By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: Why Can’t Cincinnati Hospitals Survive on Medicare + 40%?
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Business > Why Can’t Cincinnati Hospitals Survive on Medicare + 40%?
Business

Why Can’t Cincinnati Hospitals Survive on Medicare + 40%?

DavidEWilliams
DavidEWilliams
Share
5 Min Read
SHARE

With ObamaCare the law of the land, employers are facing up to the fact that they will continue to be responsible for providing health care coverage for their staffers. That’s a good thing because it means some will focus harder on innovative ways to get more value for money, and their success will blaze a path for others.

With ObamaCare the law of the land, employers are facing up to the fact that they will continue to be responsible for providing health care coverage for their staffers. That’s a good thing because it means some will focus harder on innovative ways to get more value for money, and their success will blaze a path for others.

In Cincinnati, several employers have signed up for TrueCost, a simple plan that pays providers 140 percent of Medicare rates.  The idea is to save the trouble and cost of negotiating with providers and pay them a premium over what they already accept from Medicare. But hospitals are angry about the plan and are threatening to “balance bill” patients the difference between hospital “charges” and the TrueCost amount.

Here’s how employers are viewing it:

More Read

mobile patient engagement
Combating the Nursing Shortage with Mobile Patient Engagement
How is Gaming Changing the Landscape in Health Care? Part 2 | Joseph C. Kvedar, Center for Connected Health
How Health Facilities Can Prepare For Natural Disasters
Stage 2 of Meaningful Use Delayed to 2014
Doctor Entrepreneur: What Patient-Customers Want Is Good Business

Employers say that with health care costs skyrocketing out of control, they don’t have a choice but to try something new.

“If this is out there and it’s available, I feel the responsibility to save the taxpayers money,” said Richard Gardner, treasurer of Mason City Schools, which spends about $15 million a year on health care. The district laid off teachers last year to help balance its budget. “We’re kind of on the edge of a different billing structure. But I think its time has come.”

Hospitals see things differently:

Hospitals say Medicare rates don’t begin to cover what they actually spend on medical care.

“Every hospital sets their own prices,” said Jennifer Atkins, vice president of payor contracting and engagement with Cincinnati-based Catholic Health Partners, which operates the five Mercy hospitals and Jewish Hospital. “The discount is the quid pro quo for a group of patients to have access to the hospital.”

The sentence about Medicare rates not covering costs isn’t attributed to anyone, but it really does bear examination. For most hospitals, Medicare is the biggest customer. Medicaid is also usually a big customer and its rates are usually lower than Medicare. Hospitals also have patients that can’t pay or just don’t. So if a hospital isn’t breaking even on Medicare it will have a big gap to fill. Some hospitals have substantial other sources of income (from investments and/or philanthropy) but in general they look to commercial payers for more than 100 percent of their profits.

Costs are a funny thing. If Medicare really was a net negative to a hospital theoretically the hospital could just forego Medicare patients, but somehow no one does so. There are fixed cost and variable costs, and costs that are in between. And because reimbursement is structured so strangely, hospital accounting systems often provide little insight into what services and patients are profitable and which are not.

Historically commercial payers have gone along with paying hospitals way above Medicare rates. But if you think about it it’s reasonable for employers to expect hospitals to accept Medicare + 40%, or even less. After all it’s not the fault of employers that Medicare (and Medicaid) are relatively stingy.

It would be interesting to recalculate the cost of Medicare to include the subsidy from commercial payers. That would show the true cost of the program to be much higher.

Like it or not, the age of transparency and cost consciousness is going to drive hospital prices down toward the Medicare level. And hospitals had better figure out how to deal with it. One way, of course, is to embrace global payments, which allow hospitals to benefit from optimizing utilization.

 

Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

Remote Monitoring touchpoints
Remote Monitoring Touchpoints Patients Will Actually Follow
Technology
October 9, 2025
dental care
Importance of Good Dental Care for Health and Confidence
Dental health Specialties
October 2, 2025
AI in Healthcare
AI in Healthcare: Technology is Transforming the Global Landscape
Global Healthcare Policy & Law Technology
October 1, 2025
Choosing the Right Swimwear for Health and Safety
News
September 30, 2025

You Might also Like

BusinessNews

Google’s Upcoming Changes: How it Will Hurt the Growth of Private Practices

August 11, 2016
New_Proposed_CMS_Rule_on_Radiology_Reimbursement_Rates_for_2015
BusinessFinanceHealth ReformHospital AdministrationPolicy & LawRadiology

New Proposed CMS Rule on Radiology Reimbursement Rates for 2015

December 22, 2014

FDA Approves First Ever Self Sanitizing Keyboard

January 3, 2012
Image
BusinesseHealthMobile HealthNewsTechnology

Health Startups that Interest @HealthCursor @medmocha

April 22, 2013
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?