The government literally has an entire class of hospital that receives extra taxpayers subsidies because they have a high proportion of Medicare patients.
They are called Disproportionate Share Hospitals. If every hospital has a disproportionate share of Medicare patients (say 100%) then DSH payments go away and hospitals go under.
Both private payers and taxpayer dollars are required to keep Medicare/Medicaid afloat, as those programs have 40M and 70M people respectively covered. Soon there won't be enough leftover people to fund these programs.
Having a high percentage of Medicare Patients is not enough to qualify on it's own.
"Applies to hospitals that serve a signi cantly disproportionate number of low-income patients; and
Is based on the disproportionate patient percentage (DPP)."
Medicare pays enough to cover care and operating overhead. It's not enough to cover significant writeoffs for non Medicare patients.
> For the first 18 years of Medicare's existence, the program paid hospitals for the "cost" of the care provided. However, since 1983, the payments have been slowly declining in relationship to the actual cost of providing care, and now hospitals are receiving less in payments than the actual cost of the care. How do hospitals recover this shortfall? Simple: they pass it on to other payers.
There is a fair amount of Hollywood according going on with what overhead is included in those costs. Medical groups for example often have profitable out patient facilities in the same area as s failing hospital.
Many hospitals do operate just fine with high numbers of Medicare patients and few private medical facilities reject Medicare patients. Remember, when a 3rd party agrees to cover costs the incentive to lower costs gets messed up.
However, many hospitals also have issues which is why there are supplemental payments.
> Many hospitals do operate just fine with high numbers of Medicare patients
Excluding those which receive extra stipends for qualifying as DSHs or CAHs, no, most hospitals aren't operating "just fine" if they have a high number of Medicare patients. Unless you call overcharging private insurers and uninsured patients just to stay afloat "doing just fine".
> There is a fair amount of Hollywood according going on with what overhead is included in those costs. Medical groups for example often have profitable out patient facilities in the same area as s failing hospital.
There's no "Hollywood accounting". This is straightforward, textbook GAAP accounting that we're talking about. Medicare reimburses less than COGS. That's a well-documented fact - so well-documented, in fact, that you yourself linked to it with that article.
If Medicare reimburses less than COGS, there's no way for hospitals to subsist on Medicare reimbursement rates alone. You can try to tease the numbers any way you want, but that's exactly why GAAP exists - it gives a common framework for comparing these cases, and here the numbers are as clear as you can get.
That was from 2005 and there has been a world of changes in how things are paid for recently.
"Most notably, the share of total spending on hospital inpatient services declined by one-third between 2006 and 2016, from 32 percent to 21 percent, while payments to Medicare Advantage (private health plans which cover all Part A and Part B benefits) doubled, from 15 percent to 30 percent, as private plan enrollment has grown steadily since 2006." https://www.kff.org/medicare/issue-brief/the-facts-on-medica...
Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Again, the problem with GAAP it assumes all spending is prudent which is far from the truth.
That KFF quotation is saying literally the exact opposite of the point you're trying to make. Though I guess if you don't understand how Medicare Advantage works, it's easy to make that mistake.
> Anyway, I still disagree with how many of these things are calculated. You need to look at the indirect cost part of COGs critically and in context of other related government spending.
Medicare doesn't cover COGS. Private payers do. You can't get away from that fact, especially when you've now provided two separate links that corroborate it.
I am not trying to get away from COGs by saying Medicare covers it because I agree it does not. I am saying the overhead included is misleading because it includes a portion of unpaid bills from other patients. Yes, it's part of a hospital's overhead, no it's not medicares responsibility.
They are called Disproportionate Share Hospitals. If every hospital has a disproportionate share of Medicare patients (say 100%) then DSH payments go away and hospitals go under.
More info: https://www.cms.gov/Outreach-and-Education/Medicare-Learning...
Both private payers and taxpayer dollars are required to keep Medicare/Medicaid afloat, as those programs have 40M and 70M people respectively covered. Soon there won't be enough leftover people to fund these programs.