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Many Medicare Outpatients Pay More at Rural Hospitals, Report Says

Medicare pays country hospitals more generously so they won’t go out of business

By Jordan Rau KHN Staff Writer

visitor brings flowers to patient at rural hospitalOct. 9, 2014 - Many Medicare beneficiaries treated at primarily rural “critical access” hospitals end up paying between two and six times more for outpatient services than do patients at other hospitals, according to a report released Wednesday by the inspector general at the Department of Health and Human Services.

This KHN story also ran in the Chicago Tribune

There are more than 1,200 critical access hospitals, which are generally the sole hospital in rural areas and can have no more than 25 beds. Medicare pays them more generously so they won’t go out of business. In Illinois, 50 hospitals, more than a quarter, hold this designation.

Medicare requires patients to pay 20 percent of the amount a critical access hospital charges. At other hospitals, patients also pay 20 percent coinsurance, but it is based on the amount Medicare decides to reimburse the hospital, which is almost always significantly below what the hospital charges.

As a result, Medicare patients in 2012 receiving an electrocardiogram at a critical access hospital owed an average of $33, while patients at other hospitals had to pay $5, according to the report. Patients getting an initial infusion into a vein had to pay $56 on average at a critical access hospital, while patients at other hospitals paid $25.

 

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Medicare 2015 Part B Charges Remain Unchanged, Part A Deductible Up Some

Premiums, copays and deductibles for other Medicare programs for 2015 also announced

Oct. 9, 2014

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Many supplemental insurance policies for the elderly pick up the tab, but one in seven Medicare recipients lacks such a policy. In addition, these higher medical costs are ultimately factored into the premiums insurers set.

The inspector general’s office recommended Congress change the law so that a Medicare beneficiary’s financial responsibility better reflects the cost of the service.

Brock Slabach, a senior vice president at the National Rural Health Association, said this issue has been raised before by the Medicare Payment Advisory Commission, or MedPAC, which counsels Congress. He said that because the law requires that critical access hospitals be paid their “reasonable” costs plus 1 percent, Congress would either have to change the law or Medicare would need to pay more to make up for the lower patient portions.

“The reason this hasn’t been solved is it would require the Medicare program to subsidize more,” Slabach said.

Since the MedPAC report in 2011, which offered a number of ways to fix the system, the share of medical costs picked up by patients has risen further, the inspector general found.  The patients’ portions of critical access hospital bills in 2012 were 47 percent of Medicare’s estimate of the cost of the treatment, with Medicare paying the remainder, the report said. Medicare beneficiaries paid about $1.5 billion of the $3.2 billion in outpatient services at critical access hospitals.

Medicare offered a short response to a draft version of the report in August, saying it “thanks the OIG [inspector general’s office] for its efforts and looks forward to working with OIG on this and other issues in the future.”

Author Jordan Rau

>> Go to the Complete Report at HHS

 

 

Some of this information is reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.

 

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