Dive Brief:
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Healthcare services performed in outpatient settings grew from 11.1% of care visits to 12.9% between 2009 and 2017, according to a new Health Care Cost Institute report. Echocardiograms and drug administration saw the biggest increases in outpatient setting services. Level 3 diagnostic and screening ultrasound visits in outpatient settings grew from 20.9% to 25.2% and level 5 drug administration visits increased from 23.4% to 45.9%
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The average price for services in an outpatient setting was higher than an office setting. For instance, the average price for a level 3 diagnostic and screening ultrasound visit grew 4% in office settings from $233 to $241, while outpatient settings led to a 14% increase from $568 to $650.
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Also, level 5 drug administration's average price increased 15% in office settings and 57% in outpatient settings. Those outpatient visits were nearly three times as expensive as an office visit. There was an even wider price difference for a level 4 endoscopy upper airway. Outpatients settings averaged $2,679 compared to $527 for an office setting in 2017.
Dive Insight:
As payers look to find ways to contain costs, they have pushed for more care to take place in lower-cost settings. That includes moving more care from inpatient to outpatient and from outpatient to provider offices. They have also promoted lower-cost options like retail clinics.
However, another trend is leading to higher prices. Hospitals are buying physician practices to replace lost inpatient revenue. A recent report by Avalere Health and the Physicians Advisory Institute found that hospitals now employ 44% of physicians. Hospitals acquired 8,000 medical practices between July 2016 and January 2018. The number of hospital-acquired physician practices increased from 35,700 in 2012 to more than 80,000 in January 2018.
That's contributing to higher costs, partly because outpatient settings often have facility fees. Despite utilization dropping by 17% between 2012 and 2016, healthcare prices rose 13%, according to another recent HCCI report.
The trend of more hospital-employed doctors may help health systems, but higher prices are being passed onto patients.
CMS is hoping to eliminate that problem by implementing site-neutral payments. That could help resolve the issue for Medicare and Medicaid, but it doesn't fix the extra payments for employer-sponsored plans, which is how most Americans are covered.
Proponents see site-neutral payments as a way to cut costs and balance the playing field. However, the plan has opposition, including strong pushback from the American Hospital Association. The hospital group has said CMS lacks an "understanding about the reality in which hospitals and health systems operate daily to serve the needs of their communities."