A MATRIX Minute from MATRIX Group Benefits, LLC
Many of us lose sight of where various medical services are performed. As hospital corporations have increased their footprint in physician services by acquiring physician practices and employing physicians in office settings throughout the community, more outpatient procedures are being performed in hospital settings than in free-standing independent ambulatory settings. Diagnostic procedures and surgeries that can be performed in a non-hospital setting are generally referred to and scheduled at the outpatient departments of a hospital. Even routine lab work is typically drawn in the physician office and sent to the hospital’s lab rather than a reference lab.
As provider networks narrow the number of providers a consumer can choose from, a patient has fewer options when deciding where to go for medical care, and also needs to better understand how benefit coverage may change based on the service provider. Understanding the difference in cost between a provider in the narrow provider-owned network versus one outside of the network, and the cost difference between a service performed in a hospital setting verses an ambulatory free-standing center, directly affects the cost borne by a benefit plan.
Site of service does matter in many ways. Generally, a diagnostic or treatment procedure that is performed in a free-standing outpatient center will cost less than the same procedure performed in an outpatient hospital setting. Diagnostic colonoscopy, surgery, and infusion therapies are good examples of procedures where the charge is typically more than double in the hospital than in the free-standing center.
Dispensing and administration of prescription drugs is another example of a service that can be considerably more expensive when done in an outpatient hospital setting than a free-standing center. Not only is the provider charge typically much less, the patient may be able to acquire the drug and have it delivered to the provider which can reduce the cost of the drug since the cost is not affected by provider’s mark up. Typically the plan sponsor’s contract with a Pharmacy Benefit Manager (PBM) requires a provision for Site of Service Management for a patient to get assistance with purchase of a drug that has to be delivered to a physician.
How and where medical care is delivered affects plan costs. As healthcare corporation systems continue to consolidate and control the provider sub-systems of physician and outpatient services, and as they expand into some form of risk-bearing health plans that control the direction of patients to its provider-owned services, understanding the dynamics of site of service will help plan sponsors position their plan design to help control plan costs.
Inviktus 