Some cost shifting claims

I never know when I’m going to need to document that claims of hospital cost shifting are still pervasive. So that my future self can easily find some, here are a few quotes from a report by HCTrends, which I’ve posted here.

  • “In southeastern Wisconsin, cost shifting is responsible for 35 percent of the overall commercial rates paid.”
  • “Cost shifting is a hidden tax on employers that affects their ability to compete economically.”
  • “A 2014 Milliman analysis conducted for the Greater Milwaukee Business Group found that cost shifting accounted for 35 percent of the commercial rate paid for hospital services in 2012. Milliman estimated that Medicare and Medicaid underfunding accounted for almost two-thirds of the cost shift, adding about $782 million to commercial rates in 2012. Bad debt and charity care accounted for the remaining third.”
  • “Medicare, however, will pay less than half that amount due to specific budget cuts mandated by the Affordable Care Act and the sequester, and an assumed productivity adjustment implemented as part of the ACA (see Chart 2). Since its inception in FY2012, the productivity adjustment has reduced the market basket update by between 0.5 and 1.0 percentage points each year.”
  • “Revenue reductions or payment rates that fail to keep pace with inflation force health care providers to find more efficient ways to deliver care while simultaneously improving the quality of care delivered. If those initiatives do not completely offset their government revenue shortfall, providers make up the difference by increasing the rates charged by the business community – a process known as ‘cost shifting.’ The degree to which a hospital can leverage the business community to subsidize government health programs depends on the market dynamics between health care providers and insurers.”
  • “Cost-shifting is real and represents a hidden tax on employers that can threaten their competitiveness.
  • “Cost-shifting is not a 1:1 proposition: Every $1 in government funding is not offset by a $1 increase in private payer funding. Some of it is absorbed by providers through cost-savings and other efficiency initiatives. But after years of flat or declining government revenues, hospitals have little choice but to offset these revenue losses by increasing commercial rates.”

Here are all of TIE’s cost shifting posts.


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