Will Medicare beneficiaries pay more for outpatient vs. inpatient surgeries?

Let’s say you need a surgery. Let’s say that it’s a serious surgery. There are a number of choices that you (or your doctor) may make. The surgery could be done in a hospital where you are admitted as an inpatient. On the other hand, you could get the procedure at a hospital, but perhaps on an outpatient basis. Alternatively, you could get the surgery at a free-standing ambulatory surgical center.

Which one would you choose?

Well, the choice you make could affect how much you will be paying for care, particularly if you are an elderly American with Medicare coverage. As Kaiser Health News reports:

For years, the Centers for Medicare & Medicaid Services classified 1,740 surgeries and other services so risky for older adults that Medicare would pay for them only when they were admitted to the hospital as inpatients. Under the new rule, the agency is beginning to phase out that requirement and, on Jan. 1, 266 shoulder, spine and other musculoskeletal surgeries were crossed off what’s called the “inpatient-only list.” By the end of 2023, the list — which includes a variety of complicated procedures including brain and heart operations — is scheduled to be gone.
CMS officials said the change was designed to give patients and doctors more options and help lower costs by promoting more competition among hospitals and independent ambulatory surgical centers. But they forgot one thing.
While removing the surgeries from the inpatient-only list, the government did not approve them to be performed anywhere else. So patients will still have to get the care at hospitals. But because the procedures have been reclassified, patients who have them in the hospital don’t have to be considered admitted patients. Instead, they can receive services on an outpatient basis.
CMS pays hospitals less for care provided to beneficiaries who are outpatients, so the new policy means the agency can pay less than it did last year for the same surgery at the same hospital and Medicare outpatients will usually pick up a bigger part of the tab.

According to MedPAC, Medicare beneficiaries who were hospitalized in 2020 have a flat inpatient deductible was $1,408 per episode with the daily copayments of $352 between days 61 to 90 (if they stay beyond 60 days). If you go to a hospital and receive care on an outpatient basis, by statue, your cost sharing cannot exceed the per hospitalization deductible ($1,408 in 2020). On the other hand, if you go to an ambulatory surgical center (ASC), you are responsible for paying the Part B deductible and 20 percent of the ASC payment rate. Thus, depending on the cost of the surgery, you could pay more or less at an inpatient hospital facility compared to an ASC.

One finding more generally is that while most Americans support price comparison shopping for health care, few actually do so in practice.

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