Consolidation in the health care sector is hitting patients in their pocketbooks, and new research finds that a policy fix currently before Congress could save millions for patients and taxpayers.
Large hospital systems have been buying up independent physician’s offices and converting them to hospital outpatient departments. Those facilities can then charge higher hospital prices – tack on an extra facility fee – for services that are safely and regularly provided in a doctor’s office. This means patients are paying more for the same routine services even when they’re seeing the same doctor.
However, the bipartisan Lower Costs, More Transparency Act, which is currently being considered by the House, would be an important step forward to expand site-neutral payments in Medicare. The legislation would require Medicare to pay the same amount for drug administration services provided in off-campus facilities as it pays when the service is provided in a doctor’s office. A new research brief by the Actuarial Research Corporation estimates that if site-neutral payments for drug administration in off-campus facilities had been in place in 2021:
- Total fee-for-service Medicare costs would have been $161 million lower.
- Beneficiary cost sharing would have been $40 million lower.
- Medicare patients receiving level 4 drug administration would have paid $40 less per service, keeping in mind many patients receive multiple drug administration services over a course of treatment.
- Chemotherapy patients would have paid $292 less in cost sharing. And the highest-need chemotherapy patients would have paid more than $1,000 less.
how much the highest-need chemotherapy patients could save on cost sharing under the Lower Costs, More Transparency Act
“These research findings show that the Lower Costs, More Transparency Act would put money back in the pockets of patients with chronic health conditions,” said Mark E. Miller, Arnold Ventures executive vice president of health care. “These savings would provide much-needed help for seniors on a fixed income who disproportionately require this sort of care.”
While the proposed bill is limited to drug administration, those services are frequently used by the highest-need cases involving chronic health conditions. For example, off-campus hospital outpatient departments covered by the bill disproportionately serve patients with cancer, which is not only a life-threatening medical diagnosis but also can be financially devastating. One in four Americans with medical debt who have had cancer have declared bankruptcy or lost their home. Two-thirds have cut spending on food, clothing, and other household spending. Implementing site neutral payments for drug administration would help Americans with cancer afford their life-saving chemotherapy treatments.
The research brief also found:
- 68% of drug administration services are performed in a physician’s office, meaning it is safely provided in a doctor’s office a majority of the time.
- Medicare pays 200 – 300% more when drug administration services are provided in an off-campus hospital outpatient department rather than in a physician office.
Congress needs to go further. The savings from the Lower Costs, More Transparency Act come at a critical time. About half of Americans report difficulty affording health care costs. Four in 10 report delaying or going without medical care in the last year due to cost.
Read the ARC research brief here.
Learn more about site neutral payment reform here.