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Medicare reimbursement policies for outpatient services have encouraged physician integration with hospitals, according to a new study and commentary published in Health Services Research.

An article on MedPageToday claims that’s in part because Medicare reimbursement for physician services, on average, would have been $114,000 higher per physician per year for those who were integrated with a hospital, researchers found.

For primary care alone, reimbursement would have been $63,000 higher per physician per year for those who were integrated with a hospital. For medical specialties, the average reimbursement difference was $178,000, and for surgical specialties, it was $150,000.

The reimbursement difference per specialty ranged from $363,000 for urology to $15,000 for psychiatry, according to the study.

These numbers are astonishing,” healthcare technology consultant Dan O’Neill, MA, MS, tweeted. O’Neill is the former senior vice president and general manager of Change Healthcare and a former Robert Wood Johnson Foundation health policy fellow.

The incentives and waste here are just … incredible. As in, incredibly destructive,” O’Neill tweeted. “Just imagine how much worse this is for commercial payers, given the 200% to 400% markups (over Medicare) in hospital outpatient departments.”

Post and colleagues also found a modest association between a higher payment differential and the probability of integrating with a hospital. The effect was larger among primary care physicians and medical specialists, but not statistically significant among surgeons, they found.

Post also tweeted about the potential effects of vertical integration: “While integration is associated with higher prices, current evidence suggests a limited association with quality,” he wrote. “As a result, we’re not crazy about encouraging more of it.”

There are several reasons the study has garnered attention, Michael Chernew, PhD, professor of healthcare policy at Harvard Medical School and author of the study’s corresponding commentary, told MedPage Today.

“There’s an enormous amount of concern about healthcare prices in this country,” Chernew said. And much of the concern about high prices is because of consolidation.

Additionally, there is interest in Medicare spending, he said. One issue that has an impact on that is site-neutral payments.  “This study links them together in a way that is both interesting and policy-relevant,” Chernew said.