Privately insured continue to augment Medicare/Medicaid patients

Posted 6/5/19

While required to post a listing of the costs of services, the prices listed on the Jefferson Healthcare website may not necessarily represent what will actually be on your bill if you are treated there.

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Privately insured continue to augment Medicare/Medicaid patients

Posted

While required to post a listing of the costs of services, the prices listed on the Jefferson Healthcare website may not necessarily represent what will actually be on your bill if you are treated there.

This discrepancy is caused by the fact that those with private insurance generally pay more than those with Medicaid or Medicare.

“Commercial insurance companies pay more toward healthcare than federal or state payers,” said Hilary Whittington, Chief Financial and Administrative Officer at Jefferson Healthcare.

“That is true across any hospital.”

For a hip replacement procedure, for example, Medicare provides the hospital 59% of total charges while Medicaid provides 16% of total charges, according to Whittington.

For Medicaid patients, the benefits available vary based on their plan. However, Medicaid patients generally do not have an additional responsibility beyond what the plan pays the hospital if a service qualifies under the plan - though not all services are in contract depending on the plan relevant to the patient, Whittington said.

For a Medicare patient’s share of a bill, it depends on whether the status of the patient is inpatient or outpatient, which is based on medical necessity as determined by the provider, Whittington said.

For inpatient services, the Medicare deductible typically caps out at $1364, according to the Medicare website, so the patient’s responsibility could cap at this. However, there could be outpatient charges for some of the diagnostics and visits on the front end, and physical therapy on the back end, Whittington said.

“For outpatient, Medicare patients generally are responsible for a $185 deductible plus 20% coinsurance. However, the portion the patient owes could qualify for our financial assistance program depending on the patient’s financial situation,” Whittington said.

“Insurance plans vary widely,” she said. “For many plans, patients generally pay 20% of the allowable rate, up to their deductible.”

Average prices listed online

Since Jan. 1, Medicare has required hospitals to post their pricing online to provide transparency to customers, and to make electronic medical records more readily accessible to patients, according to a press release from the Centers for Medicaid and Medicare Services.

The new law was pushed by Alex Michael Azar II, United States Secretary of Health and Human Services as part of the Trump Administration’s efforts to reform Obamacare.

“America’s healthcare system has to change, and President Trump’s Administration recognizes that,” Azar said in 2018. The new law “puts patients in charge of their care and allows them to receive the quality and price information needed to drive competition and increase value,” he continued.

While preparing to provide such information to comply with the law, Whittington and her team also began to review the process of hospital pricing. On average, the costs to the hospital to provide services increase by about 3 to 6 percent per year. This cost is generally absorbed by those covered with commercial insurance.

And while the pricing list is only a best estimate, it does provide a nudge towards transparency, Whittington said.

“I think what was hoped to be understood is our hospital is not charging prices that are out of market or absurd.”

The issue of those with private insurance being on the hook for a larger bill in order to supplement the lower rates paid by government insurance is common and hard to solve, said Kees Kolff, MD, Commissioner for Jefferson County Public Hospital District No. 2.

“This is something that all smaller critical access hospitals really struggle with. We don’t have the economies of scale a larger institution has. We are trying to serve a population of roughly 30,000 people and it is very difficult to do that in a cost effective way.”

The hospital offers 25 beds. To put that in comparison, Harborview Medical Center of Seattle has 413 licensed beds and serves a population of millions, according to their website.

So why should those with private insurance be forced to pay extra to subsidize shortfalls? Kees said the sacrifice is for the health of the community at large.

“Everyone in this community likes having an emergency room,” he said. “Everyone in this community would like to have an MRI available at midnight if they need one. In order for us to have that MRI tech available at midnight, we have to charge more than in a freestanding or a larger facility where they can keep a couple of MRI techs available 24/7.”

To recoup the losses while preventing privately insured patients from footing the entire deficit, the hospital focuses on specialty care services, Kees said. That is because there is better reimbursement from Medicare and Medicaid than in traditional services, he said.

“They are services we think are a priority for our community, but can really support our efforts in general to provide all kinds of general care.”

The process of trying to stay afloat while providing essential care is one the board takes seriously, Kees said.

“We work in collaboration with the staff leadership team in order to craft a strategic plan. That strategic plan has in it the specific elements that we adopt and that then the leadership team puts budgets around. We prioritize from the strategic plan. It is all a very thoughtful long term process.”

Kees said many people in the community may not understand the pricing mechanism and the finances for an institution such as Jefferson Healthcare.

“The reason is because it is very complicated.”

The best fix would be at the federal level, Kees said, and the implementation of a single payer healthcare system.

“We are stuck in this problem of having multiple different sources of revenue from multiple types of services that just don’t make sense. We are in that very difficult transition process where this country is moving towards not fee-for-service but population health and quality measures.”

While potentially exciting, this period in medical history can also be a very challenging time for hospitals to stay afloat, Kees said.

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