Congress Can't Cut Medicare Hospital Outpatient Payments

Cutting Medicare payment for hospital facility fees could threaten vital patient care.

Woman waiting for the doctor
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Rich Umbdenstock is president and CEO of the American Hospital Association.

America's hospitals are open 24 hours a day, seven days a week, 365 days a year to provide for the healthcare needs of their communities. Hospitals provide emergency services around-the-clock as well as emergency back-up for other settings of care; disaster preparedness; and a wide range of personnel and equipment.

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However, these "stand-by capacity" services make hospital-level care more expensive—and these essential public services are not explicitly funded by Medicare, Medicaid, or private insurance. To provide these vital services, facility fees and other costs are spread across all hospital services, including outpatient care.

Hospitals face increasing challenges in fulfilling this complex role, and some members of Congress have proposed cuts to Medicare hospital payments for outpatient services. Hospitals already lose money treating Medicare patients in hospital outpatient departments, receiving only 89 cents for every dollar spent on their care.

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Additional cuts would significantly reduce payments for certain non-emergency outpatient services, making them equivalent to the rate paid to physicians providing the same services in their offices. This does not make sense since hospitals must also bear myriad other costs not borne by doctors' offices, like emergency care, surgical, nursing, and emergency transportation.

Hospitals have far greater responsibilities and must meet more stringent requirements than physicians' offices. In addition to their "stand-by" role, they represent the only place that those who cannot afford lifesaving healthcare, especially the elderly and poor, can turn to in times of need.

More and more, physicians are aligning themselves with hospitals as they are finding it challenging to deal with the complexities of government regulations and inadequate payments. (Hospitals are subject to regulations from nearly a dozen different federal agencies, not to mention other multi-state ones.)

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Cuts to Medicare reimbursements would be particularly detrimental to critical access, safety net and teaching hospitals. These facilities provide coordinated care to low-income, vulnerable, and chronically ill patients, many of whom are medically complex and have multiple comorbid conditions, such as diabetes or heart disease.

Frequently, there are no other facilities in the community that can provide these essential services and manage the care of this extremely complex patient base; in fact, many private practice physicians refer such patients to hospital outpatient departments for exactly that reason.

In addition, free-standing physicians' practices often refer more complex patients to hospital-based clinics for safety reasons as hospitals are better-equipped to handle complications and emergencies. Cuts of the magnitude being debated in Congress would make it difficult for hospitals to continue supporting existing outpatient clinics or to create new ones to support the growing needs of these vulnerable populations. Yet, these facilities often serve as the only access point for care in urban and rural areas.

America's hospitals are committed to ensuring that patients will be able to obtain the care they need at the right time, in the right setting. The services provided by hospitals are an essential component of our nation's health and public safety infrastructure. Cutting payment for hospital facility fees could threaten vital patient care.