News & Updates

June 16, 2022

MedPAC: Payment Differences Across Settings Encourage Consolidation, Resulting in Care Shifting Toward the Most Expensive Setting

On June 15, the Medicare Advisory Payment Committee (MedPAC) issued its annual June Report to Congress. This report featured a chapter on aligning fee-for-service payment across ambulatory settings. According to MedPAC, “payment differences across settings encourage arrangements among providers—such as the consolidation of physician practices with hospitals—that result in care being billed at the payment rates of the provider with the highest rates, increasing program and beneficiary spending without meaningful changes in patient care.”

Additional findings from the June 2022 MedPAC report:

  • The effects of the site neutral payment policies in BBA2015 and the CY2019 OPPS have been limited. Only 0.8% of total OPPS spending is for services provided in off-campus PBDs covered by BBA2015 requirements. In addition, only one-third of the office visits provided in HOPDs occur in off-campus PBDs.
  • In 2022, Medicare pays 141% more in an HOPD than in a freestanding office for the first hour of chemotherapy infusion (counting both the professional fee and facility fee).
  • In 2022, Medicare also pays 105% more in on-campus HOPDs than in freestanding offices for a midlevel office visit.
  • As hospitals acquire more physician practices and more physicians become employed by hospitals, large shifts in billing from the PFS to the OPPS have occurred for four service categories: chemotherapy administration, echocardiography, cardiac imaging, and office visits.
  • The HOPD share of office visits provided to FFS beneficiaries grew from 9.6% in 2012 to 13.1% in 2019, and the HOPD share of chemotherapy administration services rose from 35.2% to 50.9%.
  • The Commission estimates that the shift of office visits from the office setting to the HOPD setting from 2015 through 2019 increased Medicare program spending by $615 million and beneficiary cost sharing by $150 million

In this chapter, MedPAC discusses a method  to more closely align payment rates with those in the PFS setting and identifies 57 APCs for potential payment alignment (primarily office visits, X-rays, minor procedures, and drug injections). It also identifies 11 APCs to align OPPS rates with those paid in the ASC setting. The Commission estimates that if changes in payments resulting from aligning payment rates as discussed in this chapter were taken as program savings, Medicare program spending in 2019 would have declined by $6.6 billion and beneficiary cost-sharing obligations by $1.7 billion.

To read the full report: MedPAC June 2022 Report to Congress.