Heart hospitals, medicare, and cross-subsidization.

Abstract

Background: Compared with heart hospitals (HHs), does Medicare provide better reimbursement to traditional hospitals (THs)?

Methods: Diagnosis Related Group (DRG)-specific data from Hospital Compare (www.hospitalcompare.hhs.gov) were used to compare Medicare reimbursement to hospitals in nine HH markets, representing 10% of the national HH market.

Results: On average, markets contained 1.2 HHs and 8.1 THs. Average market size for invasive cardiac services was $13+/-8.4 million, with HHs having 36.1% of the market share. Compared with HHs, THs received significantly better reimbursement for coronary artery bypass graft (CABG: $20,281+/-3,047 HH versus $23,958+/-4,562 TH; p=0.004), percutaneous coronary intervention (PCI: $11,230+/-742 HH versus $13,347+/-2,662 TH; p<0.001), heart valve replacement ($33,710+/-4,056 HH versus $39,819+/-6,356 TH; p=0.001), pacemaker implantation ($11,245+/-706 HH versus $13,212+/-2,043 TH; p<0.001), heart failure ($5,622+/-489 HH versus $6,482+/-1,010 TH; p<0.001), chronic obstructive pulmonary disease (COPD: $4,893+/-802 HH versus $5,641+/-841 TH; p=0.013), pneumonia ($5,708+/-763 HH versus $6,456+/-1,136 TH; p=0.012), and diabetes ($4,115+/-355 HH versus $4,963+/-812 TH; p<0.001).

Conclusions: The excessive reimbursement granted to THs for non-cardiac services is likely to reflect a policy decision to assist these hospitals with their cross-subsidization of other services. If Medicare is to cut reimbursement to TH for CABG, PCI, or other services, Medicare should be asked to pay more for the services (e.g. emergency room care) that it currently reimburses only indirectly through the process of cross-subsidization.