Medicare

Pursuant to a congressional request, GAO reviewed three alternatives to the current Medicare payment methodology for hospital outpatient surgery.

GAO found that Medicare's: (1) hospital payment system had problems in computing and applying beneficiary coinsurance amounts; and (2) outpatient payment computation method did not take full advantage of beneficiary coinsurance amounts to reduce its payments. GAO also found that: (1) under one alternative, billed charges would be converted to Medicare-allowable costs by using the hospital's cost-to-charge ratio combined with ambulatory surgery center payment amounts; (2) another alternative would base beneficiary coinsurance on Medicare-allowable costs, rather than on hospital-submitted charges; and (3) another alternative would make the beneficiary coinsurance payment exactly 20 percent of the Medicare blended amount. GAO also noted that: (1) the third alternative would result in the greatest beneficiary liability reduction with the highest Medicare payment and would require the implementation of a prospective payment system; (2) the second alternative would split the reduction in the hospital payment between the Medicare program and the beneficiary; and (3) the first alternative would result in no beneficiary relief.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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