Rural Medicare Patients Get Hit on Cost and Quality
Policy + Politics

Rural Medicare Patients Get Hit on Cost and Quality


A flaw in Medicare’s payment structure has forced beneficiaries in rural “critical access” hospitals to pay between two and six times more for outpatient procedures than patients at other hospitals pay for the same procedures.

That’s the conclusion of a new report by the inspector general for the Department of Health and Human Services, which reviewed Medicare claims for critical access and acute area hospitals between 2009 and 2012. The IG found significant differences in how much patients were paying, depending on where they sought treatment.

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For example, in 2012, Medicare patients at critical access hospitals paid an average of $33 for an electrocardiogram, while patients at other hospitals paid just $5. Medicare patients paid an average $56 to get an initial infusion into a vein compared to $25 at other hospitals for the same procedure.

Auditors say patients have paid more at critical access hospitals because of Medicare’s payment structure. The hospitals are small and are often the only medical facilities in rural areas, so the federal government pays them more (costs plus 1 percent) to keep them in business. Under the law, patients are required to pay 20 percent of what the hospital charges. That co-insurance amount is true at other hospitals, too, but Medicare reimburses them much less.

Although supplemental insurance for the elderly usually covers the extra costs, roughly one in seven Medicare recipients does not have this kind of policy, the IG noted. In addition, the higher costs are usually factored into the premiums insurers set, according to Kaiser Health News.

To fix this, the IG recommends that the Centers for Medicare and Medicaid urge Congress to make changes to Medicare’s payment structure to more “closely represent the costs” of services. Under the law, any changes must be done so legislatively.

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The auditors pointed to a 2011 report from Medicare Payment Advisory Commission, or MedPAC, which recommended Medicare “apply to coinsurance calculations the same process currently used to estimate critical access hospital interim payments.” Coinsurance amounts would then be based on interim payments rather than on charges.

The group also said Medicare could process outpatient claims from critical access hospitals as if they were being paid under the Hospital Outpatient Payment System OPPS and then charge the beneficiaries the same OPPS coinsurance rates.

CMS said it would review the IG’s proposals.

While Medicare patients at critical area hospitals pay more—they don’t always receive quality care. Right now, the country’s 1.256 critical area hospitals have been excluded from a key Obamacare provision aimed at improving hospitals’ quality of care. Though the health care law required the government to include these hospitals in the provision, Congress has yet to provide the money for it.

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