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Uncompensated Care and Cost Shifting 1 Running Head: Uncompensated and Cost Shifting

Uncompensated Care and Cost Shifting Matthew Mabalot HCA 600 Week Two Assignment National University

Uncompensated Care and Cost Shifting 2 Uncompensated Care and Cost Shifting Uncompensated care is one of challenges that the U.S. health delivery faces in providing healthcare services to everyone. Uncompensated care are the services rendered by providers unpaid by people uninsured afford to pay the costs for those services. Uncompensated care includes low reimbursements rates for the services provided and services that some people were not able afford to pay for. The majority of uncompensated care includes the services rendered to people with no insurance. The cost of healthcare is expensive because of the cost of maintenance of hospital fees, staff, and technology. The reimbursements from the government are lower than the costs that the hospital or provider has to pay to do the service. The total amount of uncompensated care adds up when low reimbursements, no payments, and charity care included. Providers can still keep the fixed rates for the services provided to patients covered by the government reimbursements but still face the challenge when government cuts occur and are not enough to pay for the rendered. To pay for the services for the uncompensated care, providers use cost shifting to obtain the money lost. Cost shifting is put into place by providers to make up for the loss of uncompensated care. The uncompensated care is care unpaid for so the money must come from somewhere. Cost shifting was developed to gain money loss through uncompensated care. Providers that lose money through the lower reimbursements and care that was provided free is compensated through cost shift by charging a higher rate to the patients. Although the government is trying to help low income population by providing government programs to help the patients be covered for health services, the providers are increasing premium rates to the people have commercial insurances. The loss through uncompensated care and low rates paid by

Uncompensated Care and Cost Shifting 3 government medical assistance increases the cost to insured patients because of the services not paid for have to be compensated for to avoid losing profit. Providers have limited ability to shift costs because of the competition that exists between other providers and hospital facilities that can afford the costs of uncompensated care by joining forces with other facilities. It is more difficult to raise prices to people who have insurance because of lower premium rates that other companies can offer despite the services given to the people with no insurance. Private payers will have to pay higher rates to pay for the money loss for the unpaid services. The competition in negotiating rates and the new laws makes it difficult for some hospitals to use cost shifting to pay for the money lost. It is going to become more of a challenge for people to get insured because of cost shifting being less flexible for providers. The costs for services remain the same for everyone yet the reimbursement rates are less for others, causes hospitals to have to increase premiums for the people who can pay the costs. When there is a decrease in reimbursement somewhere, there is an increase for someone else in another place. The reimbursement rates change every year for various services and negotiations start over every year. Although cost shifting can help pay for costs by increasing the rate for the insured, it is still a difficult to use in todays competitive premium rates offered by health plans. Some hospitals and provides have the negotiating power to c offer the lowest premium rates, which makes it difficult for other providers to continue to pay for the facility and still get paid when their consumers are going elsewhere for the lower premium rates. The issue with uncompensated care and cost shifting is that there are rates that remain fixed by the government for these services but private payers change and negotiate premium

Uncompensated Care and Cost Shifting 4 rates for the providers. Although providers can get paid at a fixed rate by the government, private payers can offer providers a higher rate based on negotiated contracts and rules for specific services. Private payers can change prices and offer competitive reimbursement for providers, which means providers may not even take insured patients under government medical assistance and become private offices where they only take private insurances. The providers that provider services for government and commercial insurances will not be able to use cost shifting because they can lose consumers from private payers. Private payers can offer providers bonuses to providers to keep services limited to patients in their private office rather than sending them to specialist to prevent uncompensated care payments. They can also offer low premium rates to their consumers and still compensate the provider with higher payments for their services by negotiating prices for those services. Cost shifting still does not help the purpose the healthcare reform is trying to reach, which is providing health services to patients in need without losing quality. Although cost shifting helps pay for uncompensated care, it all returns to the same challenge, which is getting people health insurance. The United States already has a low percentage of people without insurance because of high unemployment rate. With cost shifting, the premiums for the insured will continue to increase as long as uncompensated care continues. The percentage of uninsured people has the potential to increase because of such high premium rates to be insured. The insured population may not be able to afford the high rates if cost shifting continues the population of uninsured people will increase.

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References Shi, L. and Singh, D. (2008) Delivering Health Care in America. A systems Approach. Jones and Bartlett Publishers, Inc. 106, 197-237. Cogan, J., Hubbard, G., and Kessler, D. (2011). Obama Care and the Truth about Cost Shifting. Retrieved from http://online.wsj.com/article/SB10001424052748703560404576189012255187694.html Schoenberg, S. (2010). Health providers warn of effects of cost shifting Higher premiums may make up slack. Retrieved from http://www.concordmonitor.com/article/health-providers-warn-of-effects-of-costshifting?SESS398758ddd1b40ee0d2b0789933215124=bing&page=full

Lefton, R. B. (2003, December). What's it worth? Cost shifting, a practice that can often result in significant financial burden on self-pay patients, is leading to greater scrutiny of hospital charging practices. Healthcare Financial Management, 57(12), 60+. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE%7CA111696060&v=2.1&u=nu_main&it=r &p=AONE&sw=w

Uncompensated Care and Cost Shifting 6 Healthcare reform: shifting costs saves none. (2009, September 19). PharmacoEconomics and Outcomes News, (587), 2. Retrieved from http://go.galegroup.com/ps/i.do?id=GALE%7CA222315743&v=2.1&u=nu_main&it=r &p=AONE&sw=w