Recently I posted about deceptive techniques hospitals are using to enhance fees. Today I am writing about an article by Dr. Marty Makary, a professor at the Johns Hopkins School of Medicine and a frequent critic of the many failings of our health care delivery system. A recent column by Dr. Makary in the Washington Post discusses how Medicare’s payment system has unintentionally played a role in incentivizing hospitals to create these money-making schemes.
The starting point here is the fact that hospitals charge a great deal more for a procedure performed inside the walls of the hospital than the charge for the identical procedure performed in almost any other setting. The simple answer for a consumer seeking to get good treatment at a reasonable price is to avoid having the procedure performed inside a hospital. Not so fast, my friend. Hospitals know this and have begun to stretch the definition of what it means to be a hospital. You are no longer safe from excessive charges just by avoiding the hospital. Hospitals now consider the offices of doctors whose practices they have purchased to be part of the hospital, no matter how far away that office might be, and to charge accordingly. Part of this is due to the way in which Medicare has structured its payments.
Medicare is the elephant in the room. Like the elephant, it is huge. Its senior members are many and consume a large amount of the health care delivered in this country. In 2022, almost 25% of all health care spending was made by Medicare. When Medicare makes a rule about payments, it affects nearly everyone.
As Dr. Makary notes, Medicare draws a distinction between procedures performed in the hospital and those performed elsewhere. It pays substantially more for the same procedure, if it is performed in the hospital, than it does if the procedure is performed anywhere else. For example, Medicare will pay a doctor $190 for an allergy skin test performed in the doctor’s office. If the same test is performed on the same patient in a hospital, Medicare will pay almost $675. Doctors and hospitals have discovered that doctors can make a lot more money (at the expense of the taxpayers and health insurers) if they do the same procedures in a hospital setting. Doctors have therefore been selling their practices to hospital chains. The doctors treat their patients as before, the hospital handles the billing, which it bills at the higher hospital rate, and the doctors and the hospital split the newly increased income. A win-win for everyone except the patient and whoever has to cover the patient’s bill.
Medicare’s payment rule has other pernicious effects. By encouraging doctors to sell their practices to hospitals, it clearly reduces competition, which inevitably leads to higher prices. Doctors no longer compete with hospitals by offering the same service at a lower price. Doctors who are employed by hospitals send their patients, who need inpatient care, to the hospital that employs them. The patient who wants to keep their doctor has little or no say in the matter.
While there may have been a good reason at the time the rule was adopted for Medicare’s decision to pay differently for different locations, that reason is no longer valid. The House of Representatives has passed “site neutral” legislation to require Medicare to pay the same amount for the same procedure, no matter where it is performed. The hospitals have pushed back hard in the Senate and the Senate has not taken up the House bill. The hospitals are not going to let this golden goose go quietly into the night.
It is time for a change. Encourage your Congressperson and your Senators to vote for site neutral legislation. It is good for everyone except the hospital lobby.
The post Hospitals Are At It Again first appeared on Sandweg & Ager PC.