Differentiate between how hospitals and physicians are reimb

Differentiate between how hospitals and physicians are reimbursed. Include government entitlements such as Medicare and Medicaid.

Solution

Reimbusement to hospital includes payment to not only physician but also for all overheads.

Wide variation in private insurer payment rates to hospitals and physicians across and within local markets suggests that some providers, particularly hospitals, have significant market power to negotiate higher-than-competitive prices, according to a new study by the Center for Studying Health System Change (HSC). Looking across eight health care markets—Cleveland; Indianapolis; Los Angeles; Miami; Milwaukee; Richmond, Va.; San Francisco; and rural Wisconsin—average inpatient hospital payment rates of four large national insurers ranged from 147 percent of Medicare in Miami to 210 percent in San Francisco. In extreme cases, some hospitals command almost five times what Medicare pays for inpatient services and more than seven times what Medicare pays for outpatient care. Variation within markets was just as dramatic. For example, the hospital with prices at the 25th percentile of Los Angeles hospitals received 84 percent of Medicare rates for inpatient care, while the hospital with prices at the 75th percentile received 184 percent of Medicare rates. The highest-priced Los Angeles hospital with substantial inpatient claims volume received 418 percent of Medicare. While not as pronounced, significant variation in physician payment rates also exists across and within markets and by specialty. Few would characterize the variation in hospital and physician payment rates found in this study to be consistent with a highly competitive market. Purchasers and public policy makers can address provider market power, or the ability to negotiate higher-than-competitive prices, through two distinct approaches. One is to pursue market approaches to strengthen competitive forces, while the other is to constrain payment rates through regulation.

Medicaid and Medicare are two governmental programs that provide medical and health-related services to specific groups of people in the United States. Although the two programs are very different, they are both managed by the Centers for Medicare and Medicaid Services, a division of the U.S. Department of Health and Human Services.

Medicare is a social insurance program that serves more than 44 million enrollees (as of 2008). The program costs about $432 billion, or 3.2% of GDP, in 2007. Medicaid is a social welfare (or social protection) program that serves about 40 million people (as of 2007) and costs about $330 billion, or 2.4% of GDP, in 2007. Together, Medicare and Medicaid represent 21% of the FY 2007 U.S. federal government.

Medicaid does not pay money to individuals, but operates in a program that sends payments to the health care providers. States make these payments based on a fee-for-service agreement or through prepayment arrangements such as health maintenance organizations (HMOs).

Each State is then reimbursed for a share of their Medicaid expenditures from the Federal Government. This Federal Medical Assistance Percentage (FMAP) is determined each year and depends on the State\'s average per capita income level. Richer states receive a smaller share than poorer states, but by law the FMAP must be between 50% and 83%.

All Medicaid beneficiaries must be exempt from copayments for emergency services and family planning services.

What is Medicare?

Medicare is a Federal health insurance program that pays for hospital and medical care for elderly and certain disabled Americans.

The program consists of two main parts for hospital and medical insurance (Part A and Part B) and two additional parts that provide flexibility and prescription drugs (Part C and Part D).