Medicare pays hospitals based on services provided, regardless of location. Since 1997, Medicare may not pay for preventable conditions caused by poor care or human error. Some hospitals argue that reimbursement rates are inadequate, leading to understaffing and lower quality care. Medicare Part A requires patients to pay a deductible and daily fee for hospital care.
Hospital Medicare reimbursement refers to the amount of money that the US Medicare program pays to hospitals. The determination of what is paid is based on the service performed by the hospital and this usually does not take into account the location of the hospital. People in Topeka or New York City who have the same type of heart surgery will have their Medicare program pay the same rates. Medicare determines what it believes is a reasonable payment for a particular service rendered and pays accordingly.
Since 1997, there have been some changes in the way Medicare hospital reimbursement works. In many cases, Medicare will not pay a surcharge if they determine that a condition is developing in the hospital due to poor care or human error. In other words, many preventable conditions such as infections or bed sores that cause a patient to stay in do not lead to an extra hospital reimbursement. Some are in favor of this system and others argue that it discourages hospitals from accepting certain patients, especially those who are medically frail.
There are a number of hospitals that argue that Medicare hospital reimbursement rates are not adequate. Very little actual costs may be covered, and hospitals that are required to take Medicare, like many state hospitals, can shoulder the burden of trying to operate with extremely low reimbursement rates. This could be partially offset by the amounts charged to non-Medicare patients, and especially those without any form of insurance. It can also be a vicious cycle, because low funding can translate into understaffing, lower wages for workers, and lower quality workers, which in turn can lead to more human error or churn. patients and a reduction in the money paid for people’s long hospitalizations.
One aspect of this equation, however, is the determination of “effective cost”. It’s easy enough to figure out standard cost, but the true actual cost may be a different matter. Hospitals contract with insurers at many different reimbursement rates, and these different pay scales for services don’t tell much about the real costs. Hospital Medicare reimbursement certainly builds the cost analysis at the low end of the pay scale, but there are also private insurers that don’t pay much more for services.
Another way to look at Medicare hospital reimbursement is to look at Medicare Part A, which determines hospital coverage for each patient and each patient’s financial responsibility. Under this part of Medicare, a patient must pay a certain amount for hospital care, and that includes a deductible in excess of $1000 US Dollars (USD) and $100 USD per day if the stay is in a skilled nursing facility. One of the reasons people often purchase supplemental insurance through Medicare is due to concerns about having to pay these fees.
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