President Barack Obama has shared his $3.99 trillion budget proposal, and one of the recommended changes contained in the document has drawn the attention of hospitals and physicians, many of whom aren't excited about the suggested modifications to their Medicare reimbursement.
Deep within the budget, on page 106, the White House asks Congress to "encourage efficient care by improving incentives to provide care in the most appropriate ambulatory setting." In other words, the White House is asking Congress to reduce "financial incentives that are causing many physicians to sell their practices to hospitals just to take advantage of extra revenue," according to The New York Times.
Under the current system, Medicare pays physicians employed by hospitals one price and independent physicians another price for providing identical services in the exact same office. Under the proposal, this would be done away with, and only physicians who work in a "hospital building" would be reimbursed at the "higher hospital rate," according to The Times.
In its proposal, the Obama administration stated the switch would lead to nearly $30 billion in Medicare savings over a 10-year period.
However, hospitals aren't excited about the suggested switch, with many arguing compliance with regulatory requirements and running emergency rooms, among other factors, makes it more expensive to run a hospital-owned physician practice than a physician-owned practice, according to The Times.
Moving forward, this Medicare reimbursement change will be one more challenge many hospitals will have to confront as Congress explores ways to save money in the Medicare budget, according to the report.
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