"The cuts continue to hammer the same types of hospitals over and over – teaching hospitals, safety net hospitals, the public hospitals, and rural hospitals," Kim continued. "And we're having a hard time seeing how those discussions fit with the 1% update recommendations that are going to be made in the March report."
MedPAC is giving the idea serious consideration because of what Hackbarth called the "rapid growth in hospital employment of physicians, which has contributed to the migration of ambulatory services from free-standing offices to outpatient departments," especially in cardiology.
Certain procedures, such as a level II electrocardiogram without contrast, are performed in a hospital outpatient department, are reimbursed by Medicare 67% more than when they are performed in a physician's office, even though the service is exactly the same.
If Medicare cuts the rate it pays for that service in a hospital outpatient department to what it pays for it in a physician's office, that would mean a $275 million loss to hospital revenue each year, according to an analysis by Linda Fishman, senior vice president for the AHA, in a Jan. 4 letter to MedPAC.
"This single (procedure) represents a quarter of the overall payment impact," her letter said.
Likewise, a level III nerve injection procedure is now reimbursed at a rate that is 32% more when it's done in a hospital outpatient department than when it's done in a physician's office, and if that were cut, it would mean a $108 million loss of payments to hospitals.
MedPAC has been concerned that payment policies may be influencing physician behavior in that doctors are gravitating to settings where their services are paid at higher rates. Hackbarth noted that physicians employed by hospitals increased 55% from 2003 to 2011, "And according to the American College of Cardiology, the share of cardiologists employed by hospitals grew from 11% to 35% from 2007 to 2012."