How Do You Maximize Against Medicare’s Payment Formula?
The answer is by using exceptions/loopholes to payment rules. The Medicare Wage Index adjusts payments to hospitals based on hospital worker wages in the hospital’s labor market. Payment exceptions, in this case the rural floor, causes payments to hospitals in Massachusetts to increase by 16.4 percent simply by having one hospital reclassify.
More on increased Medicare’s reimbursement rates at the Healthcare Economist.
I worked in hospital accounting years ago. The hospital system I worked for owned hospitals in rural counties outside Dallas along with urban (and suburban) hospitals in Dallas. In our case, the rural floor caused the rural hospitals close to urban areas to lose money. The hospitals were reimbursed like they were rural hospitals with low labor costs, but the nurses who worked there were well aware that they only had to drive an extra 20 minutes each day to get far better wages in Dallas. Thus, the hospitals were paid like they were in low-cost areas but had to compete with higher-cost labor out of Dallas.
The providers are always going to be able to outsmart Medicare.
@Ken That must mean we should legislate more.
The current system is rigged more than I thought.
I’m surprised hospitals in other states haven’t been charging rates that high.
This is not a dramatic subject, so there are few responses, but it is VERY revealing about health care economics for the last 40 years.
This is pure cost-plus funding. If hospitals raise salaries, Medicare pays them more money.
For mamy years, if you built new hospital wings, Medicare also paid you more money.
Is it any wonder that hospital employment has grown even while days of care have shrunk?
Is it any wonder that many nurses and technicians have had salary increases far beyond workers in other fields?
In much of the USA, hospitals are a sink hole for money. People without low-deductible insurance are frightened to go near them, and people with good insurance pay higher rates each year because of them.
I am not too happy to say this, but it looks like Medicare has created a hospital-cost problem so large that only a new single payer system can solve it.