DCMedical News: Tuesday, June 14, 2022
DCMedical News is published every day both the House and the Senate are scheduled to be in session.
THE BIG STORY Tuesday, June 14, 2022
OIG on Payments for “Provider-Based” Physician Services, 40% Higher Than Independent Physician Services
The Office of the Inspector General (OIG) of HHS has published a new study (one page summary here, complete report here) on the cost of services performed by physicians whose practices have been acquired by hospitals (known as “provider-based” services).
“Three Medicare Payment Advisory Commission reports to Congress and a previous OIG report found that hospitals were increasingly purchasing physician practices and operating them as provider-based facilities because of their higher payment rates, and that Medicare payments and beneficiary coinsurance payments were substantially higher for services in provider-based facilities than they were for the same services in freestanding facilities.”
“Our objective was to identify the potential cost savings to both the Medicare program and its beneficiaries by comparing their payments made for certain evaluation and management (E&M) services performed at provider-based facilities in calendar years 2010 through 2017 in eight selected States with what Medicare and beneficiaries would have paid for the same type of services performed at freestanding facilities in the same eight States.”
“Our audit covered $3.95 billion that Medicare and beneficiaries paid for E&M services they received at provider-based facilities in the selected States. We developed a database of payments made to physicians and provider-based facilities based on outpatient and Physician Fee Schedule (PFS) claims for E&M services performed in these facilities. We then compared those payments to what would have been paid at freestanding facilities.”
“If the physicians in the selected States had been paid at the freestanding PFS nonfacility rate and hospitals paid nothing under the Outpatient Prospective Payment System for our audit period, the Medicare program could have realized cost savings of $1.3 billion and its beneficiaries could have realized cost savings of $334 million, for combined savings totaling over $1.6 billion. In addition, beneficiaries would have been required to make only one coinsurance payment rather than two (as they are currently required to do) and the cost-sharing would generally be lower because it would be based only on the freestanding facility rate.”
Historically, hospitals have been able to acquire physician practices by offering higher compensation than would have been available to the doctor in his or her own practice, using a portion of the higher reimbursement from the “provider based” status as a source for that incremental income (see e.g. here and here).
DOCTORS, NURSES AND OTHER HEALTH PROFESSIONALS
More on Hospital-Controlled Physician Practices
Political and organizational obstacles to patients seeking independent medical advice from specialists took a prominent place at the AMA’s annual meeting in Chicago. One of the top five resolutions, according to Modern Healthcare (here), is that “The AMA supports granting credentialed independent specialty physicians equal access to inpatient consultations. Hospital-employed specialists have historically been prioritized over outside doctors through narrow referral networks that limit access and equity.”
HCA Grows Some of Their Own Nurses
Becker’s reports (here) that “Nashville, Tenn.-based HCA Healthcare plans to open its eighth nursing education campus in partnership with Galen College of Nursing . . . Galen has opened seven other campuses in Florida, Tennessee, South Carolina, Virginia and Texas since joining HCA.”
Hospital-based schools of nursing were common at the time of the passage of Medicare. The then-new government program declined to pay hospitals for the teaching expenses of the colleges. The AHA, led by Hartford Hospital (and AHA) President T. Stewart Hamilton, M.D., decided that, absent such support, hospitals could not afford the cost of teaching nurses, and almost all of the schools closed, with nursing education moving to academic settings (timeline here).
HOSPITALS AND OTHER HEALTH CARE FACILITIES
Hospital Cost Reduction Programs? Not a Good Bet
A survey published in Healthcare Financial Management (here) found that “Nearly 89% of healthcare organizations have some type of cost reduction program in place; however, only 6% say their program is extremely effective, according to a recent HFMA poll. This trend was identified in a 2022 survey of 185 healthcare finance, accounting and revenue cycle executives . . . Other findings included: The majority (85%) of respondents say their cost reduction process or program is executive sponsored.”
Patient Safety and Diagnostic Error
An opinion piece in JAMA (here) focuses on diagnostic error and the impact of such error on patient safety. “Diagnostic safety failures are common in medical care but often have not been a focus for organizational leaders responsible for quality and safety processes.”
Dr. Nirav Shah, former New York State Health Commissioner, and co-authors, find (looking at cancer screening in primary care; the ED; pulmonary embolism; sepsis; telehealth, as examples) that “Discussions about diagnosis have long focused on such concerns as sensitivity and specificity, cost, and the role of new technology. Relative to these issues, matters related to patient safety in diagnosis have received less attention, even though failures in the diagnostic process harm many patients . . . errors in the use and performance of diagnostic tests can harm patients, both from delayed and missed diagnoses and from the preventable harm from unnecessary diagnostic tests.”
MEDICARE, MEDICAID AND COMMERCIAL HEALTH INSURANCE
Medicare and Social Security Trust Funds Live Another Two Years, in Peril
The reports of Trustees for the Medicare program (here) and the Social Security Trust Fund show (according to The Washington Post, here) that “The financial outlook for the Medicare and Social Security programs slightly improved this year due to a stronger and faster economic recovery than predicted in 2021, but both programs still face future insolvency.”
Reports the paper, “A key Medicare trust fund that covers many hospital bills for seniors and those with disabilities will be unable to pay full benefits starting in 2028, two years later than reported last year. The Social Security Trust Fund, which covers benefits to retirees, workers’ survivors and people with disabilities, will be able to pay full benefits until 2035 . . . But the trustees warned about the future of the huge entitlement programs, expressing concern that both face long-term financing shortfalls.”
According to the Trustees, “Social Security and Medicare both face long-term financing shortfalls under currently scheduled benefits and financing. Costs of both programs will grow faster than gross domestic product (GDP) through the mid-2030s primarily due to the rapid aging of the U.S. population. Medicare costs will continue to grow faster than GDP through the late 2070s due to projected increases in the volume and intensity of services provided.”
The six Trustees are four government officials and two public members; the public member slots have both been vacant since 2015.
READINGS & REFERENCES
Select Coronavirus Public Health Resources and References may be found here.
The JAMA Patient Page explains the current status of oral anti-viral medications for COVID-19, here.
2022 CQ Congressional Calendar here.
PUBLICATION SCHEDULE FOR DCMEDICAL NEWS
June 15, 16, 21, 22, 23, 24
July 12, 13, 14, 15, 18, 19, 20, 21, 26, 27, 28, 29
August, Congress adjourned, no editions of DCMN
Notes to Fred Hyde, MD, JD, MBA, news@dcmedicalnews.org