• Hospital cost shifting [FAQ]

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    • As your grad advisor would have told you however many years ago. To have the maximum effect here, you could do worse than add a good summary paragraph or two.

    • I’m not an expert and not criticizing your position, just asking a question.
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      If a non-profit hospital is paid less by Medicaid, and perhaps by Medicare, than its services cost, where does the delta come from, if not from other payees?
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      Now the cost may not show up in price, it might show up in decreased services, i.e. Medicaid cut our payments, so we can’t afford to get a new, digital CT, which will improve care and eventually cut costs. So, private insurance payees pay a “price”, which might be in dollars, or might be hidden.
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      Not all hospitals lend themselves to simple P&L analysis, because the motivations are more complex and stakeholders not simple business people (nuns, for example).

      • Hey, JimF

        I’m no expert either, but spent literally weeks in total time during 2009 researching hospital cost reporting. Your question shows how well the AHA public information campaign has worked.

        I strongly dispute the assertion that Medicare pays less than the cost of services. Best I can tell, it’s about cost + 10% (which used to be a sober businessman’s happy profit amount!)

        Indeed, CMS rules like those for Disproportionate Share Hospitals (of charity cases or underpaying patients) pay lump sum compensation to make sure that loss is NOT the case.

        Hospitals must submit yearly Cost Reports to CMS. The most recent approved report for my hospital was 3 years old, which indicates to me an effort to game the system. Straightforward accounting doesn’t need haggling over.

        Have you noticed the proliferation of hospital-owned satellite offices for outpatient surgery, physical therapy, etc.? Their rise coincides perfectly with the institution of a new rule that changed the way capital costs were included in the Cost Reports. Next, hospitals lobbied for (and got) higher reimbursement rates for the same procedures provided at the satellites than at the hospital!

        Looks to me like Medicare is having the cost of those new offices cost-shifted onto it!

        The Medicare Hospital Manual is here for your perusal (the fall through the looking glass is a bit unpleasant, but your inner ear will eventually restore the feeling of balance and reality!):

    • @ BoRegard. Thanks for the info.

      As for satellite offices, certainly a huge factor for the large, chain hospitals.

      But for, say, the religious-owned hospitals with large, charitable efforts, they certainly “lose money” on Medicaid, which has to come out of somewhere.

      Medicare, I’m trying to better understand. Physician-owned hospitals seem to be able to game/ milk the system. Not sure you can apply that to other types of hospitals, which seem to be struggling. Apparently, we need to distinguish between the hospitals, and medical specialists getting $1 million a year.

      Make sense, or no?

      • The difference in cost treatment between non-profit 501(c)3 charity hospitals and not-for-profits is a true inequity, I think. You can’t add the cost of unpaid nun nurses to the report, but a CEO salary in the millions is a cost. It’s ridiculous! The DSH payments to compensate for Medicaid patients are affected by the hospital’s cost report, so it further disadvantages the charity hospitals which do most of that care.

        I personally think Medicaid will have to be wrapped into the Affordable Care Act programs eventually. Having 50 different states administer the program seems highly inefficient to me. Not to mention the inequity among levels of care provided to the destitute by state. Please realize that you can’t own a home or investment property, or have more than $2500 in bank accounts and personal property to qualify in my state. By the time folks with health problems have spent down to that level in the marketplace while uninsured, they usually need more and costlier care than if they’d been helped earlier.

        Seems to me that underfunding of Medicaid is mainly a political problem – there’s very little support for raising the revenue necessary to run an efficient, effective program, so reimbursement rates are constantly cut to providers – just stupid, since you will get to a level they can’t stay in business, or you’ll have fewer and fewer providers. Sometimes I wonder if that’s precisely the desired outcome!

        One thing in the ACA that might help is taking some of Congress’ ability to tweak recommended reimbursement rules/rates. The “free” scooter chairs and diabetes supplies delivered to your home are direct results of lobbying Congressmembers to defeat proposed cost-cutting rule changes.

        If you have the time and inclination, cruise around this section of the CMS website where rule proposals and public comments are accessible. http://www.cms.gov/eRulemaking/

        I’ll tell you the truth, JimF – things sure seemed to work better back when anybody could walk into a Public Health doctor’s office and get good, affordable treatment, hospitals were viewed as public institutions operated for the general health of the community, not profit, and insurance hadn’t driven costs through the roof. My parents negotiated payment plans with our family doc, and everybody came out making very decent livings in health care without bankrupting their patients.

        Interesting Nixon tape here : http://whitehousetapes.net/transcript/nixon/450-023