Healthcare is trending toward pricier outpatient services

An increasing share of hospital services have been performed in an outpatient setting in the past decade, according to a recent analysis from the Health Care Cost Institute—a trend that’s costing patients more every year.

The 2017 Health Care Cost and Utilization Report found healthcare prices have risen substantially in recent years, and we know those costs can be compounded when hospitals outsource services to other facilities. But it’s becoming a more common phenomenon, with the Physicians Advocacy Institute reporting the number of physician practices acquired by hospitals doubled between 2012 and 2016.

“This trend is important, as services performed in an outpatient setting may come with a facility fee, which is an extra payment in addition to the service rendered that is intended to cover the cost of maintaining the facility,” HCCI researchers John Hargraves and Julie Reiff wrote in the new report. “To address these price discrepancies in the Medicare program, CMS recently finalized site-neutral payments for clinic visits, meaning that CMS will reimburse these visits at the same rate regardless of where they occur. This new policy, however, does not apply to the commercially insured population.”

Hargraves and Reiff looked at a set of outpatient services with similar intensities and resource utilization—known by CMS as ambulatory payment classifications (APCs)—and compared their costs year-over-year between 2009 and 2017. Overall, the proportion of services performed in an outpatient setting as opposed to an office setting rose, from 11.1% to 12.9%.

The shift affected some sectors more than others. The average price for a level 3 diagnostic and screening ultrasound visit, for example, increased by 4% in office settings during the study period, from $233 to $241, while it increased by 14% in outpatient settings, from $568 to $650. The average level 5 drug administration office visit rose by 15% for patients between 2009 and 2017, but in outpatient settings prices rose by 57%.

The researchers found the average price for any given service was always higher when performed in an outpatient setting. By 2017, 25.2% of level 3 diagnostic and screening ultrasound visits and 45.9% of level 5 drug administration visits were performed in an outpatient setting. Few services remained steady, but the percentage of endoscopies performed in outpatient settings did hover around 19% for the whole study period.

Hargraves and Reiff considered 26 services in total, ranging from photochemotherapy and eye tests to anoscopies and echocardiograms. The proportion of outpatient procedures increased in most areas between 2009 and 2017, including:

  • Level 3 echocardiogram without contrast: 24.7% to 29.4% (average outpatient cost increase of $370)
  • Fine needle biopsy or aspiration: 23.8% to 26.3% (average cost increase: $241)
  • Level 3 nerve and muscle tests: 16.8% to 21.4% (average cost increase: $48)
  • Level 4 pathology: 20.9% to 29.5% (average cost increase: $54)
  • Level 3 pulmonary tests: 32.8% to 36% (average cost increase: $221)
  • Level 1 sigmoidoscopy and anoscopy: 30.1% to 40.4% (average cost increase: $455)
  • Level 2 strapping and cast application: 9.2% to 13.5% (average cost increase: $129)
  • Level 3 urinary and anal procedures: 11.3% to 14.5% (average cost increase: $521)

Find the full report here.