Pricing Vs Healthcare Pricing

The Iron triangle for healthcare consists of cost, quality, and access; these three characteristics when balanced create great healthcare. Managed Care Organizations combine the three to offer consumers with care that is appropriate for their individual needs. Our book describes managed care organizations as “the cost management of healthcare services by controlling who the consumer sees and how much the service cost” (Basics of the U.S Healthcare System, Niles). Taking a look at the history prior to the Health Maintenance Organization Act of 1973 (HMO ACT of 1973) the implementation has been significant in balancing cost, and quality control. Before this Act was signed in to law by President Nixon healthcare costs were determined by fee for service. A fee for service or indemnity plan is a plan that allows the provider to determine the cost of service, this fee for service plan caused for healthcare costs to increase rapidly. An example of this would be going to the doctor with neck pain, being told to stretch then receiving a bill for 25,000 dollars. As could be understood the cost of healthcare had became a problem.

In the healthcare environment, the challenges that providers face are revenue shortfalls due to insufficient payments from the reduction of Medicare reimbursement rates (Shi and Singh, 2015. p238). Payers that have employment-based insurance are charged extra to cover the remaining balance. This process is called cost shifting. In some healthcare systems, the relationship between reimbursement reduction and cost shifting is correlated in an inversely proportional trend. As the decrease in reimbursement from public insurance such as Medicare and Medicaid, the method of cost shifting would increase.

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

One of the drawbacks of a uniform fee for medical services in the United States is that medical providers cannot agree on a set price because of price-fixing. In regards to competition, they are having difficulty of maintaining the prices at a certain level by agreement. The reason why it’s at a fixed-pricing is because it puts the price at the level where they can control the supply and demand. In other words, the uniform fee reduces competition between providers as everyone received the same rather than someone trying to do it for less and received more of the market.

Revenue determination is an important tool for health care organizations because it allows for efficient management of payment systems. This paper will look at the different components that form the payment-determination bases of revenue determination. Moreover, the difference between specific and bundled service payments will be discussed. Lastly, the three ways health care providers control their revenue function will be highlighted.

There are so many different health care providers and types of health care services that we as consumers can receive. All those different services or facilities are going to have competitive prices for our medical care. I think a patient as a consumers are going to benefit from this. Not only do medical facilities have competitive prices but also insurance

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

In this system, when payers pay billed charges, they pay according to a rate schedule, called a charge master, established by the provider. To a many extent, this reimbursement system places payers at the mercy of providers, especially in markets where competition is limited. In the very early days of health insurance, all payers reimbursed providers on the basis of charges. At prssent the trend is shifting toward other, less generous reimbursement methods, and the only payers expected to pay the full amount of charges are self-pay (private-pay)

This article provides background on previous financial models used such as fee-for-service and the potential costs between practitioners. The article states that in the fee-for-service model of payment many physician operate disjointed care and often rely on patient volume rather than need. It attempts to create a strategy to change physician behavior and incentivize them to work as a team focused on a set of guidelines for a specific episode of care. The article is largely important as to give background information on bundled payments that are already currently happening with the pilot programs brought forth for hospital related health care services. One program is the Medicare Acute Care Episode (ACE) Demonstration for Orthopedic and Cardiovascular

Through the formulas we can manage resources and revenues which is what chapter 15 explains about. At the beginning of this chapter it brings about the subject of healthcare insurance which protects the individual from “paying the full price of healthcare” (Sayles and Gordon 2016) and also the Affordable Care Act which is more commonly known by its nickname Obama Care. There are a number of ways a person can ways an individual can pay for such insurance is by out of pocket which means that the money for the procedure is coming straight from the patient and copayment also called co-pay which ‘is a cost-sharing measure in which the policyholder pays a fixed dollar amount per service. All of this depends on eligibility which pertains to the verification

Revenue management, accounts evaluations, and reimbursement analysis, are essential for successful negotiations with payers. Payers expect accurate evidence-based data to start any negotiation (Paterson, 2014, p. 97). Providers must be aware of negotiable and unnegotiable items before any dialogue can take place. For instance, payers like Medicare and Medicaid are regulated through the government. Therefore, providers must request politicians to intervene if any reimbursement policy needs modification (Paterson, 2014, p. 97).

After carefully analyzing all the stories on the Kaiser Health News, I picked Martha Bebinger’s article on “Price Tags on Health Care? Only In Massachusetts.” The article focuses on how private health insurance companies in Massachusetts have shared price tags of the medical care to be offered with their users. This event is seismic as sharing information that was considered heavily guarded to the public is one step to making the Obamacare work for our Medical care. As much as they have tried to make this step, the article points out many caveats that still need working on. The article also mentions that the posted prices sometimes do not include all the charges one is to incur while enjoying their health care services. Additionally, the prices keep fluctuating, and there is also no standard list of the procedures and tests which also cost a pretty penny.

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.

President Trump’s new Secretary of Health and Human Services, Alex Azar, discussed the benefits of transforming healthcare to value-based and highlighting the importance of creating price-transparency. Azar wants to use Medicare's power to shift how the nation pays for health care, from reimbursing for procedures to paying for outcomes. It has been emphasized, in order to move to a system where we put patients more in charge of their own healthcare dollars, providers and insurers have to become more transparent about their pricing. Azar told the Federation of American Hospitals on March 5, “there is no more powerful force than an informed consumer" (Meyers). Increasing price transparency is only part of his agenda, Azar also wants to: give

In conclusion, a structure on lower cost is pertinent to providing the right model for the system. Achieving a prosperous medical outcome in the end requires a cost budget that will benefit not only the Health care organization but the patients as well. Another benefit for patients is to implement a low cost strategy that will allow patients to receive medical treatment and also pay out cost that meets the individual’s budget. Creating an income chart would also be a way to know what a patient can afford to pay.