Performance Improvement 2011-2012. What Explains Medicare Payment Differences for the Same Medical Treatment by Outpatient Medical Setting and are they Justified?


This project provided recommendations on how to make payment incentives more uniform across different outpatient settings to discourage shifting the provision of medical procedures to settings with higher payment rates. Researchers looked at a small number of procedures performed in multiple settings in order to first derive a methodology to compare prices across settings for similar procedures and ultimately to develop policy recommendations. The most important methodological development of the project was to develop a methodology to compare prices across physician and hospital outpatient department settings for similar procedures because ancillary services associated with the procedures are bundled differently in these settings.

Payment differentials between settings are large and variable among procedures to an extent that do not appear justified by factors the researchers examined. Policy recommendations to reduce inconsistent payment for the same procedures in different ambulatory care settings included; eliminate duplicate overhead payment when a physician provides services in an Ambulatory Service Center, cap certain hospital outpatient based non-surgical procedures at the physician fee schedule rate, extend bundling for routine pre-procedural tests and other general proposals aimed to reduce or eliminate inappropriate Medicare payments across multiple ambulatory settings.

Report Title: Policy Options for Addressing Medicare Payment Differentials across Ambulatory Care Settings
Agency Sponsor: OASPE-OHP, Office of Health Policy
Federal Contact: George Greenberg, 202-260-6217
Performer: Rand Corporation
Record ID: 9626 (Report issued June 1, 2011)

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"PerformanceImprovement2011-2012.pdf" (pdf, 701.44Kb)

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