Medicare patients pay far more for outpatient care at critical access hospitals

Medicare enrollees at critical access hospitals often pay far more out of pocket than patients obtaining the same care at larger institutions, according to an analysis by The Wall Street Journal.

The differentials can often be dramatic, the newspaper reported. For example, a Medicare enrollee had to cough up an average co-pay of $840.22 for a colonoscopy performed at a critical access hospital in 2013. By contrast, the same procedure performed at a general hospital cost a Medicare enrollee an average of $270.53. There are similar price gaps for other procedures such as bunion removals and hernia surgeries, the WSJ said. 

The newspaper reports that the cost differential lies in the 1997 federal legislation that created the critical access designation. Such facilities are paid more to perform such services, and Medicare enrollees must pay a 20 percent co-pay of that higher payment. The continual rise in hospital chargemaster prices also plays a role in the gap.

In 2012, Medicare enrollees paid nearly half of the $3.2 billion Medicare spent on outpatient care at critical access hospitals. That compares with less than a quarter of such charges paid by patients who received outpatient services at general hospitals.

"Initially, it wasn't a problem, but as time went on, charges increased a lot," Sara Freeman, a research economist at RTI International, which was commissioned by the Medicare Payment Advisory Commission to examine the issue, told WSJ. "It was an unintended consequence of the law designed to help rural hospitals."

Ironically, critical access hospitals are usually portrayed in two ways: As struggling to survive to serve isolated rural communities, or as models of cost savings for the entire U.S. healthcare system.

Meanwhile, few patients are aware of the gap in co-payments. A large proportion of them have Medigap policies that cover their deductibles, and most find their medical bills inscrutable anyway, the WSJ reported.

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