Lower-Cost May Mean Better Health Outcomes

[funologist.org]

Proponents of health care price and quality transparency believe that by providing cost and quality information about physicians and hospitals, individuals will choose those providers with high quality scores and lowest costs. The argument is that providing this information to patients, the demand for high-quality health care at the lowest cost will reinvigorate competition in the health care market, thereby driving down the overall cost of care.

Because higher costs are not always indicative of the best quality, the goal is to showcase the connection between quality scores and price so that patients can more easily make informed decisions about their health care.

This disconnect between lower costs and better care is not unusual. An analysis by Modern Healthcare reported this weekend indicated that in seven of 12 cities examined, the hospital with the lower average cost for inpatient and outpatient percutaneous coronary intervention ("PCI") also had the lower readmission rate for PCI patients.

This analysis emphasizes the importance of providing side-by-side cost and quality data. In order for the U.S. healthcare market to start behaving like other markets, consumers (or patients) must have access to the same kinds of information for their health care insurers and providers as they do for cell phones and cars. Then, hospitals will no longer be able to add a large markup over their actual costs of delivering the services because the value-add simply won't be justifiable.

Same Care, Higher Bill

Medicare Patients Hospitalized but not "Admitted" Can Face Higher Costs

The front page of the Boston Globe yesterday detailed how some hospitals charge Medicare patients different prices depending upon how the hospital classifies their care.  For instance, a patient admitted for "medical observation" receives a much larger bill than one whose stay is classified as "inpatient."  This is true even though the observation patient "usually share rooms with regular inpatients and receive care from the same doctors and nurses, making their status invisible to them."

[voxxi.com]

Although hospitals do not accept blame for these classification differences, the Globe's article showed that hospitals increasingly keep patients in "observation" status longer than the typical 24 to 48 hours.  This can have a startling effect on Medicare billing.

Medicare covers the cost of rehabilitation care in a nursing home if the patient was admitted to a hospital for at least three days of inpatient care.  However, the days that a patient under "observation" do not count toward the three-day minimum needed for Medicare coverage.  As a result, Medicare patients are getting stuck with bills in the thousands, forcing some seniors to file for bankruptcy.

Out of concern for this, Medicare issued regulations this summer they believe will help hospitals clarify this issue. But others, like Toby Edelman, senior policy attorney at the Center for Medicare Advocacy in Washington D.C., believe the regulations do not provide any clarity.  Edleman believes hospitals may be trying to avoid readmission penalties under the ACA for patients readmitted within 30 days of discharge.