Does Medicare forbid posting surgery center prices?

An article linked by Tyler Cowen suggests that Medicare forbids posting of surgery center prices. I don’t think it’s true. CMS is moving towards pricing transparency in many initiatives. Here’s the quote from the underlying article:

Surgery Center of Oklahoma does accept private insurance, but the center does not accept Medicaid or Medicare.

Dr. Smith said federal Medicare regulation would not allow for their online price menu.

They have avoided government regulation and control in that area by choosing not to accept Medicaid or Medicare payments.

Several medical facilities in Oklahoma are posting their prices online through The Kempton Group’s website, in order to circumvent that Medicare guideline.

Medicare pays ambulatory surgery centers (ASCs) based on an administrative pricing model. ASC rates are generally lower than hospital inpatient rates for the same procedure, which has fueled the huge shift to outpatient and freestanding ASC procedures in the US over the past few decades. The government doesn’t pay the posted rate – they have a fixed price.

But fraud & abuse laws prohibit paying anything of value to induce someone to use a particular Medicare service or provider. You can’t attract Medicare customers by offering a $500 cash payment to the patient. That is an illegal kickback. In a similar vein, providers (such as ASCs) can’t routinely waive the copays and deductibles that Medicare beneficiaries are required to pay. Those cost-sharing mechanisms are in Medicare for a reason, to give the patient some incentive to ration care. If the ASC routinely waived co-pays or deductibles, Medicare can treat them as illegal kickbacks.

There is nothing wrong with posting your ASC prices on the internet. Legal troubles begin if the ASC uses the lower posted fee as the basis for calculating copays and deductibles, while charging Medicare the larger fee proscribed by the government.

The Surgery Center of Oklahoma may also have given up on Medicare to avoid other regulations, such as restrictions on who can own and refer to a surgery center. But I don’t think Medicare bans posting ASC prices.


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