Medicare Fee Cuts and Cardiologist-Hospital Integration

Physician practices are increasingly integrating with hospitals.1 For physicians, the expansion of accountable care organization contracts centered on providers taking responsibility for population spending and quality makes independent practice more challenging. For hospitals and health systems, acquiring practices helps them control referral patterns, coordinate care, and improve their bargaining power with payers. In 2010, based on recommendations from the American Medical Association and a national practice expense survey of physicians, the Centers for Medicare and Medicaid Services reduced fees for cardiology services, focusing on those delivered in the office setting.2 For example, payment for a myocardial perfusion image in the office was cut 26%, compared to 5% in the hospital outpatient department (HOPD). That for an echocardiogram was cut 16% in the office, compared to a 3% increase in the HOPD setting. This widened the already existing payment gap favoring HOPDs—by 2013, an echocardiogram cost Medicare 141% more in HOPDs than in the office.3 The American College of Cardiology (ACC) projected a surge of integration in response to physician office fee reductions, with cardiologists exchanging practice ownership for more predictable salaries as hospital employees.4 We analyzed trends in cardiologist-hospital integration.