• 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.


    • I don’t understand this. If the surgery center is willing to pay Medicare customers to use their center (ie, accept a lower reimbursement for the service), doesn’t that suggest the Medicare payment is too high?

      • @Jacob
        It does suggest that providers are earning marginal positive returns on that Medicare service.

      • @Jacob
        Or just that Surgery Center of Oklahoma has found more efficient ways to achieve care than most other hospitals.

        My best guess is a bit of both, but heavy on the ‘a set price is the wrong price’ model.

    • Kevin, the key word I think here is “inducement.” Many ASC owners (and others) believe advertising lower prices, posting them to lure in patients, etc. qualifies as that and thus puts them at risk for investigation, suspension, etc.

      This risk is not really quantifiable (and may be completely imaginary) but it is actually driving behavior unfortunately.

      • @ V
        You can publicly offer lower prices to private pay and privately insured patients. None of that will affect Medicare reimbursement under the ASC rate. Why would published prices be an inducement to Medicare patients?

        Unless the copay or deductible is lower.

        • Unfortunately, your last statement could be true.

          Also, do believe there is a separate component of irrationality and risk aversion at play as well.

    • The article didn’t say that Medicare forbade posting prices. It said Medicare regulations would not allow for their online price menu, which is something else.

      Medicare regulations are chock full of weird consequences, of the general form, “sure, you can do X, but then you can’t do Y”. My favorite of those is “you can accept private-pay from a Medicare beneficiary, only if you sign a contract that you will not bill Medicare for any other patient.” So if Medicare declines a treatment for one patient, and that patient want the treatment badly enough to offer to pay cash, to accept the cash payment, I have to agree not to see any other Medicare patients. Or at least, make all other Medicare patients pay cash and — not making this up — sign contracts that they will not seek Medicare reimbursal. For 2 years.

      So I would not in the least be surprised to find out that there is some combination of rules that add up to, “sure you can post prices, but then you’re not allowed to use electricity in your facility” or some such other off-the-wall practice-killing consequence.

      I have an idea, Kevin. How about instead of speculating idly about what they mean about the regulations not allowing it, you got in touch with the good doctors and asked them what they meant and why they thought it so? I have a hunch that they would be happy to talk to an academic/blogger with the chops to report the sorts of details that don’t generally get into popular-press pieces like the one Tyler linked to.

    • I train physicians groups and ASCs in risk management and compliance programs.

      The DHHS-OIG and the DOJ are insane about hammering health care providers, and they do not always hammer the guilty parties. The law is whatever they say it is at the moment.

      Compliance experts (me) and lawyers expert in health law train providers to be extremely cautious and risk adverse.