Medicare Payment and Hospital Provision of Outpatient Care to the Uninsured

Objective To describe the amount of hospital outpatient care provided to the uninsured and its association with Medicare payment rate cuts following the implementation of Medicare's Outpatient Prospective Payment System. Data Sources/Study Setting We use hospital outpatient discharge records from Florida from 1997 through 2008. Study Design We estimate multivariate regression models of hospital outpatient care provided to the uninsured in separate samples of nonprofit and for‐profit hospitals. Principal Findings Hospital outpatient departments provide significant amounts of care to the uninsured. As Medicare payment rates fall, total charges and the share of charges for outpatient visits by the uninsured decrease at nonprofit hospitals. At for‐profit hospitals, the share of outpatient care provided to uninsured patients increases, but there is no significant change in the number of uninsured discharges. Conclusions Nonprofit and for‐profit hospitals respond differently to reductions in Medicare payments; thus, studies of the impact of legislated Medicare payment cuts on care of the uninsured should account for differences in hospital ownership in communities. Given that outpatient care to the uninsured includes preventive and diagnostic care procedures, reductions in this care following payment cuts may adversely affect long‐run health and health care costs in communities dominated by nonprofit hospitals.