High Deductible Provisions Cause For An Increase

Kutscher, B. (2015, June 24). High-deductible plans change how hospitals interact with patients. Modern Medicine, para 1.

6. How does the current reimbursement level of $140,000 per case affect a decision to use or not use marginal cost pricing? Does the amount of excess capacity affect the decision? Why?

Finally, if any end-user customers were to adopt the activity-based pricing (ABP) system proposed by O&M, O&M could help hospitals better understand their costs and analyze their processes. This would improve efficiency and reduce waste due to loss, theft and expiration of sensitive medical supplies. O&M would reduce its costs by delivering only what is needed, and the hospitals would be buying fewer unutilized supplies.

I really enjoyed this article, as it went into effective financial planning. The 2 major categories of cost are total charges (the patient's bill) and the cost of providing services. These 2 costs can be defined mathematically in the following indices: average revenue per patient day and the cost per patient day.

In the past the responsibility of the chargemaster, also called Charge Description Master (CDM), was assigned to a particular individual i.e. finance or business office. This department would be responsible for reviewing the CDM annually and ensuring any changes are made due to HCPCS or CPT updates, new services added, or charge increases. At times the CDM analyst would need to call upon clinical department managers for assistance with updates. Most of the time, changes were made without any input. Not involving other departments on the input of changes to the CDM leaves a hospital

Melnick, G., & Fonkycj, K. (2013). Fair pricing law prompts most California hospitals to adopt policies to protect uninsured patients from high charges. Health Affairs, 32(6), 1101-1108. Retrieved from http://ezproxy.nu.edu/login?url=http://search.proquest.com/docview/1372932073?accountid=2532

“The amount people pay for health insurance increased 30 percent from 2001 to 2005, while income for the same period of time only increased 3 percent.” (Source: Robert Wood Johnson Foundation). The rising cost of healthcare is a huge problem in America today. In this paper I will analyze the different issues and causes for the increase in cost.

In the past several years, there have been several changes in economic policy at federal and state levels. The two economic policies that present to be the most precedent for healthcare leaders with concern to facility reimbursement are the Affordable Care Act (ACA) and the switch from volume to value reimbursement. First, there is the ACA policy, which have affected healthcare facilities and their reimbursement methods. In fact, ever since this policy was implemented, provider reimbursement has started to decrease in terms of fee-for-service payments (The Common-Wealth Fund, 2015). In other words, the intention of this policy was to provide budget relief to the government payers as well as giving providers an incentive to provider patients with great quality of care.

Inflated billing. This is more common in hospital settings. However, it can still happen at the practice level. A patient goes in for surgery to correct his badly broken ankle. His insurance company receives a bill that is bloated with overcharges. Medical screws costing $2000 each for example. This kind of mistake is generally not so

Patient financial services in managed care environments are now challenged with gauging the patient’s ability to pay with the increase of liability on high-deductible health plans. “The inability of many consumers to pay high deductibles is projected to produce outcomes that damage bottom lines of healthcare businesses” (Boland, PhD; Gibson, PhD; 2014).

Conversely, fluctuating fee schedules also attribute to external influences that drive change. The topic of fee schedules are a substantial category of any healthcare reform bounced around the headlines at this time. Essentially, fee schedules are subject to what each state determines as sufficient for each diagnosis and associated treatment. “The fee schedule for many states hovers around 50 percent above the Medicare reimbursement rate. That state’s reimbursement rate under its fee schedule is just over 130 percent of the Medicare rate. That anomaly sends a message regarding both the competitiveness of the Medicare rate in Illinois and the related ease of obtaining medical services at that reimbursement level”. (Stahl, 2013). Fee schedule

Develop payment strategies to reduce unwarranted price variation, such as reference or value pricing (e.g., analysis of price variation among network providers by procedure and service types, pilot value pricing programs,

This method of calculating costs could be beneficial or not depending on the organization and its size. In a healthcare setting, any healthcare institution is seen as delivering quality care and therefore most decisions regarding choice of the institution come down to the pricing. In order to compete for patients, the healthcare institution must bring its price down to the absolute margin. This will over time affect the institution badly as it will leave the institution without funds to replace the capital equipment. This can eventually lead to closing down of the financially weaker

Besides, studies delving into the economics of the medical marketplace consistently find that a moderately higher or lower price doesn't change consumer purchasing decisions much, if at all, because in health care there is little of the price sensitivity found in conventional marketplaces, even on the rare occasion that patients know the cost in advance. Most hospital administrators defend such chargemaster rates at all, they maintain that they are just starting points for a negotiation. But patients don't typically know they are in a negotiation when they enter the hospital, nor do hospitals let them know that.

This can ensure that at ‘peak’ times of the day, AHC will be making more revenue, but there may also be an increase during ‘off peak’ times. AHC must also make sure that because of the higher prices, they don’t face a loss of consumers if they do decide to use price discrimination. Option A displays such pricing in which additional charges may be given, however if AHC wishes to maintain its customer base, as well as attract more while prices are being raised, they may need to offer consumers extra services, discounts or deals such as ‘ 3 Pilates classes for the price of 2’ for women which will help maintain good relationships and loyalty with members in the long term.