In December last year, the Government Accountability Office came out with findings that physician practices had accelerated in recent years along with physician employment. The analysis they brought showed that from 2007 through 2013, the amount of vertically consolidated hospitals went up 21 percent, bringing the number up to 1,707 organizations. The same period saw the number of vertically integrated physicians to almost double and reach 182,000.
Many sources in the industry attribute this trend to the risen Medicare payment rates for hospital outpatient department services, compared to the ones performed in physician offices. In the end, GAO concluded that the higher number and share of the evaluation, management visits, and outpatient department, was seen for counties with more political integration. The mean share of E/M visits and outpatient departments in counties at the other end of the line was 4.1 percent in 2013; while for that with more vertical integration, this was 14.1 percent.
Regarding measures to address Federal inefficiencies, GAO recommended in their annual report that CMS equalize payment rates for services without basing them on the setting of the service. The report explicitly describes services that are provided in physician offices, as being reimbursed less. Similar facilities under hospital management are considered outpatient department and are able to bill at a higher reimbursement rate.
GAO found that around $40 billion was spent by Medicare on HOPD in 2013, with the amount growing steadily. The study also found that for a mid-level E/M visit, the average payment was about $51 more than what could be reimbursed by the same services performed in a traditional office setting. The higher rates are a result growing consolidation in healthcare.
An estimate in the report says that if CMS works to equalize payments among all settings, then it would be possible for the government to save around $1-2 billion a year. However, chances are slim the agency will take up these recommendations without congressional action proceeding it.
As for Congress, there is no guarantee that it will make clear attempts to pass the legislation with the requirement of such a policy. Kevin Brady, who serves as the House Ways and Means Committee Chairman, has voiced hopes of bringing legislation that can address site neutral payment for HOPDs, although he did not provide any details on what such legislation would accomplish.