Outpatient Departments Treat Sicker, Costlier Patients Than Physician Offices

New proposals from Congress would decrease Medicare payments to hospital outpatient departments, which traditionally serve patients who are more likely to be minority, poorer, and have more severe chronic conditions compared with patients treated in physician offices, according to a new study for the American Hospital Association (AHA) by KNG Health Consulting LLC.

The study found that patients seen in hospital outpatient departments were 2.5 times more likely to be on Medicaid, self-pay or eligible for charity care, 1.7 times more likely to live in areas with a median income of less than $33,000, and 1.7 times more likely to be black or Hispanic.

The proposal being considered in Congress would cap payment for certain hospital outpatient department services at the physician rate.

“The needs of patients cared for in hospitals are different from those seen at physician offices; treating them like they are the same does not make sense,” AHA President and CEO Rich Umbdenstock said in a statement. “Any proposal that equates them ignores the very different clinical capabilities of and regulatory demands on hospitals. And physician offices aren’t set up to provide access for all or 24/7 emergency services.”

Although patients seen in hospital outpatient departments and physician offices are similar in the number of chronic conditions they have, the severity of these conditions, as measured by the Charlson Comorbidity Score is higher for hospital outpatient department patients (0.24) compared with patients in physician offices (0.17).

The care provided for patients in hospital outpatient departments is slightly more likely to be routine care for a chronic problem or care for a new problem. Not only do hospital outpatient departments provide more services and treatments, but care received in this setting also involved more health education compared with care provided in physician offices.

“To the extent that these differences result in variations in the cost of care, site neutral payments may have adverse effects on patient access to care,” the report concludes.