Medicare Compliance & Reimbursement

According to a recent study, the balance hospitals use to pay for uninsured and Medicaid patients is in jeopardy.

To subsidize care for uninsured patients and Medicaid enrollees, hospitals have traditionally used profits from their insured patients, according to a recent press release by Health Affairs. This is a safety net that hospitals have grown to rely on, but a recent study shows that physicians owning ambulatory surgical centers (ASCs) have been sending their lucrative patients to their own facilities and sending lower paying patients elsewhere.

The study took place in the Pittsburgh and Philadelphia metropolitan areas because Pennsylvania has both a high number of physician-owned ASCs and "a requirement that all ASCs and hospital outpatient departments submit discharge abstracts," according to Health Affairs.

Authors conducted this study to test whether having an ownership stake in an ASC affected the types of referrals physicians made to ASCs. Public records do not identify physician-owners of ASCs, so the study looked at high numbers of referrals to physician-owned ASCs instead. Researchers then compared "referral patterns for these physicians with the referral patterns of high referrers to hospital outpatient departments and nonphysician-owned ASCs," according to Health Affairs.

The study found that in 2003 the top half of physician-referrers to physician-owned ASCs in both Pittsburgh and Philadelphia referred very few Medicaid and self-pay/indigent patients either to the physician-owned ASC or to other facilities. Study statistics show that 11 percent of the state's population is enrolled in Medicaid and 10 percent is uninsured; however only 1.4 percent of all referrals were Medicaid patients, and only 1.8 percent of referrals were self-pay indigent patients.

When those who frequently refer patients to physician-owned ASCs did refer Medicaid patients, they sent approximately 55 percent of Medicaid patients to physician-owned ASCs, and about 45 percent to hospital outpatient departments. The study then showed that referrers sent approximately 92 percent of patients with commercial and Blue Cross insurance to physician-owned ASCs and about 8 percent of lower-paying patients to hospital outpatient departments.

The study determined that referrers sent Medicaid patients to hospital outpatient departments at a rate of about 36 percentage points higher than they directed those patients who had private insurance to outpatient departments, Health Affairs says.

For those who refer primarily to hospital outpatient departments and nonphysician-owned ASCs, the top 50 percent of referrers sent almost all of their patients to outpatient departments regardless of insurance status. The study showed that top referrers at nonphysician-owned ASCs more often referred Medicaid patients to other facilities than commercially insured patients, but this gap proved to be only half as large as it was for the top referrers to physician-owned ASCs.

In matters concerning cosmetic surgery, top physician-referrers to physician-owned ASCs sent 98 percent of patients to physician-owned ASCs. This suggests that these patients were insured, but were receiving services not covered by their insurance.