Why Hospitals Cry Poor: Cross-Subsidization Explained

Why Hospitals Cry Poor: Cross-Subsidization Explained. The story of senior citizen 'Rick' who was hospitalized with pneumonia illustrates underpayment by Medicare to hospitals.

Hospitals then Over-charge employer-sponsored plans via their health insurance carriers to 'Cross-Subsidize' the Medicare underpayments.

This process of 'Cross-Subsidization' involves the insurance carrier 'tacking on' an additional 15% in administrative fees, commissions to insurance brokers and consultants and profit margin.

Therefore, insurance carriers are incentivized for Medicare to underpay hospitals by even more in order to maximize the carriers' 15% additional fees/commission/profit.

Hospitals could create their own health insurance companies (and indeed some have) and work to decrease their costs and lower administration fees... However, most hospitals lack the will and the skill to execute such a strategy.

As a result, hospitals 'Cry Poor' to the Government via lobbying efforts to increase Medicare reimbursement and 'Cry Poor' to insurance carriers to negotiate higher payments.

Sources:

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[ThinkingMan-]

Okay well that was SUPER ENLIGHTENING!

[ShimmyMD]

Great video! Subscribed!
Why does it cost insurance 350k for procedure that costs the hospital only 50k? Speaking to the scoliosis example

[suns]

Great video! Can you please investigate and do a video on NPs, especially in outpatient settings, getting severely underpaid. Let’s say an NP is seeing 3 pt in an hr with a 99214 (charging $160/visit but having reimbursement rate of $70-110/visit, depending on the insurance). And NPs salary is $50-60/hr. Obviously the employer has benefits 401K's and other things to pay but that’s a profit margin of 420-550%. How is this even going on? And how is this even allowed? NPs are severely unaware and uneducated about reimbursement rates, and it seems like they're being taken advantage of because of this. Obviously, there is a huge educational difference between MDs vs NP and insurance companies in general reimbursed NPs 15% lower. But what in the world is going on with the NP salary? They're being used like a cash cow. Can you please do a deep dive in this?
It would make sense if NPs were working less in outpt setting compared to MDs but in most places They have the same patient and volume load; honestly sometimes more than MDs. This is pure robbery and exploitation.

[AjayPerumbeti]

Would you think that hospital insurance companies would incentivize rather than disincentivize performing profitable procedures since they are taking a cut and passing on the expense to the employers. Especially, since there is not a lot of choice for insurers and perhaps the market doesn't function well to keep prices low for employers.

[geriatricdoc]

Can you comment on Kaiser Permanenete and their success

[UnitedhealthcareCompany]

Please ask someone to make your writing in simple word document... your ways is way back to 50s and 60s way of teaching 😅