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Some U.S. Hospitals Manipulating Medicare System

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By Phil Cohen

Hospitals across the United States have found a way to manipulate Medicare and get themselves fast, easy money. Taking advantage of Medicare’s incentivized policy that encourages health care provides to administer higher quality care to as many patients as they can, hospitals have been disproportionately raising the prices of complex procedures.

The current Medicare system has a policy of giving hospitals special payments for treating extremely sick patients called “outlier costs,” according to the Wall Street Journal (WSJ). Typically, such payments are given to hospitals far before case reports are made official and submitted to the government, meaning that these payments are often made blindly. The government simply reimburses the hospital for however much money they charged the patient for the complicated procedure or treatment

Apparently, hospitals have gotten wise to this system which is contingent upon blind faith, and have raised the prices of administration to a level that is much higher than what the standard market costs should be.

Christ Hospital, in New Jersey, for instance, has made a $2.93 million profit since 2013 on raising the prices of their administration of special procedures. None of that money was earned because they took in more patients or administered a higher quality of care—rather, they have increased their listing prices by about 60%, according to the Wall Street Journal.

This is just one of the nation’s many health care institutions that have discovered how to take advantage of Medicare’s incentivized policies. The Wall Street Journal has identified over $2.6 billion in overpayments that Medicare has issued to various hospitals since 2010.

Nonetheless, Christ Hospital, whose parent company is CarePoint Health, insists that they have acted in complete accordance with the Medicare guidelines. A spokesman told WSJ, “CarePoint goes to great lengths to avoid receiving any undue outlier payments by notifying [Medicare] of any changes in charges immediately.”

Regardless, there is no doubting that there are several flaws with the current Medicare payment policy regarding outlier costs. The government is too often forced into overpaying healthcare providers for their administration of special procedures. Additionally, studies have found that Medicare has also been found to underpay hospitals by about $550 million if they do not keep pace with the hawkish price raises being implemented by their competitors nationwide.

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Phil Cohen

About the author

Philip Cohen is the founder and President of PRN Funding, LLC. PRN Funding is an extraordinarily focused niche player in healthcare funding. With years of…... Read More

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