For years large hospitals have been buying up independent physician practices, changing the name on the door and charging more for the same services. Medicare pays more for care in many hospital-owned clinics than in an independent physician’s office, and that gap continues to grow, further incentivizing care to shift to higher cost settings.
A new brief from Actuarial Research Corporation quantifies the magnitude of the payment differential between hospital-owned clinics and physician offices and how quickly it is growing. These concerning trends emphasize the urgent need for Congress to act to protect patients from higher costs for routine care. Without Congressional action on site-neutral payments, the Medicare payment differential between hospital outpatient departments (HOPDs) and a physician’s office will continue to rapidly widen, creating stronger financial incentives to consolidate. Patients already pay 2 to 4x more for the same routine care at a hospital outpatient department than a physician’s office, and that difference is growing at about 4% a year, nearly double the rate of medical inflation.
