Cuts proposed for hospital outpatient surgery rates

HHS' Office of the Inspector General recommended last week that the CMS seek congressional approval to pay the same rates for surgeries in hospital outpatient departments that Medicare pays for procedures done by freestanding ambulatory surgery centers. ASCs typically are paid 30% to 50% less than hospital outpatient-surgery departments. The change would only apply to patients at low risk for complications.

According to federal data, 68% of hospital patients ages 65 and older fall into categories of “low risk” or “no risk.”

The recommendation will face staunch opposition from hospitals. “Medicare already pays substantially less than what it costs to provide outpatient services in hospitals, and this would make that much worse,” said Joanna Hiatt Kim, vice president for payment policy at the American Hospital Association.

In 2012, the average operating margin for Medicare outpatient surgery was a negative 11%, according to a report last month from the Medicare Payment Advisory Commission, which also recommends trimming rates for hospital outpatient operations.

If the OIG recommendation is carried out, Medicare could save as much as $15 billion over six years, while beneficiaries could save $2 billion to $4 billion in copayments, the office estimated.

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