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Foreign Staff

8/20/2030

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Foreign Nurses in US

Hospitals and others hire foreign nurses through agencies. The State Department must approve visas. Some agencies train the nurses on arrival about the differences between work & life with US practices, compared to practices in their home countries. They may be paid the same as US nurses, plus a fee to the agency. Traveling nurses are more often US nurses who travel where needed, and are often paid more than local hires.
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Patients' Medical Costs

8/15/2030

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Insurance premiums for Medicare and Medigap policies are described in 9 pages on SeekingAlpha. There is also information on SeniorCare and Medicare Rights Center about differences in Medigap plans. Medigap covers a lot of copays not covered by Medicare Part A and B. You can't use Medigap if you have Medicare Part C (Medicare Advantage). If you don't get a Medigap policy when you start on Medicare, in most states you may not get it later.
  • Only four states (CT, MA, ME, NY) require Medigap plans to offer continuous or annual eligibility for people with pre-existing conditions.
  • In all other states and D.C., people who switch from a Part C Medicare Advantage plan to traditional Medicare may be denied a Medigap policy due to a pre-existing condition, with few exceptions, such as if they move to a new area or are in a Medicare Advantage trial period. This denial may lock you into Medicare Advantage, with its limited networks, limited appeal rights, and sometimes worse care for the sickest patients (12% higher death rates and more preventable emergency room visits for non-elderly in California 2009-2013).
Several groups have proposed changes in Medicare premiums. Cancer Today discusses high drug copays.

Community Health Centers get federal grants and often have lower costs than average.

Cost disclosures are in flux. Checkbook has a good article.

The Wall Street Journal has a good free guide to looking for health care costs, no matter if you pay with Medicare, other insurance, or cash. Finding costs before you get treatment is hard. Dr. David Belk explains about the confusing cost of office visits, including higher pay from HMOs than from fee-for-service. The Atlantic describes 2019 laws and practices of debt collection for unpaid hospital bills.

Each patient's cost depends on his or her insurance.
  • Insurance companies negotiate costs, and patients pay this up to their deductible or copay.
  • For understanding and negotiating Medicare coverage and some aspects of medigap policies, help is free.
  • A 2020 HCCI survey lists (a) average cost paid by private insurance, (b) average cost that would have been paid by Medicare, (c) numbers of patients and providers. These are in 2 spreadsheets: (1) summary for each state and metro area, (2) detail for each type of office visit or injection for each state and major metro area. Summary citing previous studies and methods.
  • A 2019 RAND survey lists 1,600 hospitals and the average prices negotiated by insurers for inpatient and outpatient care, as multiples of Medicare prices (averaging 2-10 times as high for outpatient care, 2-4 times as high for inpatients): xlsx list of 1,600 hospitals, pdf summary, AHA comment.
  • For people without insurance, the Medicare level for each service, and the private insurers' averages, are starting points for negotiation.
  • In order to know total costs, patients can ask the doctor's office whether an anesthesiologist, assistant surgeon or hospital fee will be needed.
  • Anesthesiologist fees are in the Specialists tab above.

Doctors' fees under Medicare are in the Specialists tab above. They show what Medicare pays, and the list price for each procedure from each provider. Medicare costs include the total paid by Medicare, supplemental insurance and patients.

Hospital fees for the most common 100 diagnoses are in hospital spreadsheets from Medicare, and are mapped nicely at ClearHealthCosts. 

For example the data files show that surgeon costs for knee replacement are typically around $1,500, assistant surgeon $300, anesthesiologist $200, and hospital costs (for "major joint replacement or reattachment of lower extremity") averaged $14,000 if there were no major comorbidities and complications (MCC), or $23,000 if there were.

For a few procedures (primarily imaging, tests, counseling, dental extractions or implants, cosmetic procedures), ZendyHealth gives (free) a range of local prices within a radius you choose. They offer you a doctor based on how much you want to pay ($49 referral fee). You cannot use insurance with the doctor, but Zendy helps you submit a claim to your insurance company, so your cost counts against the deductible. For these and other procedures they offer a free consultation. You have to pay their legal bills if there's a problem ("indemnify"), and accept arbitration. You have no choice of provider, and see the name assigned to you only after you have paid the referral fee. For example different MRI centers have different strength magnets, and you are likely to get the cheapest, weakest magnets, which give less precise images. If you have time to search the Specialists tab above, you can find the lowest price providers and negotiate directly.

Costs in New York state are at pndslookup.health.ny.gov/

Costs for treatments in North Carolina are available from Blue Cross/Blue Shield of North Carolina, based on their patients and their contracts with providers: bcbsnc.com/content/providersearch/treatments. These have actual costs for a treatment episode, including hospital and doctors. Very easy to access. The free system compares all providers within any radius of a zip code, up to the whole state. You can sort by cost, name or distance. However there are only 1,200 procedures, no info on how often each doctor does the procedure, voluminous output with typically 3 providers per screen, not downloadable, only North Carolina, no procedure codes, so it is hard to be sure what each item covers,  no lab costs or drug costs. Their data come from one year, but they don't say which year.

Doctors' Incomes

Doctors' incomes derive from the payments above and the volume each doctor does. Average incomes (after expenses)  by specialty range from $240,000 per year for Public Health and Pediatrics to $580,000 for Plastic Surgery, with wide variation. Top pay is in KY, TN, AL, MO, probably because of standard payments combined with lower costs. Concierge practices have 1% of doctors. The most rewarding parts of the job are gratitude and relationships with patients, doing a very good job and making the world better. They average 15 hours per week on paperwork and administration.  27% would not choose medicine again, varying by specialties. Wealth averages $1-2 million, depending on specialty and age. A quarter of doctors have over $1 million by the time they are 35, and two thirds do by the time they are 50.

​Most doctors at hospitals work for large groups (TeamHealth, Schumacher) which contract to provide hospitalists, radiologists, emergency doctors, etc. Some companies provide doctors to hundreds of hospitals (Envision + Amsurg). Hospital doctors earn $200,000 - $400,000 per year. About half feel fairly compensated. Only a quarter "regularly" discuss the cost of treatment with patients. Over three quarters would choose medicine again and the same specialty.

Insurance payments are complex, and are further discussed throughout this site. A glossary defines insurance terms.
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Cost & Number of Prescriptions

2/9/2022

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Drug stores in half the states are not allowed to volunteer to you that the cash price is less than your co-pay, but the other half of states have laws letting them tell you. You can always ask about the cash price and ask if they have coupons or discount cards for the drugs you're buying.

Dr. David Belk has clear data on wholesale (NADAC) and retail costs of generic and branded drugs (from GoodRx) and what drives the costs.


CMS has National Average Drug Acquisition Cost (NADAC) database at data.medicaid.gov/nadac. An explanation from West Virginia dhhr.wv.gov/bms/BMS%20Pharmacy/Documents/NADAC%20Survey.pdf

Commercial services (cost) wolterskluwer.com/en/solutions/medi-span/price-rx and www.fdbhealth.com/

IQVIA reports on wholesale and retail costs and number of prescriptions.

Express Scripts has numerous articles on drug pricing and 11 billion prescription records (paid access).

Drugs are distributed to retail pharmacies primarily by three companies: 
AmerisourceBergen, Cardinal, and McKesson, which have paid small fines, relative to their revenue, for not reporting excessive deliveries of opioids.

You can find the number of drug prescriptions from each doctor and costs for Medicare patients in at least 2 places, described below. For non-Medicare prices see above.


ProPublica has Medicare Part D cost for each drug: number of prescriptions and total spending. You can get separate totals for US and each state, so you can get average cost per prescription, and for each doctor who prescribed a drug 50 or more times in 2013.

Medicare itself has more complete Part D data. The US and state summary files (bottom of the link) show for each drug: the number of beneficiaries as well as prescriptions and spending, so you can get average per beneficiary (total during a year), as well as per prescription for each drug.

Medicare's detailed files show number of days prescribed, so you can get average cost of a daily dose, as well as each doctor who prescribed a drug 11 or more times in 2013. This info is in 23 million records, without state or US summaries. However you can get good state and national estimates by opening any of their 36 spreadsheets (divided by last name of prescriber) and getting averages there. The average costs do not vary much by last name of prescriber. (Tips for working with large spreadsheets)

Some doctors and drugs typically have 30-day or 90-day prescriptions, which may be renewed all year. Their averages include the cost for each  whole long prescription (30 or 90 days). Docs & drugs with shorter prescriptions only include that lower cost. Medicare's focus seems to be on cutting total costs, not cost per dose.

ProPublica's methodology says it has "retail cost" for these prescriptions.

Medicare's fact sheet gives more detail, saying it includes,
  • total drug cost includes the ingredient cost of the medication, dispensing fees, sales tax, and any applicable administration fees. It's based on the amounts paid by the Part D plan, Medicare beneficiary, other government subsidies, and any other third-party payers (such as employers and liability insurers). Total drug costs do not reflect any manufacturer rebates paid to Part D plan sponsors through direct and indirect remuneration or point-of sale rebates
It does not directly include patients' monthly premiums, though on average those premiums may cover all drugs, administration, and profits.

After seeing which drugs a doctor prescribes, you can find drug safety and effectiveness from the main drugs page here.

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Causes of US and Foreign Health Costs

1/1/2021

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Unnecessary Care?

Doctors identified 25 procedures and tests which may be wasteful, since they usually have low value for patients. They were given to 25% to 42% of Medicare beneficiaries each year, depending on definitions, but they only cost 0.6% to 2.7% of total Medicare costs.

 High spending at end of life? 

In the United States, 
  • 13% of medical spending goes on people who die within a year Mt.Sinai
  • 25% of Medicare spending goes on people who die within a year NBER
This is because most Medicare spending goes on sick people (!), especially very sick people (!!), and some die unexpectedly (!). However very little spending goes on those who are likely to die soon.
  • 5% of Medicare spending goes on people likely to die within a year (50% or more chance) NBER
  • About half the people with high costs got better after an expensive treatment: heart attack, cancer treatment, etc. Mt.Sinai
  • About 40% of the people with high costs have chronic conditions, and death is unpredictable Mt.Sinai
  • "[R]eliably predict who will die and therefore would not benefit from receiving intensive care... turns out to be extremely hard to do. In a recent article in Science, researchers used a sophisticated machine-learning prediction tool to identify patients who are most likely to die, and found that there is no group of people for whom death is easily predictable." The Science article supplement table S2 shows that only 1% of Medicare enrollees had more than 50-50 chance of death within a year (46.6%-53.4% chance). So half of these did die, representing 0.5% of Medicare enrollees. The average death rate among the other 99% of enrollees was 4.6%, representing 4.5% of enrollees. So a total of 5% died, and most would not be predicted to die within a year. Similar data for hospitalized Medicare patients are in table S5.

Comparing Countries

Vox quotes economists that the US health care prices per item are abnormally high. So other countries get more health care for less cost:
"When you’re paying the highest prices in the world for basic services, for scans and drugs, it will undoubtedly be a struggle to provide all citizens with health care...
  • Americans go to the doctor four times each year.
  • Dutch people go to the doctor, on average, eight times each year.
  • Germans make 9.9 annual doctor trips.
  • Japanese residents clock in an impressive 12.8 doctor visits each year — more than three times the frequency of their American counterparts...
When Americans do go to the doctor, we tend to have less face time or interaction with our providers.
  • The average hospital stay, for example, is 5.4 days in the United States.
  • This puts us roughly in line with New Zealand and Norway (5.2- and 5.8-day averages, respectively) and with much shorter stays than Canadians (7.5 days) or Germans (7.8 days).
The real culprit in the United States is not that we go to the doctor too much. The culprit is that whenever we do go to the doctor, we pay an extraordinary amount."

A 2018 JAMA article compares insurance systems, and a 2008 JAMA article shows the same cost issues in 2004-6, with US doctors' salaries double the level in other countries.

​DailyKos has more detail on the range of costs.
  • "America’s economic competitors discovered years ago and still share today... Whether negotiated directly or through a national association of insurers, the government sets the prices for prescription drugs, tests, treatments, hospital stays, and pretty much everything else...
  • Economics, after all, is the study of the allocation of scarce resources... In the face of the infinite “wants” for healthy citizens, financially secure families, well-compensated practitioners, and strong profits for private companies of all stripes, societies must choose how and why to distribute discomfort and dissatisfaction to some or all of the constituents."
​​And DailyKos quotes the Commonwealth Fund comparisons:
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Medicare Costs, Premiums, and Alternatives

12/27/2020

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 Related Topics:
Hospitals' Financial Data
Medicare Payment Formula for Hospitals
Patients' premiums depend on income and what coverage they want.

Glossary of health insurance terms.

Government Approaches which Could Save Money Include: ​

  • Learn from other countries, which vary widely in the effectiveness and government share of their health spending.
  • Follow Inspector General recommendations to reduce costs, with examples as high as $6 billion. Spend more on fraud prevention, which returns $1 billion for each $125 million spent.
  • Provide patient-education fliers, especially in emergency rooms, telling patient families about efforts to reduce readmissions and asking what they need, so families know the risks and work for better transitions. It is strange that the most powerful people, patients and their families, get the least information about readmission risks. Provide fliers on a wide range of exercise and diet options, not just the ideal ones.
  • Describe procedures, not just date and code numbers, on patients' Explanations of Benefits, and explain how to report discrepancies, so patients can report for example doctors who see the patient for 10 minutes and bill 40 minutes.
  • Help patients find the least expensive options for tests, as NPR and Vitals describe.
  • Assign process researchers to see how hospitals help and harm patients (monitoring, awakening, transfers, therapy, intravenous drugs), how much could be done at home with intense support, how patients could be treated better or less expensively in hospitals or at home.
  • Give Medicare power to suspend hospital personnel who make egregious errors, rather than suspending the whole hospital or depending on state license suspensions for individuals. SEC can suspend financiers and accountants. Medicare needs similar power.
  • Change payment formulas in some of the ways recommended by the Center for Healthcare & Payment Reform.
  • Concentrate each elective surgical procedure among as few surgeons as possible, so they steadily become more expert.
  • Cover hospital stays abroad, at lower cost than in the US, by 80%.
  • Offer an option with higher premiums or copays in order to be free of penalties and cost-saving limits, or to have higher limits, like car or house insurance. Participants would pay the full extra cost of the extra coverage. People are used to the idea of paying more for more coverage.
  • Reduce coverage for readmissions (rather than imposing a delayed large penalty). For example people know there are limits on hospital and nursing home days, and therapy hours, so patients limit use, have other insurance, or pay directly, and Medicare still saves money. Medicare could limit coverage to 2 days of readmission per year.
  • Raise the copay for readmissions. Charging $1,000 copay for every readmission would raise $250 million per year, comparable to the $227 million direct income from penalties (760,000 readmissions in 3 years, or 250,000 per year). Presumably this would improve self-care and discourage readmissions at least as much as the penalties imposed on largely powerless hospitals, thus saving the same $1.5 billion in readmissions. It makes the patient think hard about staying out of hospitals, and if s/he decides to return, the hospital itself is not at risk of penalties, so it can give full care rather than push cheaper, riskier comfort care. It puts decisions about the level of care to seek in the right hands, the patient's. Research shows that higher copays for hospitals may or may not reduce use, depending on the detailed situation. (Higher copays for office visits do reduce preventive office visits, and therefore increase hospital use.)
  • An extra 0.9% tax on wages and self-employment income started in 2013, for income over $250,000 per year (couples) or $200,000 (individuals). The rate could be raised and/or the starting point lowered.
  • 3.8% tax on investment income (including capital gains) started in 2013, for the lesser of net investment income or the excess of modified Adjusted Gross Income over $250,000 per year (couples) or $200,000 (individuals). The rate could be raised and/or the starting point lowered.
  • Charge Part A premiums for higher income families. They currently pay nothing, having accrued coverage if they worked enough quarters. The fact that the trust fund is expected to run out of money indicates that not enough was collected during working years.
  • Make it easier to drop Part B. People with good health plans rarely benefit from Part B. The government payments simply reduce what the private plan has to pay. Medicare makes it needlessly hard to drop Part B.
  • Raise Part B premium for higher income families. The current Part B premium is the higher of $105 per month or about 2% of income. There are various proposals:
Graph of Subsidy for Couples
The government pays a lot for people at all income levels. Medicare Part B (doctors) and Part D (drugs), are not paid by the payroll tax, and are paid by premiums and government aid. (Part A, hospitals, is paid by the payroll tax.) Currently the Part B premium is $105 per month per person, and the cost is 4 times as much, $420 per month, so taxpayers pay a 75% subsidy. Premiums go up with income and subsidy is reduced, in several bands of income, but even the highest income participants get 20% subsidy.

The current premium is about 2% of income (red line above). It is
  • 1.5% to 2.5% of income between $101,000-$537,000 for couples
  • 1.5% to 2.5% of income between $50,000-$270,000 for individuals.
People below that pay more; people at the top pay less (in percentage). The advantage of bands is that premiums generally do not change for small changes of income, simplifying administration a little.

The Bipartisan Policy Center recommends starting bands at lower incomes (p.59 of full report), which result in higher premiums (and lower subsidies - green dashes above):
  • 2.3% to 4.1% of income between $62,000-$349,000 for couples
  • 1.7% to 3.1% of income between $41,000-$233,000 for individuals
People below that pay more; people at the top pay less. The plan would raise $6 billion per year.

Kaiser summarizes a variety of 2014 Budget proposals involving 15% increases in the premiums paid by high income participants, starting the first band lower, and slowly lowering all bands by not adjusting for inflation for several years (red dots above). Premiums would be:
  • 1.6% to 2.7% of income between $93,000-$576,000 for couples
  • 1.6% to 2.7% of income between $47,000-$288,000 for individuals
People below that pay more; people at the top pay less.

A Tucson blogger recommends charging 5% of income, up to the full cost (purple line above). Dots show bands of income, where people pay
  • 4.25% to 5.75% of income between $44,000-$237,000 for couples
  • 4.25% to 5.75% of income between $22,000-$118,000 for individuals
People below that pay more; people at the top pay less. She does not estimate the savings. A spreadsheet here estimates the savings from this proposal at $19 billion per year, using IRS counts of people by income, and consistent assumptions.

This option charges low income people the current $105, since Medicaid already pays the premium for most of them. Dropping the premium to 5% for low income people would cost Medicare more, but save an equivalent amount in Medicaid assistance, so the $19 billion overall savings would remain. It is far more than the $1.5 billion saved by the readmission penalty. Incomes can be adjusted for cost of living (purchasing power parity) by using US government locality pay. AARP presents arguments for and against basing premiums on income.

In the spreadsheet you can try different percentages and bands. A 3% charge could have bands of income where people pay
  • 2.5% to 3.5% of income between $72,000-$402,000 for couples
  • 2.5% to 3.5% of income between $36,000-$201,000 for individuals
People below that pay more; people at the top pay less. The plan would raise $6 billion per year.

The graphs show subsidies people would receive from various proposals. The current Medicare subsidy is large, even at incomes well over $100,000. The government does not subsidize food or housing for people at those incomes. The highest income limit on Food Stamps is $15,000 for one person, $20,000 for two; in subsidized housing it is $55,000 for one, $63,000 for two (Honolulu). Housing tax benefits do go to higher incomes, but people still have to pay the basic cost themselves. Why does the government make such large direct payments for health insurance for people with incomes over $100,000?
Graph of Subsidy for Singles
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Data on Hospitals

11/5/2020

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Map shows where hospitals are (or maps of doctors)
​Financial Data (below)
Quality measures and mixed incentives
Readmission penalties or xls (6MB)
Biggest penalties (methods)
Previous data: Readmission Penalties (August 2013, 3 MB xls)
List of Accountable Care Organizations (many include hospitals)
Other Medicare data
Medicare Costs, Premiums, and Alternatives

Hospital Financial Statements

​A slideshow describes different sources of information for non-profit, profit, and publicly owned hospitals, as of 2013.

A spreadsheet (5MB) shows each hospital's 2013 or 2014 financial statements, and many Medicare calculations at each hospital. It includes both Medicare and non-Medicare revenue and spending. It is compiled by Medicare to provide a context for Medicare spending in each hospital, and is called a "Medicare Cost Report"

The spreadsheet includes:
  • Revenue from patients, investments, donations, and other
  • Expenses for Salaries, Capital, major departments such as ICU, Operating room, Radiology, Emergency, Lab, Pharmacy, Administration, Building operation
  • Chain membership, Ownership type, number of beds, number of Medicare patients, address, phone, latitude + longitude, date certified
  • Medicare payments for Diagnostic groups, outliers, education,
  • Several penalties: HAC, VBP, IQR, EHR, and readmissions.

The spreadsheet has brief labels; fuller explanations are in the original Medicare form and instructions. Chapter 40 of Medicare's manual has the form (R6P240f), including work sheets S (p.1),  A (p.22), E (p.84), and G (p.100). Chapter 40 also has the instructions (pr2_40, abbreviations are on pp.9-11), which can answer many questions about the entries on the form. The current format has been used since 2010, and other data are available back to 1995.

Another article shows helpful commands for the spreadsheet.

The source also has each hospital's occupancy rate for several departments: general, maternity, ICU, coronary care, burn, hospice, psychiatric, rehab, etc. These have not been put in this spreadsheet. If you would find the occupancy rates useful, please leave a comment below or send an email.

​Medicare offers online access and downloadable spreadsheets for 2014 and 2015, without breakdowns by department, ownership, latitude+longitude or penalties.

The original Medicare databases are available from 1995 to the present. They are far more complex than the spreadsheet, with 3 types of records, and millions of records, since every number and answer on each form has a separate record. For those who need it, a CMS documentation page has record  counts, a spreadsheet of hospitals covered, and  layouts. The Medicare database averages 3,000 numeric records and 600 alpha records per hospital each year. 65 key items are in the spreadsheet, and others can be available if needed.

Other Hospital Financial Data  

Electronic Municipal Market Access (EMMA) has PDF copies of operating expense and audited financial statements for each hospital (or other facility), if it has outstanding tax-free bonds. Put hospital name in their search box, to list its past & present bonds. Click any bond which is still outstanding (on right), accept the disclosure, then click "Continuing Disclosure" to see annual and sometimes quarterly data. The data are similar to the spreadsheet above, but in PDF, often with more data from the past, but fewer hospitals.

"Summary of audit findings and federal awards" is an Audit Clearinghouse form a few pages long for each hospital showing checkoffs for any audit findings, and the amount of each federal grant spent during a year ("awards"); it does not cover Medicare or Medicaid, since these are exempt from the federal "single audit" rules. It also shows address, Employer ID number (EIN) and DUNS number. 

IRS form 990 for US nonprofit hospitals is available from AHCJ (search by name, place or person; just hospitals; other sources have many more non-profits, which can make hospitals harder to find), Open990 (2010 to present, downloadable spreadsheets) or Guidestar or Foundation Center or ProPublica or Charity Navigator, or CitizenAudit (full text search $350/yr). Form 990 shows total revenue and expense and highly paid staff (schedule J ) and contractors (VII-B). It also shows total received from Medicare and Medicaid in section VIII-2 "Revenue, Program Service," and several types of expenses in section IX, balance sheet in X, political spending in schedule C.

Canadian nonprofits (non-governmental organisations, NGOs) are listed, and some have financial information, at a government site:

apps.cra-arc.gc.ca/ebci/hacc/srch/pub/dsplyBscSrch

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Payments

8/5/2020

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Hospital bills for 100 most common diagnoses, 2011 and 2012, for US and each hospital.

Explanation of General Medicare Payment Formula for Hospitals

The explanation is based on information from
  • CMS factsheet
  • CMS web page
  • CMS regulations
  • Hartstein, Institute of Medicine
  • Dalton+Slifkin, U of North Carolina
  • Oklahoma Hospital Association factsheet

Many numbers change each year. There are links to Medicare's "home page" of each year at the bottom of the main CMS readmission page.
  • From that home page follow the links for Tables (discussed below).
  • There is also a link for Data Files which include the
  1. Impact File (names of hospitals, size, categories, cost factors), 
  2. Standardizing File (cost factors), 
  3. Wage Index File, and 
  4. Readmissions Supplemental File (numbers of readmissions).

DRG weight
  • Each patient's hospital stay is put in one diagnosis-related group (DRG), which has a payment weight (Table 5), reflecting its relative cost, compared to other diagnoses. Weights are updated every year.

Hospital operating base or "Specific standardized amounts"
  • The base for operating costs is $5-6,000 (Table 1), divided into labor-related $3-4,000) and nonlabor ($1-2,000) shares. The labor-related share of operations is multiplied by the wage index (Table 4 and Impact File) applicable to the area where the hospital is located, and in Alaska and Hawaii the nonlabor share of operations is multiplied by a cost of living factor (in Federal Register).

Hospital capital base
  • The base for capital costs is $420-440 (Table 1D), multiplied by the capital wage index which is also called the capital geographic adjustment factor-GAF (Table 4 and Impact File) applicable to the area where the hospital is located. In Alaska and Hawaii the capital base is also multiplied  by the cost of living factor.

Both hospital bases are multiplied by the DRG weight (Table 5).

Readmission reduction for "excess" readmissions in past years, based on operating costs plus payments for new technology, but excluding capital, and adjusted for transfers.

DSH for poor people
  • If the hospital treats a high-percentage of low-income patients (under either of two statutory formulas), the disproportionate share hospital (DSH) adjustment, provides for a percentage increase in Medicare payment. The DSH is about $12 billion per year, so it averages 12% of all inpatient payments in all hospitals.

IME for teaching
  • If the hospital is an approved teaching hospital the indirect medical education (IME) adjustment for operating costs depends on the ratio of residents-to-beds, and for capital depends on the ratio of residents-to-average daily census. The IME is about $6 billion per year, so it averages 6% of all inpatient payments in all hospitals.

Outlier payments for very costly hospital stays cover 80% of hospital losses over $23,000 (90% for burns). These total about $16 billion per year and they average about 2.9% of payments for most procedures, including the procedures subject to readmission penalties. They are higher on a few other procedures.

Summary inpatient costs released by Medicare include DRG amount (operating + capital), disproportionate share, teaching, and outlier payments. Operating cost (the base for readmission penalties) is about 73% of these summary costs.

Transfers after short stay get lower payment

New technology add-on payment (NTAP) added if applicable

Large Urban Areas get extra factor, meaning Metro Statistical Areas over 1 million people and New England County Metro Areas over 970,000.

Organ acquisition is paid separately

Value-based purchasing VBP has adjustments, based on operating costs, not capital.

Sole community hospitals (SCH) are paid by other formulas if higher

Medicare dependent hospitals (MDH) are paid by another formula if higher

Low volume hospitals get more, by formula

Qualifying hospitals are in the bottom quartile of counties on Medicare spending per enrollee, and get more

Hospitals not reporting quality data get reduction


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