Equal Pay – Does Government Dictate or Free Market Control?

Published:March 11, 2013

Ambulatory surgical centers reimbursed the same as hospitals for performing the same procedures? Impossible. Absurd. Well, hold on a minute …

The Medicare Payment Advisory Commission (MedPAC), the federal body that advises the U.S. Congress on issues related to Medicare payments, last week discussed equalizing payments between hospital outpatient departments (HOPD) and ASCs for many services commonly provided in ASCs.

ASCs receive on average about 58% of the reimbursement hospital outpatient departments receive for performing the same procedures. The longstanding imbalance in how surgical centers are reimbursed for the same procedures performed in hospitals has been well documented.

Though this news from MedPAC is only a staff proposal at this time, the very prospect that the playing fields would be leveled would be welcome news for the many who’ve long argued that surgical centers should be paid the same as hospitals. Don’t assume, however, that payments would necessarily increase. It’s quite possible that MedPAC would propose capping HOPD rates at ASC levels to encourage appropriate surgical services to migrate from the hospital to the surgery center.

The following criteria would be applied to determine which services would have equal rates between settings:

  • frequently performed in ASCs (more than 50% of the time);
  • infrequently provided with an emergency room visit (less than 10%); and,
  • patient severity no greater in the HOPD than the ASC.

On the surface, it might seem absurd to pay such widely differing amounts for the same surgery based solely on setting. But consider that hospitals incur costs related to standby capacity for emergencies and regulatory requirements. Also, hospital outpatient payments are likely to package the cost of surgery with ancillaries into a single payment. Plus, patients undergoing surgery at hospitals might be sicker than those at surgical centers.

Dan O’Connor