Medicare Payments for Outpatient Procedures Vary by Setting

Lara C. Pullen, PhD

October 24, 2012

Outpatient surgery in less–resource intensive settings costs significantly less than outpatient operations that take place in hospitals, and future studies should examine whether excess hospital costs are a result of case mix, service/content, or hospital inefficiencies, according to John M. Hollingsworth, MD, from the Dow Division of Health Services Research and Center for Health Outcomes and Policy, University of Michigan, Ann Arbor, and colleagues.

Dr. Hollingsworth and colleagues found that, in the case of urological surgery, average total payments around outpatient surgical episodes vary by location of care. The authors published the results of their Medicare claims review in the December issue of the Journal of Urology.

The authors reviewed Medicare claims from 1998 through 2006 to identify patients who underwent a common urological procedure. The review included 22 outpatient urological procedures.

The authors documented that 88% of the procedures were performed at an ambulatory surgical center or a physician office. Patients who resided in the South were disproportionately more likely to have these procedures performed at a nonhospital facility (P < .001). Women and black patients were less likely (compared to men and white patients, respectively) to receive care in an ambulatory surgery center or physician office (P < .001). Cost was defined as payments made during the 30-day claims window around the procedure date. Itemized costs included hospital payments, professional services, and facility payments.

Although the costs varied widely, they were largely less in outpatient settings. As an example, the authors highlighted urodynamic procedures that, when performed in ambulatory surgery centers, cost less than a third of those performed at hospitals (P < .001). Office based prostrate biopsies were 75% less costly than hospital based prostrate biopsies (P < .001).

The authors note that they were unable to control for the health status of the patients. They did find, however, that patients treated in a nonhospital setting appeared to be less ill (lower average Charlson score).

Increasingly, outpatient surgeries are being performed in non-hospital-based facilities such as freestanding ambulatory surgical centers and physician offices. Before this study, research on outpatient surgical procedures at nonhospital facilities has focused on physician ownership and overuse.

The authors conclude, "Collectively our data support policies that encourage the provision of outpatient surgical care in less resource intensive settings."

This researcher was supported by the Agency for Healthcare Research and Quality. The Urologic Diseases in America Project is supported by the National Institute for Diabetes and Digestive and Kidney Diseases.

J Urol. 2012;188:2323-2327.