Medicare Outpatients Pay More at Critical Access Hospitals

Medicare outpatients at critical access hospitals (CAHs) pay significantly more than Medicare beneficiaries at acute care hospitals, according to a new report from the Department of Health and Human Services’ Office of the Inspector General (OIG). OIG noted in its report that policy changes are needed to reduce the amounts those rural patients pay.


The payment discrepancies occur when Medicare beneficiaries pay coinsurance. Those at CAHs pay coinsurance amounts based on the hospitals’ charges. But acute care hospitals charge coinsurance based on the outpatient prospective payment system (OPPS) rates.


“CAH charges are typically higher than the reasonable costs associated with CAH services or the OPPS rates that acute-care hospitals receive,” the authors of the OIG report said. The differences can range from two to six times more for the 10 most common outpatient services than acute care hospitals charged for the same services, according to OIG. (Medicare Beneficiaries Paid Nearly Half of the Costs for Outpatient Services at Critical Access Hospitals, Office of the Inspector General, October 7, 2014)


Medicare beneficiaries paid nearly half the estimated $3.2 billion in costs for outpatient services at CAHs in 2012.


The OIG recommended that CMS seek legislative authority to modify how coinsurance is calculated for outpatient services received at CAHs. Possible changes included computing coinsurance based on interim payment rates rather than charges, according to the OIG. Meanwhile, CMS neither concurred nor disagreed with the recommendation. (“OIG: Medicare Patients Paying Too Much At Critical Access Hospitals,” HFMA Weekly News, October 10, 2014)


Other earlier reports also noted the high coinsurance charges at CAHs. In 2011, the Medicare Payment Advisory Commission reported the discrepancy and proposed modifications to how CAHs calculate coinsurance. In 2009, a consultant group reported that coinsurance jumped when a hospital took on a CAH designation.


The report is the latest critical OIG finding of CAHs. Previous OIG findings that many CAH are close to other hospitals led the agency to recommend stripping many of the 1,329 CAH facilities of that designation. (“OIG: Medicare Patients Paying Too Much At Critical Access Hospitals,” HFMA Weekly News, October 10, 2014)


The most recent OIG report can be found here.



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