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Medicare, insurers questioning payment differences based on where care is delivered

Image by ShellyS via Flickr

Image by ShellyS via Flickr

Health insurers and the federal Centers for Medicare & Medicaid Services (CMS) pay much different rates for clinical services, depending on where care is delivered. Typically, hospitals are paid more than physician practices for the same clinical service.

This payment variation has drawn attention recently: CMS and the Medicare Payment Advisory Committee (MedPAC) have proposed eliminating different payments based on the site of service. In May, MedPAC Executive Director Mark Miller said Medicare should address these price differences immediately to eliminate the incentive to deliver care in high-cost settings, wrote John Tozzi at Bloomberg Businessweek.

Last year, the Society of General Internal Medicine also called for eliminating the site-of-service differential in a report on payment reform (PDF). “Medicare pays $450 for an echocardiogram done in a hospital and only $180 for the same procedure in a physician’s office,” the SGIM report said, citing MedPAC data.

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