chest pain that isn’t reported — will devastate some patients and families. Ruvalcaba had to face a diagnosis with a terrible prognosis, inflammatory breast cancer. “If she would have come six months earlier, it could have been just surgery, chemo and done,” Ruvalcaba’s doctor told Eldeib. “Now she’s incurable.”

Doctors expect the delayed care “could cause worsening health conditions, delayed diagnoses and earlier deaths,” Ana Ibarra reported in CalMatters.

“Unfortunately, we know we’re going to see some tragedies related to the delays,” Wiley Fowler, an oncologist at Dignity Health in Sacramento, told Ibarra.

Consequences of Delayed Care

Public health messages early in the pandemic urged people to avoid public places, including doctor’s offices. In April, as Hayley Smith noted in a Los Angeles Times story, the US Centers for Disease Control and Prevention (CDC) and the Centers for Medicare & Medicaid Services “both published guidelines recommending the postponement of elective and nonurgent procedures, including ‘low-risk cancer’ screenings, amid the first wave of the pandemic.”

Patients and doctors listened. Appointments were canceled. “Nonurgent” procedures encompassing a wide array of treatments and operations, including cancer surgeries, were delayed.

Preventive cancer screenings dropped 94% over the first four months of 2020, Eldeib reported. The National Cancer Institute expects to see 10,000 preventable deaths over the next decade because of pandemic-related delays in diagnosis and treatment of breast and colorectal cancer. Screenings for these cancers, which account for about one in six cancer deaths, are routine features of preventive care.

I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.

—Molly Codner, a Southern Californian who received an abnormal Pap smear last summer

In California, cancer deaths have remained roughly the same as prepandemic rates, but that stability is not expected to last. Based on the National Cancer Institute data, Ibarra calculates that an additional 1,200 Californians will die from breast and colon cancer. The National Cancer Institute estimate is conservative “because it only accounts for a six-month delay in care, and people are postponing care longer than that,” Ibarra reported.

Nationally, death rates from cancer are expected to increase in a year or two. Slow-growing cancers will remain treatable despite a delayed diagnosis, Norman Sharpless, MD, director of the National Cancer Institute, told Eldeib. Yet for conditions like Ruvalcaba’s inflammatory breast cancer, delayed care can be disastrous.

Women, People of Color Disproportionately Affected

For women across Southern California, appointments have been delayed, exams canceled, and screenings postponed during the pandemic, Smith reported in the Los Angeles Times. “Some are voluntarily opting out for fear of encountering the virus,” Smith wrote, “while others have had their appointments canceled by health care providers rerouting resources to COVID-19 patients.”

Before Pap smears became part of routine American health care, cervical cancer was one of the deadliest cancers for women. Today, as many as 93% of cervical cancer cases are preventable, according to the CDC, and screenings are a crucial component of preventive care. Yet during the first phase of California’s stay-at-home orders, cervical cancer screenings dropped 80% among the 1.5 million women in Kaiser Permanente’s regional network, Smith wrote.

The effects of the pandemic shutdown extended beyond delayed Pap smears. Women who spoke to Smith said that “mammograms, fertility treatments and even pain prevention procedures have been waylaid by the pandemic.”

Sometimes, obstacles other than the pandemic are continuing to interfere with access to care. One woman had an appointment delayed and then lost her job and her health insurance, Smith reported.

“Molly Codner, 30, has needed a checkup ever since she received an abnormal Pap smear last summer,” Smith wrote, “but like many Southern Californians, the trauma of the last year still weighs heavily on her mind: Nearly a dozen people she knows have had COVID-19.” Codner told Smith that “I know I should get another check soon, but the anxiety of COVID feels like more of a priority than the anxiety of cervical cancer.”

People who face disparities in treatment and care are most likely to be hard hit by pandemic delays. That includes Black people, who were already more likely to die from cancer than any other racial group. Cancer also is the leading cause of death among Latinx people. Breast cancer is the most common cancer diagnosis for Latinx women. Overall, more Americans die of heart disease.

Black adults are more likely than White or Latinx adults to delay or forgo care, according to researchers from the Urban Institute.

Telehealth Solved Access Issues for Some, Not All

Telehealth was a boon for patients during the pandemic year. Yet, as Ibarra notes, “there’s only so much that doctors and nurses can do through a screen.” Dental visits, mammograms, and annual wellness checks were also put on hold by the pandemic.

Unequal access is another challenge for telehealth. The benefits of the telehealth boom were not shared equally, according to a statewide survey conducted last month by the University of Southern California and the California Emerging Technology Fund.

Latinx, Asian, and Black respondents did not use telehealth as often as White respondents. USC researchers attribute these differences to “disparities in income, education and access to any kind of health care.”

Researchers at the Urban Institute report similar findings: “Black and Latinx adults were more likely than White adults to report having wanted a telehealth visit but not receiving one since the pandemic began, and that difficulties getting a telehealth visit were also more common among adults who were in poorer health or had chronic health conditions.”

After controlling for socioeconomic factors and health status, patients with limited English were half as likely to use telehealth compared to fluent English-speaking patients, the Urban Institute said. “Much work remains to ensure all patients have equitable access to remote care during and after the pandemic,” the researchers wrote.

Whether telehealth is conducted by video or phone may be crucial to ensuring access to care. A study of telehealth use at Federally Qualified Health Centers in California in 2020 found that “more primary care visits among health centers in the study occurred via audio-only visits (49%) than in-person (48%) or via video (3%). Audio-only visits comprised more than 90% of all telemedicine visits.”

“For many Californians with low incomes, the ability to connect with a doctor or their care team by phone or video is much more than a convenience,” Chris Perrone, director of CHCF’s Improving Access team, explained on The CHCF Blog. “It’s really the difference between canceling a visit because the barriers are too great or getting the timely care that they or their child needs.”

Pandemic Health Effects Will Outlast COVID-19

Public health efforts might need to focus on two goals at the same time as the US recovers from the pandemic: increasing vaccine uptake to keep COVID-19 in check and proactively managing the fallout from delayed care.

“As we focus on recovery, we have to ensure that we get vaccinated,” Efrain Talamantes, a primary care physician in East Los Angeles, told Ibarra. “But also that we have a concerted effort to manage the chronic diseases that haven’t received the attention required to avoid complications.”

In analyst call, Clover reveals it doesn’t have the customers it said it did during IPO

Why Clover Health Chose a SPAC, Not an IPO, to Go Public | Barron's

When it planned to go public through a SPAC merger, insurance startup Clover Health told investors that it already had 200,000 direct contracting lives under contract for 2021. But in new guidance shared on Monday, the company now plans to end the year just 70,000 to 100,000 covered lives from direct contracting. 

After telling investors that it would more than quadruple its membership base in a year, insurance startup Clover Health is cutting its projections in half.

The insurance startup now plans to end the year with between 70,000 and 100,000 covered lives from direct contracting, a new payment program launched last by the Centers for Medicare and Medicaid (CMS) services last year, according to its most recent earnings report. 

Last year, when Clover announced plans to go public through a merger with a special-purpose acquisition company backed by “SPAC King” Chamath Palihapitiya, the company told investors it already had 200,000 direct contracting lives under contract for 2021, according to a slide deck.

But its projections call into question the veracity of those shared when the company was looking to go public. In fact, Kevin Fischbeck, an analyst with Bank of America, called out the discrepancy when he asked the company about estimates that it would have nearly half-a-million members covered through direct contracting by 2023.

Clover could only manage a feeble response, with CFO Joe Wagner saying it was “too early to say in future years exactly where we’re going to end up.”

It’s not the only big question that Clover faces about its future. After a scathing report from a short-seller earlier this year, the startup confirmed it had received a request for information from the Department of Justice, which it hadn’t disclosed previously. A day later, the company received notice of an investigation from the Securities and Exchange Commission.

When asked about the current status of the investigation, co-founder and CEO Vivek Garipalli said it was the company’s policy not to comment on pending inquiries.

In an unusual move, the company fielded questions from Reddit during the investor call, alongside those from analysts.

Clover is one of 53 companies selected to participate in CMS’ direct contracting programs in 2021. The value-based payment models were created under the previous administration, which would allow the startup to strike contracts with doctors who are caring for patients under the traditional Medicare program and manage their care.

Under the new administration, CMS has stopped taking applications for the new direct contracting models, which are slated to launch next year. It also paused the rollout of an alternative model that would tie payments to the population health and cost outcomes for all residents of a specific location.

In the meantime, most of Clover’s business still comes from its Medicare Advantage plans, where it has 66,300 members, an 18% increase year-over-year. It brought in $200.3 million in revenue in the first quarter, up 21%, but its net loss jumped more than 70% to $48.4 million.

The company also decreased its revenue projections from what it originally told investors last year. The startup said it expects to bring in revenue of $810 million to $830 million by the end of 2021, a decrease from its previous projections of $880 million. A small portion of that, just $20 million to $30 million, would come from direct contracting.

Hospital giants bet big on hospital at home

Mayo Clinic Kaiser Permanente invest in Medically Home

This week Mayo Clinic and Kaiser Permanente announced a $100M joint investment in Boston-based Medically Home, a provider of virtual hospital solutions. Founded in 2016, Medically Home is one of a handful of companies that coordinate with hospitals and doctors to provide in-home clinician visits, round-the-clock communications and monitoring, and access to support services to enable hospital-level care in the home. While interest has surged during the pandemic, the first hospital at home programs launched in the 1990s, and the model has a proven track record of delivering care that is lower cost and clinically equivalent (or better), when compared to a traditional hospital admission. 

A confluence of market forces has driven rapid expansion in the model across the past year. Health systems are increasingly looking to hospital at home to address emerging consumer demand for care outside the hospital, and achieve the longer-term goals of providing flexible, lower-cost acute care capacity. And payers are looking to add hospital at home capabilities to their growing virtual and home-based care platforms to manage acutely ill Medicare Advantage beneficiaries in a lower-cost care setting.

Early adopters estimate that as many as 30 percent of patients admitted to hospitals today could be candidates for treatment at home. The large infusion of funding from Kaiser and Mayo will enable Medically Home to scale across the US, and also provides an endorsement of, and commitment to, the care model from these respected systems, which may help convince physicians who remain skeptical.

Coupled with the Centers for Medicare & Medicaid Services’ waiver program, allowing payment for home-hospital care, this investment should drive a new wave of growth in the model—and will likely make hospital at home a routine part of the care options available to patients.

For one more year, Medicare says there is no Central Jersey, saving hospitals $100M

https://www.app.com/story/news/health/2021/05/01/central-jersey-disappears-medicare-says-saving-nj-hospitals-100-m/4892942001/

Medicare saves hospitals more than $100M by denying Central Jersey

Hospitals in Monmouth, Ocean and Middlesex counties will continue to receive New York City-level reimbursement rates from Medicare for another year, avoiding more than $100 million in potential cuts, New Jersey lawmakers said Friday.

The decision by the U.S. Centers for Medicare and Medicaid Services gives the hospitals a year to convince the Biden administration that for them, at least, there is no such thing as Central Jersey.

CMS released its decision as part of its final rules for fiscal 2022. It delayed a Trump-era proposal to move the hospitals out of the New York-Newark-Jersey City region and into the newly crafted New Brunswick-Lakewood core-based statistical area.

Any Central New Jersey designation usually is met locally with pride and joy, but this move came with a steep price. Hospitals’ Medicare reimbursements are tied in part to their labor costs. And the labor costs in their new region are about 17% lower than their old region.

The cuts in reimbursement rates would have saved money for federal taxpayers, but they also would have hit local hospitals hard. The industry during the pandemic was faced with higher expenses and forced to delay lucrative elective procedures. 

As a result, 41% of New Jersey hospitals were losing money, according to the New Jersey Hospital Association, a trade group.

The group on Friday thanked the state’s congressional delegation for its help.

“NJHA has strongly advocated for the reversal of this ill-advised policy since it was first implemented last year, and this delay in further cuts in critical health care dollars to our state is welcomed news,” Cathy Bennett, the association’s president and chief executive officer, said. 

U.S. Sen. Robert Menendez and U.S. Rep. Bill Pascrell Jr., both Democrats, led the campaign to stop the new classification at least until the 2020 U.S. Census data was released.

In a letter a month ago to U.S. Health and Human Services Secretary Xavier Becerra, the lawmakers said hospitals moved to the new statistical areas would have lost revenue, making it tougher to compete with hospitals in New York and northern New Jersey to attract skilled workers.

“This federal support will benefit patients by allowing our top-notch hospitals to retain and hire the best and the brightest,” Pascrell said in a statement Friday.

Medicare’s proposed payment rule benefits hospitals

https://mailchi.mp/097beec6499c/the-weekly-gist-april-30-2021?e=d1e747d2d8

The Centers for Medicare & Medicaid Services (CMS) released its 2022 Inpatient Prospective Payment System (IPPS) proposed rule this week. Overall, the rule brings good news for hospitals: Medicare reimbursement rates are slated to increase by 2.8 percent, resulting in a $2.5B payment boost to the industry.

In another win, hospitals will no longer be required to disclose their contract terms with Medicare Advantage (MA) insurers. Hospitals had previously been mandated by the 2021 rule to report median, payer-specific, negotiated charges for MA insurers on their Medicare cost reports. Medicare’s goal was to use this data to create a new, market-based, inpatient reimbursement methodology—an effort which has also been tabled, at least for now.

Led by the American Hospital Association, hospitals have been embroiled in lengthy legal challenges over a variety of CMS price transparency requirements, maintaining they are neither beneficial for consumers, nor helpful in lowering healthcare costs. 

It’s too early to tell whether this step back from price transparency, which was a key goal of the Trump administration, signals anything about the Biden administration’s prioritiesit’s possible CMS may just be slowing down the effort in the wake of the pandemic.

Other highlights of the proposed rule include funding 1,000 more residency slots over the next five years, and extending payments for COVID-19 treatments to the end of 2022, as CMS expects COVID patients will need care beyond the duration of public health emergency. The agency also proposed several changes to its readmissions and other value-based purchasing programs, to ensure hospitals aren’t penalized by COVID-related impacts on quality measures.

Comments on the proposed rule are due by June 28th.

House extends moratorium on 2% Medicare sequester cuts through 2021

https://www.healthcarefinancenews.com/news/house-extends-moratorium-2-medicare-sequester-cuts-through-2021

APR 14MORE ON REIMBURSEMENT

House extends moratorium on 2% Medicare sequester cuts through 2021

President Biden is expected to sign the bill into law.

Susan Morse, Managing Editor

(Photo courtesy joe daniel price/Getty Images)

In a vote of 384-38, the House on Tuesday passed a bill that eliminates the 2% cut to Medicare payments until the end of 2021. However, the bill proposes to offset the change by increasing the sequester cuts in 2030.

WHY THIS MATTERS

The cuts were triggered by a federal budget sequestration.

Hospitals, physicians and other providers protested the 2% cuts as coming at a time when they were struggling financially and clinically to handle the COVID-19 pandemic.

The bill also makes several technical changes to the rural health clinic provisions that were included in the Consolidated Appropriations Act. Specifically, the CAA required that the payment rate for RHCs, including provider-based RHCs certified after Dec. 31, 2019, to be capped at $100 per visit, starting from April 1, 2021. 

This rate will increase over time based on the Medicare Economic Index, but will remain well below typical provider-based RHC rates. The bill would correct the Dec. 31, 2019, date to Dec. 31, 2020, and include both Medicare-enrolled RHCs located in a hospital with less than 50 beds and RHCs that have submitted an application for Medicare enrollment as of this date, according to the AHA.

THE LARGER TREND

Last year, Congress paused the 2% Medicare cuts, but they were to resume on April 1.

The Centers for Medicare and Medicaid Services instructed Medicare administrative contractors to hold all claims with dates of service on or after April 1 for a short period until potential legislation was enacted.

In March, the House passed the bill to delay the cuts, and the Senate approved it later that month, but with an amendment to delay through December 31 and ensure that the cost of the delay is paid for. 

PROVIDER REACTION

Providers have reacted positively to the news.

American Hospital Association president and CEO Rick Pollack said, “Even though our country is making great progress by vaccinating millions of people a day, it is clear that this pandemic is far from over and that there is an urgent need to keep hospitals, health systems and our heroic caregivers strong.”

American Medical Association president Dr. Susan R. Bailey said, “The Senate and House, Democrats and Republicans, have overwhelmingly acknowledged that cutting Medicare payments during a pandemic is ill-conceived policy. Physician practices are already distressed, and arbitrary 2% across-the-board Medicare cuts would have been devastating.”

America’s Essential Hospitals SVP of policy and advocacy Beth Feldpush said, “Extending the moratorium through the end of this year provides much-needed relief for essential hospitals, which continue to face heavy financial pressure from their frontline response to COVID-19. The sequester would weaken the ability of our hospitals to care for the communities of color that have suffered disproportionately from the pandemic.”

CMS proposes 2% pay bump for rehab, psychiatric facilities

The Biden administration has proposed giving rehabilitation facilities a 2.2% payment increase for the 2022 federal fiscal year that starts in October.

The payment rate outlined in a proposed rule released late Thursday is slightly below the 2.4% that CMS gave rehab facilities for the 2021 federal fiscal year. CMS proposed in a separate rule a 2.3% increase for payments to inpatient psychiatric facilities as well.

Both payment rules also give updates on outlier payments, which help facilities deal with the costs of treating extremely costly beneficiaries.

For rehab facilities, CMS proposes to maintain outlier payments to 3% of the total facility payments for fiscal 2022, which begins on Oct. 1.

CMS also aims to keep the outlier payments for psychiatric facilities at 2% for 2022.

A major change for both rules is a new addition aimed to track coverage of COVID-19 vaccinations among healthcare personnel.

CMS also wants to add vaccination coverage among healthcare personnel as a measure to the quality reporting program for psychiatric facilities. The program outlines quality metrics that facilities need to meet.

“This measure would be reported using the COVID-19 modules on the [Centers for Disease Control and Prevention’s] National Healthcare Safety Network web portal,” a fact sheet on the psychiatric payment rule said.

The agency also is proposing a similar measure for rehab facilities to report any vaccinations of healthcare personnel for COVID-19.

“This proposed measure is designed to assess whether [IRFs] are taking steps to limit the spread of COVID-19 among their [healthcare personnel], reduce the risk of transmission within their facilities and help sustain the ability of [rehabilitation facilities] to continue serving their communities through the public health emergency and beyond,” a fact sheet on the rehab rule said.

In the rehab facility rule, CMS also asked for comments on how to improve health equity for all patients.

CMS is seeking comments on whether to add more measures that address patient equity in standardized patient assessment data elements, which must be collected by facilities after post-acute care.

The agency also wants comments on ways to attain health equity for psychiatric facilities as well.

“CMS is committed to addressing the significant and persistent inequities in health outcomes in the United States through improving data collection to better measure and analyze disparities across programs and policies,” the agency said in a fact sheet.

Comments for both rules are due by June 7.

CMS: Many value-based payment models under review after several already delayed, withdrawn

Many of the Center for Medicare and Medicaid Innovation’s value-based care payment models are undergoing a review, according to the Centers for Medicare & Medicaid Services (CMS).

The statement to Fierce Healthcare comes after CMS quietly updated and delayed several payment models, including pulling a controversial model that ties payments to geographic health outcomes.

“CMS remains steadfast in its commitment to transforming the healthcare system into one that rewards value and care coordination,” the agency said. “The CMS Innovation Center and its alternative payment models help execute that commitment.”

The agency added it hopes to design models that support the adoption of value-based care.

“Many of the CMS Innovation Center’s models are currently under review, and we look forward to providing updates when available,” CMS said.

CMS did not return a request for comment on how many models are under review or which ones are being scrutinized.

The statement comes after CMS has quietly updated the webpages for two payment models to note major changes. The agency made an update to the webpage for the Geographic Direct Contracting Model that said it was currently under review.

A request for applications for the model was posted Jan. 1, and the first performance period was expected to start in 2022 and run through 2024.

The model was intended to improve quality and lower costs for Medicare beneficiaries across a region, and providers in that region can enter into value-based payment arrangements.

Providers can build integrated relationships and invest in population health to better coordinate care, the agency said when the model was released last December.

But the model has gotten pushback from some provider groups. The National Association of Accountable Care Organizations has criticized the model, saying it could confuse patients who may not know whether they are participating in a direct contracting entity.

CMS also quietly pushed back the first performance period for the Kidney Care Choices model, which aims to improve the quality of dialysis care.

The model had an implementation period for 2020 that enabled participants to create the necessary infrastructure for the model, which aims to bundle care from treatment of chronic kidney disease all the way through kidney transplantation and post-transplant care.

Starting Jan. 1, 2021, providers were supposed to start taking on financial accountability including capitated payments.

But CMS posted an update on the webpage for the model, saying the start of the financial performance period will now be Jan. 1, 2022. The agency did not give a reason for the delay.

CMS’ review comes on the heels of a separate analysis conducted under the Trump administration on the value generated by the payment models. The analysis found bundled payment models that gave providers an amount of money for an entire episode of care had mixed results, while global budget models, which give providers a fixed amount for the total number of services given over a certain period of time, were given a more positive review.

It remains unclear whether that analysis is playing any role into the review undertaken by the Biden administration.

Rural MA Enrollees Have Substantial Rates Of Switching To Traditional Medicare

Brent Langellier (@blangellier) | Twitter

In their recent Health Affairs paper, Sungchul Park and coauthors examine rates of switching from Medicare Advantage (MA) to traditional Medicare by patient characteristics. MA plans are the private insurance alternative to traditional fee-for-service Medicare overseen by the Centers for Medicare and Medicaid Services. While enrollment in MA has doubled over the past decade, Park and coauthors find that the needs of certain enrollees are not being met by MA plans.

Park and coauthors report that rural enrollees switch from MA to traditional Medicare at an adjusted annual rate of 10.5 percent, significantly higher than metropolitan residents, who switch at a rate of 5.0 percent

This phenomenon was more pronounced among those who required the use of costly services such as facility stays or hospitalizations, those who had poor self-reported health, and individuals who reported lower satisfaction with their access to care.

A large pay gap exists between independent and hospital-employed doctors

https://www.healthcarefinancenews.com/news/large-pay-gap-exists-between-independent-and-hospital-employed-doctors

Physician practices with more female doctors have smallest gender pay gaps  | Healthcare Finance News

The payment gap was $63,000 for primary care doctors, $178,000 for medical specialists and $150,000 for surgeons.

Doctors who work for hospital outpatient facilities get much higher payments for their services from Medicare than doctors who practice independently, according to a new study.

The research, based on Medicare claims data from 2010-2016, found that the program’s payments for doctors’ work were, on average, $114,000 higher per doctor per year when billed by a hospital than when billed by a doctor’s independent practice.

Published in Health Services Research, results found that the amount Medicare would pay for outpatient care at doctors’ offices would have been 80% higher if the services had been billed by a hospital outpatient facility. In 2010, the average set of Medicare services independent doctors performed annually for patients was worth $141,000, but charging for the same group of services would have grossed $240,000 if a hospital outpatient facility billed for them.

The payment difference varied by specialty. The payment gap was $63,000 for primary care doctors, $178,000 for medical specialists and $150,000 for surgeons.

Moreover, the study found the differential grew over time. From 2010-2016, the average difference between hospital outpatient and private practice payments grew from 80% higher to 99% higher.

WHAT’S THE IMPACT?

The main reason for these large payment differences: facility fees. For each service a doctor performs, Medicare pays hospital outpatient facilities both a fee for the doctor’s work and a fee for the facility, whereas private practices receive only doctor fees.

Although the doctor fees are a bit lower in hospital outpatient locations, the facility fees more than make up for the difference, and the total payments to hospitals are reflected in higher doctor salaries and bonuses.

The Centers for Medicare and Medicaid Services has been trying to correct this imbalance for years with policies that would pay both sites the same amount. In 2015, the Bipartisan Budget Act authorized CMS to impose site-neutral payments but grandfathered existing hospital outpatient facilities. Later, CMS expanded the equal payments to other hospital outpatient facilities, but the American Hospital Association sued to overturn this regulation.

In July 2020, the Appeals Court sided with HHS. The American Hospital Association and the Association of American Medical Colleges said they would seek to have the ruling overturned.

The groups filed for a petition for a rehearing, which was denied.

In February, the Supreme Court acknowledged the AHA’s request for judicial review. The government response was due by March 15, but on March 3, Norris Cochran, acting Secretary of Health and Human Service asked for an extension until April 14 to file the government’s response, according to court documents.

The significant difference between Medicare payments to hospital outpatient facilities and independent offices has encouraged hospitals and health systems to buy doctor practices, but the study noted that good research about this has been lacking up to now.

It found little evidence of a direct relationship linking the size of the pay gap between hospital outpatient facilities and independent offices, with hospitals buying doctor practices, in particular medical specialties. But it did find that doctors whose services had larger pay gaps were more likely to have a hospital buy their practice than doctors whose services had a smaller pay gap.

In an accompanying commentary, Dr. Michael Chernew of Harvard Medical School in Boston said the study had found that the ability of hospitals and employed doctors to earn more from Medicare had resulted in a greater amount of integration.

THE LARGER TREND

However, the authors pointed out that the Medicare payment difference is only one of many factors that have contributed to the huge increase in the share of doctors employed at hospitals over the past decade. For example, they found a higher probability of a doctor going to work for a hospital in highly concentrated hospital markets and rural areas.

Other studies, they said, have established that some health systems use integration with doctors’ offices as a bargaining chip with commercial health insurance plans. Also, some doctors may find that independent practice is less viable than it used to be for a variety of reasons.

It has also been suggested that many younger doctors prefer hospital employment to private practice because they crave economic security and work-life balance.

It’s been estimated that even the payments to hospitals vs. doctors could save CMS $11 billion over 10 years. But the paper illustrates that the payment disparities can also create broader market distortions because consolidation of hospitals and doctors’ offices has been shown to lead to higher prices overall.