November 20, 2024
ARC, with support from Arnold Ventures, has released a new brief analyzing trends in pricing differentials between hospital outpatient departments (HOPDs) and physician offices. The analysis reveals that these pricing gaps are growing faster than medical inflation and outpacing increases in both the physician fee schedule (PFS) and outpatient prospective payment system (OPPS).
Key Findings:
- Medicare beneficiaries typically pay two to four times more when services are provided in a hospital outpatient department (HOPD) rather than a physician office. This payment differential is growing, providing increasing financial incentives to perform services in higher-cost settings.
- Without site neutrality, the differential between HOPD and office payment rates for the same service grew by an average of 4.0% annually from 2017 to 2022.
- This 4.0% trend in the payment differential exceeded the growth in payments at either HOPDs (2.6%) or offices (0.9%), as well as general measures of medical inflation.
- Implementing comprehensive site-neutral payment reform that accounts for the growth in the payment differential between HOPD and office rates would save Medicare $138 billion over the next ten years and lower out-of-pocket costs for Medicare beneficiaries by $21 billion.