Healthcare Services Cost More at Hospital Outpatient Departments

Costs for common medical procedures were up to 58 percent higher when they were performed in a hospital outpatient department compared to a doctor’s office, an analysis from the Blue Cross Blue Shield Association found.

Blue Health Intelligence analyzed commercial claims data for 133 million Blue Cross and Blue Shield members from 2017 to 2022 to assess the difference in allowed costs for common outpatient services across settings.

The analysis included six services: mammogram, colonoscopy screening, diagnostic colonoscopy, cataract surgery, ear tympanostomy, and clinical visit.

Costs for all of the services provided in a hospital outpatient department were consistently higher than for those provided in an ambulatory surgery center (ASC) or office setting.

In 2022, mammograms cost 32 percent more in a hospital outpatient department ($287) than in a doctor’s office ($217). Similarly, colonoscopy screenings cost 32 percent more in a hospital outpatient department ($1,224) compared to an ASC ($925) and more than double the cost when rendered in a doctor’s office ($611).

Diagnostic colonoscopies were $1,646 in hospital outpatient departments, compared to $1,022 in ASCs, marking a 58 percent difference. The cost for this service was lower in doctor’s offices at $785.

The cost of cataract surgeries was 56 percent higher in hospital outpatient departments ($3,499) than in ASCs ($2,304). Costs for ear tympanostomies were 52 percent more in hospital outpatient departments ($2,525) compared to ASCs ($1,656), and clinical visits were 31 percent more expensive in hospital outpatient departments ($161) compared to doctor’s offices ($123).

The study also found that between 2017 and 2022, allowed costs for all services provided in hospital outpatient departments generally increased each year. These higher costs are reflected in higher insurance premiums and out-of-pocket costs for consumers.

Higher allowed costs in different settings for the same service could be driven by market forces resulting from physician and hospital consolidation. In addition, hospitals may be passing on the higher costs of delivering care regardless of the setting.

The findings highlight how implementing site-neutral payments across settings can help employers and consumers save money through lower premiums and out-of-pocket expenses.

“The cost of a procedure shouldn’t be determined by the setting where the care is delivered,” David Merritt, senior vice president of policy and advocacy for BCBSA, said in a press release. “Lowering the cost of care, regardless of the site, is common sense. Our analysis shows site-neutral legislation could save our patients, businesses, and taxpayers nearly $500 billion over 10 years. We look forward to continuing our work with Congress to protect patients from these higher costs.” 

However, hospital groups like the American Hospital Association (AHA) have opposed site-neutral payments.

“So-called ‘site-neutral’ policies fail to account for the differences between hospital outpatient departments and other sites of care,” AHA CEO Rick Pollack said in a letter to The Wall Street Journal. “HOPDs treat sicker, lower-income Medicare patients and those dually eligible for Medicare and Medicaid, with more complex and chronic conditions than those treated in independent physician offices or ambulatory surgery centers.”

Due to the higher clinical needs of Medicare beneficiaries who often receive treatment from hospital outpatient departments, higher reimbursement rates are justified, according to AHA.