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  • Where It's At: Study Says Physical Therapy Charges 40% – 60% Higher in Hospital Outpatient Departments Than Freestanding Clinics

    A new report comparing some common tests, procedures, and treatments has found that hospital outpatient departments (HOPDs) consistently charge more than community-based settings for the same services. For physical therapy, HOPDs charged on average 50% more than freestanding clinics.

    The study, conducted by the former Center for Studying Health System Change and published by the National Institute for Health Care Reform, used private insurance claims data from 2011 for about 590,000 active and retired nonelderly autoworkers and their dependents to track charges for magnetic resonance imaging (MRI) of the knee, colonoscopies, common laboratory tests, and physical therapy. What researchers found was that where the service was provided made a big difference in how much was charged.

    In looking at physical therapy, the study's authors limited investigations to therapeutic exercise and manual therapy—"2 common physical therapy services" that accounted for $25.9 million of the $38 million spent on physical therapy among the claims analyzed, according to the report. Their findings: in looking at 136,000 services provided, "average prices were 41 percent and 64 percent higher in HOPDs for therapeutic exercises and manual therapy, respectively, than in community settings."

    While not significant enough to account for the differences, the study notes that patients receiving physical therapy in HOPDs were somewhat "sicker" than patients receiving the other procedures, treatments, and tests studied.. " The authors write, "the health status difference might be explained because patients with hospital inpatient stays—say for a knee replacement—are more likely to be referred to physical therapy in HOPDs than in community settings."

    Other findings in the report pointed to some even more dramatic differences. These include:

    • MRI of a knee was about $900 in hospital outpatient departments and about $600 in physician offices or freestanding imaging centers.
    • Charges for a basic colonoscopy averaged $1,383 compared with $625 in community settings.
    • The cost of a common blood test (comprehensive metabolic panel) was about 3 times higher in HOPDs—about $37 compared with $13 in community settings.

    Authors write that the findings show that there is an opportunity for private insurers to reduce spending by looking at ways to incentivize the use of lower-priced community providers through excluding higher-priced providers from networks, implementing a tiered system that requires patients to pay more when using these providers, or capping the amount of payment to in network providers for particular services.


    • Maybe it is becuase the HOPD's have to provide so much free care that the free standing clinics do not. Of course there is no mention of the quality of care or outcomes in this study. Maybe insurers can just let all of their policy holders go to free standing clinics and just let all the hospitals see the indigents.

      Posted by Donald on 6/27/2014 4:24 PM

    • How much of these differences are due to cost-shifting because HOPDs typically care for a higher percentage of patients who are uninsured or on Medicaid? Many of these folks may not have access to care if not for the HOPDs. Also a good point about charges v. payments.

      Posted by Bill McGeHee on 6/27/2014 5:54 PM

    • This differential in payment between HOPD and office providers has historically been the case because of payment methodology. Office provider contracts typically include a fee schedule for the type of services examined in this study, while HOPD are paid under different contractual terms that do not include a fee schedule.

      Posted by Pamela A Duffy on 6/27/2014 6:07 PM

    • Outpatient clinics in hospitals are not required to provide free care for indigents- only emergency services. I've worked for 3 hospital systems and none of them would (knowingly) provide free outpatient therapy. They charge far more for the same service -procedure- than I do in private practice. It seems like hospitals are being rewarded for inefficiency rather than quality. PS: I'll compare my outcomes to any clinic.

      Posted by Jerry McCollow PT on 6/27/2014 8:24 PM

    • Went from Private Practice to sale to health system. working in this health system environment has opened my eyes as to what out patient hospitals really have to carry in order to make a similar margin as private practice. You have no idea the increased labor load to stay in compliance between CMS and JCAHO-costs are crazy. Then there's the 15-30% Medicaid and indigent population that we absorb. Then on top of that health systems are supposed to keep the hospital doors open with insanely poor and declining reimbursement --so out patient services are the only reason hospitals stay afloat so that when you and your family need an ER-you have one. Seriously-focus on growth and not on expecting the same reimbursement as hospital out patients- you really have no idea what it is like for a health system to survive and see every patient that crawls to the door and never turn them away. I still love and support private practices always and my heart is there--but lay off hospital systems if you want one when you need one.

      Posted by KC on 6/27/2014 9:33 PM

    • The cost-shifting argument is very valid in this scenario. A more interesting study might be to compare the average number of visits, average number of charges per visit and the staffing mix between hospital-based and private practices. Jette and Davis published such a study in the PT Journal in 1991. It would be interesting to see if their results hold true today.

      Posted by Justin Tammany -> @GWc@O on 6/28/2014 12:08 AM

    • Currently my outpatient hospital charges/bills about $350/visit (half hour/visit in our setting) and the therapists get paid a maximum of $40 per/hour, granted they probably get reimbursed about $200/hour. The entire system is terrible

      Posted by Frank Lopez on 6/28/2014 2:32 AM

    • I am curious to know if any of you who work in hospital-based/affiliated or large group private practices periodically review/verify the CPT codes truly being billed for your work.

      Posted by Lise McCarthy on 6/28/2014 8:30 AM

    • Yes, it the the daily task of the outpatient coordinator to review all the codes.

      Posted by Alexandra Sterling -> >OX^EH on 6/28/2014 8:10 PM

    • Here is a link to a 2004 report from Medicare that shows the actual cost to Medicare per user in hospital outpatient settings vs. private practice. http://medpac.gov/documents/MedPAC_Payment_Basics_07_OPT.pdf

      Posted by Justin Tammany -> @GWc@O on 6/29/2014 12:43 AM

    • In some cases, vertically aligned hospitals may be able to extract excess fees for outpatient physical therapy from commercial insurers when they negotiate their 'basket' of services. Vertically aligned hospitals own the primary care, imaging, ambulatory surgery, home health PT and maybe the nursing home, for example. When they negotiate with a commercial insurer they have the capacity to argue "If you want our inpatient services for $X, then you must pay $Y for this other thing, like outpatient PT." Tim Richardson, PT

      Posted by Charles Richardson -> =GR^EM on 6/29/2014 2:19 PM

    • Every private practitioner knows that what is billed on paper has little if any relationship to what is reimbursed. A more informative study would have looked at what is collected for comparable services rather than what is billed.

      Posted by Marsha Lawrence on 6/30/2014 8:38 AM

    • Hey guys - I'm a private practice owner and I'm not against hospital based services and SOME do offer a lot of unreimbursed care. I just want a LEVEL PLAYING FIELD to compete in.

      Posted by Bret Derrick on 6/30/2014 9:09 AM

    • All of us who are in private practice, have known about this payment disparity for YEARS. And yes not only do they bill more, they are also paid ALOT more for the same services/codes we use. Not to mention until only recently the medicare CAP never applied to them.

      Posted by Dano Napoli on 6/30/2014 9:25 AM

    • I guess I'm not quite sure how to feel. I'm a hospital based PT and I pay my APTA dues just like the PTs who are in private practice. So why am I paying my dues to help support the case for why private practice PTs feel that patients shouldn't come to OP hospital therapy clinics for care? Besides, billed charges and actual reimbursement is not the same thing and I can tell you that our clinic does not get exorbitantly reimbursed. In fact, we may actually do a little worse than private clinics because we have to deal with all the Medicare, Medicaid, and self-pays that POPTS and private practices don't want to deal with if they don't have to in conjunction with being more tightly regulated by Joint Commission. TG

      Posted by Tony Graves -> AHQZ<M on 6/30/2014 11:50 AM

    • Great point on charges verses actual revenue. The third party system often clouds the latter, especially in an HOPD where it is diffiicult to discern actual revenue by department due to the complex reimbursement formulas and bundling described above.

      Posted by Jason M Kelecic on 6/30/2014 4:57 PM

    • Here we have seen hospital CEOs force doctors to refer only to their in house system and not offer the patient a choice of better quality care. The patient is a sheep and the hospital docs are the shepherd with $$$ as the main goal. 20-30 minutes sessions of heat and stimulation with an occasional exercise......patients start to think that is what all therapy places are like and the whole profession is deemed in a less than professional manner....

      Posted by FR on 7/1/2014 8:47 PM

    • Here at our local hospitals Aetna Insurance company reimburses them $110.00 per unit for manual therapy vs $23.00 per unit in a private practice setting.

      Posted by Eric Stevenson on 7/3/2014 1:07 PM

    • Similar trends are noted in my practice area. A recent rate comparison study done in the interest of exploring bundled payment, found the the hospitals in our area were charging $350.00 per visit and collecting 90% of their billed charges. We charge $196.00 per service and average 60%. A level playing field would be a lovely thing.

      Posted by Julie Warren on 7/23/2014 12:25 AM

    • I know there is a big difference in reimbursement in the two settings. More disturbing to me, however, is the instant and almost total loss of referrals from the doctors groups we had served, once these groups moved under the hospital's umbrella. I guess the hospital can claim to be a great thing for the community, just not if you happen to be an independent health care provider in that community.

      Posted by Teresa Maciejewski -> >OY]= on 9/26/2014 8:13 AM

    • APTA is for all PT's but gross inequity in either direction shouldn't be supported should it. That billing amounts and reimbursement are different is a fair (conceptually) , but in the end weak argument to make. Yes they are different… but an EOB shared by a Pt clearly showed HOPD billed 240% vs at outpatient clinic and was reimbursed at 257% of what the outpatient clinic received (+ co-pay same at both). The patient was shocked…and said apparently PP's not charging enough and was upset by great disparity in time/quality of care they'd received that was completely opposite the reimbursements. Cost shifting and bundled contractual agreements has been suggested as reason the "PT reimbursement rate" cannot really be truly known and that 'PT reimbursements are falsely inflated' by appearance but is merely revenue shifting within the system - BUT that would require a mutually unusual LOW reimbursement in some other Dept to offset that inflated PT $$. Have you ever seen ANYTHING billed and paid at lesser rate than possible in community based setting from a hospital? Come on? What Dept in the hospital is taking it on the chin for PT to look so good? I've never seen or heard of an inexpensive bandage, cast, hospital bed, Tylenol, surgery, meal, …etc charged pts in a hospital. Yes hospitals provide critical and necessary services, and yes they do take the "hit" of absorbing at some level indigent care and compliance with added regulations…and we love and need them to exist and thrive/survive. Just not sure that 257% reimbursement rates is justified by all that. Cutting down some of the middle men and administrative layers and consolidation of duties, and not continually expanding into luxurious expensive new buildings might help control their costs a bit too…just like other businesses must consider and survive by, might be part of the solution. Good PT's are everywhere - nothing against all those skilled and caring PT's in hospitals. .Quality of care is obviously available in all environments. But, turnover does tend to be greater in hospitals. Newer, less experienced grads do tend to gravitate and have an easier time being employed, it seems, by hospitals. It is clearly not a level playing field. Right provider at right time is key…and with immediate access via Dr relationships/control within HOPD many pts access PT much sooner than oftentimes is the case for those of us in PP. It's not a level playing field. And in spite of ACA/healthcare reform push for "transparency"..etc, our contractual obligations to not disclose reimbursement rates makes informing the public about these disparities so they can make informed choices difficult. The excessively high reimbursements paid by carriers for such services cannot be ignored as a contributing factor to our exponentially rising healthcare costs. Not THE cause but a factor, I'd think.

      Posted by Mike Napierala on 12/19/2014 7:25 PM

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