Medicare Fee Cuts and Cardiologist-Hospital Integration

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Physician practices are increasingly integrating with hospitals. For physicians, the expansion of accountable care organization contracts, centered on clinicians taking responsibility for population spending and quality, makes independent practice more challenging. For hospitals and health systems, acquiring practices helps them control referral patterns, coordinate care, and improve their bargaining power with payers. In 2010, based on recommendations from the American Medical Association and a national practice expense survey of physicians, the Centers for Medicare & Medicaid Services reduced fees for cardiology services, focusing on those delivered in the office setting. The American College of Cardiology projected a surge of integration in response to physician office fee reductions, with cardiologists exchanging practice ownership for more predictable salaries as hospital employees. Using 2007-2012 medical claims from a continuously enrolled national sample of traditional Medicare beneficiaries and commercially insured individuals from Truven Medicare and Commercial databases, the researchers analyzed trends in cardiologist-hospital integration. They measured cardiologist hospital integration by calculating the share of volume billed in Hospital Outpatient Departments (HOPDs). Their study results showed that integration did accelerate after the 2010 fee cuts and prices favored the HOPD setting.

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