Let's Fix Medicare, Replace Medicaid, and Repealthe Affordable Care Act by Lindsay L. Pratt

Author:Lindsay L. Pratt [M.D., Lindsay L. Pratt,]
Language: eng
Format: epub
ISBN: 9781467882385
Publisher: AuthorHouse UK
Published: 2012-01-11T00:00:00+00:00

Chapter Seven

Changing How Health Insurance Reimbursements

are Calculated And Awarded

Changing how health insurance reimbursements to Healthcare’s providers are calculated and awarded is the third of the five changes in the private healthcare delivery system to provide at least a 40% reduction in Healthcare’s costs.

The reimbursement recommendations in this chapter will not be received either enthusiastically or favorably by many healthcare providers and suppliers. But the recommendations will provide significant reductions in Healthcare’s costs, and eliminating those costs will contribute to providing the necessary 40% reduction in Healthcare’s costs. Furthermore, the reimbursement recommendations in this chapter offer providers better and more stable reimbursements than the reimbursements arbitrarily established by insurers and government programs.

Insurance reimbursement problems appeared in the late 1950s.The health insurance companies distributing the employer’s “insurance” dollars, and later, the tax payer’s “insurance” dollars [Medicare and Medicaid] in the 1960s were having problems establishing the amount of money each provider should receive for their services. Initially, the reimbursements were arbitrarily established by the provider. Providers submitted their service charges to an insurance company, and in most instances, the insurance company paid the provider’s charges unchallenged. The problem: There were many medically unnecessary healthcare services receiving insurance reimbursements, and there were many disparities in the amounts paid to different healthcare providers. In addition, the increasing charges for Healthcare’s services were not being challenged.

The arbitrary process of establishing a provider’s insurance reimbursements continued into the 1990s, but instead of the provider, the insurer was arbitrarily establishing the amount of those reimbursements. The problem: The insurers were arbitrarily reducing their reimbursements to Healthcare’s providers. Also, the disparities in the payments paid to different providers continued.

Over several decades, establishing the amount of, and eliminating the disparities in, health insurance reimbursements has created the need for a standard to establish those reimbursements. A standard was proposed in the late 1980s, but it received no attention. The standard was labeled a price control, and at the time, price controls were considered inappropriate because they had not been successful in the free market economy.

But as has been discussed previously, healthcare is not part of the free market economy, and price controls have a place in healthcare. In free market economies, consumers have the opportunity to decide if they wish to purchase a product, or a service, and they have the opportunity to determine the price they are willing to pay to obtain the product or service. However, in healthcare, patients have neither the option of deciding if they wanted to acquire their illness or disability nor the option of deciding how much they will pay to treat their illness or disability. Accordingly, price controls have a place in controlling the cost of Healthcare’s services, but establishing the “price” cannot be an arbitrary process. A standard is necessary to establish that “price” [reimbursement].

A standard [price control] was proposed in the late 1980s. It was the Provider Reimbursement Formula, and the Formula had then, and continues to have, three components. They are:

1. The cost of the provider.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.