Hospital inpatients are paid on a unique system by most payers. If the hospital is under 25 beds/critical access hospitals, there are some different methods to help them stay solvent, differing by insurance plan.
After 44 years in healthcare reimbursement, the individual coverage for each insurance plan continues to be complex- especially to the patient. With hundreds of different insurance plans, including traditional Medicare, Medicaid, Medicare Advantage, all commercial plans, VA and even worker’s compensation, there is definitely a need to understand the methodology behind how hospitals are paid.
Since 1980, Traditional Medicare has stopped paying “billed charges” for inpatients and moved to a single, per ‘stay’ flat payment. Other insurance plans have followed and for multiple years, most plans have been paying a single payment based on the patient’s course of treatment and diagnosis codes, regardless of billed charges. For any business this seems odd and begs the question, if a business submits a bill for services to different customers – do they all get to decide what the payment would be based on something besides charges? Welcome to healthcare!
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To better understand this, let’s look at some real examples of an inpatient stay and how all the different insurance plans ‘pay.’
There are still a few insurance plans paying a percentage of billed charges for inpatient stays, but never full billed charges. Those days are long gone! PS Be sure to reach out to learn more about the methodology for inpatient from your community hospitals as they are always your best source.
Day Egusquiza is the president and founder of the Patient Financial Navigator Foundation Inc. — an Idaho-based family foundation. For more information, call 208-423-9036 or go to pfnfinc.com. Do you have a topic for Health Care Buzz? Please share at [email protected]
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