Outpatient Hospital Treatment Costs Significantly Higher Than Other Visits

The Blue Cross Blue Shield Association (BCBSA) hopes to strengthen its campaign for site-neutral payment reform after an issue brief released on September 14.

The issue brief details how much more certain routine healthcare services for commercially insured members cost in outpatient departments than they do in doctors' offices or ambulatory surgery centers.

According to the issue brief, the review of national Blue Cross Blue Shield data revealed that the allowable costs for typical outpatient services were consistently higher in the HOPD environment than those provided in an ASC or office site.

The senior vice president of policy and advocacy at BCBSA, David Merritt, says permitted costs increased more quickly in the HOPD environment for all treatments analyzed except clinic visits. He added that reducing the cost of treatment is a simple sense, regardless of the location.

Our analysis shows site-neutral legislation could save our patients, businesses and taxpayers nearly $500 billion over 10 years. We look forward to continuing our work with Congress to protect patients from these higher costs.

Merritt

Researchers from BCBSA examined office visit data from 2014 to 2022 and PPO commercial claims data for about 133 million members from 2017 to 2022. They reviewed six procedures: mammography, colonoscopy, ear tympanostomy, clinic visits, and cataract surgery.

Over six years, HOPDs had quicker growth in allowed costs than doctors' offices and ASCs for all treatments except for clinic visits. Mammograms, for instance, are 32% more expensive at an outpatient hospital than in a doctor's office. In HOPDs vs ASCs, diagnostic colonoscopies are 58% more expensive.

Debriefing the issue brief

In the issue brief, their findings indicate that employers, employees, and patients would all see significant cost savings from decreased premiums and out-of-pocket expenses if commercial payers embraced site-neutral payments across settings.

Researchers acknowledged that they were baffled about why this occurred, although they listed numerous potential explanations. They list some of them and the financial effects of COVID-19 on providers and insurers.

They also include market dynamics brought on by physician and hospital mergers, hospitals passing along the higher care costs regardless of place, and variations in sickness severity between settings. Future research will examine these pricing discrepancies' underlying causes and other issues.

The American Hospital Association (AHA), concerned that BCBSA intends to move site-neutral payment reform incorrectly, will conduct some upcoming studies. The AHA noted that hospitals had higher overhead costs and care for sicker, more complicated patients.

When KNG Health Consulting looked at Medicare data for the AHA, they discovered that HOPDs treated more patients with severe comorbidities. This group accessed the emergency room or had a short-term stay within 90 days after an outpatient visit more frequently.

Those with more complexity "may need a greater level of care than patients with lesser complexity," according to the AHA research. Site-neutral payments may negatively impact patient access to treatment to the degree that these variances lead to variations in the cost of care.

According to BCBSA, 52% of doctors are now employed by hospitals or health systems due to the merger of medical practices and hospital networks during the past 20 years. Per the problem brief, this provides providers with much more leverage when they negotiate a new contract with health insurance. The physician charge and the facility use fee are the two categories of services that HOPDs bill for.

The problem brief adds, "HOPD facility fees are significantly higher than reimbursement for the technical components associated with free-standing physician offices or ASCs and are intended to cover the higher costs associated with operating a full-service hospital."

"Commercial health insurance payment policies are determined in contract negotiations between the health plan and the provider. However, it is also quite common for health plans to pay a much higher rate (including the facility fee) for procedures delivered in HOPDs."