Getting The Price Right: Medicare Payment Rates For Cardiovascular Services

Abstract

Specialized, physician-owned cardiac hospitals have grown rapidly. Physicians have also expanded their capability to provide cardiovascular diagnostic services in their offices. In this paper we consider evidence of errors in Medicare's prices for hospital care and physician services and discuss ways to improve the accuracy of those prices. We find that recent proposals to change the inpatient prospective payment system would help dampen hospitals' financial incentives to favor some kinds of patients and related investments. For the physician fee schedule, we suggest that the Centers for Medicare and Medicaid Services (CMS) review the accuracy of prices for high-growth diagnostic services.

ACCF/ACR/AHA/ASE/ASNC/HRS/NASCI/RSNA/SAIP/SCAI/SCCT/SCMR 2008 Health Policy Statement on Structured Reporting in Cardiovascular Imaging

“…The substantial growth in the use of imaging, and the costs associated with that growth, have increased pressures to understand the quality of cardiovascular imaging services and to be accountable for quality. 1,2,30 Thus, performance measures for cardiovascular imaging are under consideration by such policy-setting organizations as the Centers for Medicare and Medicaid and the National Quality Forum, with the understanding that such measures will be employed for public accountability, if not as part of pay-for-performance programs.…”

Impact of Community Wealth on Use of Cardiac-Resynchronization Therapy With Defibrillators for Heart Failure Patients

“…However, assessment of operating margin on technology adoption is challenging because cardiovascular procedures are largely believed to be profitable. 29,30 Financially troubled facilities might preferentially adopt high-margin services in an attempt to improve profitability; conversely, hospitals may be profitable in part because they offer advanced cardiovascular services. We used Medicare Cost Report data for this analysis because they are the only national data that use standard definitions and have sufficient detail to construct hospital margins.…”

“…Further, cardiac procedures are widely thought to be profitable. 30 Shifting profitable procedures away from hospitals in poor communities may undermine the financial stability of hospitals caring for underserved patients. 44 Limiting the scope of practice of hospitals in underserved communities may compound the difficulty of recruiting and retaining advanced healthcare providers.…”

Hospital Prices in Indiana: Findings from an Employer-Led Transparency Initiative

“…Medicare prices, in contrast, are not affected by bargaining leverage and are, instead, set with the overarching goal of compensating providers fairly based on their costs of doing business and the services they provide (Medicare Payment Advisory Commission [MedPAC], 2016a). Medicare's price-setting formulas are not perfect (Hayes, Pettengill, and Stensland, 2007), but they have been refined over time based on ongoing analysis of legitimate sources of cost variation (Institute of Medicine, 2012), and with the goal of balancing the competing interests of providers, taxpayers, and beneficiaries. 3.…”