By Tim Stewart, Jarrard Inc. Partner and Academic Health Systems Practice Lead
Healthcare in this country is financed through an intertwined tangle of jargon and obfuscation. Reimbursement rates, prior authorization, managed care, value-based care, adjusted fees, site neutral payments, 340B prescription drug benefits…Even the distinction between Medicaid and Medicare can be confusing, whether you’re a normal person going about their life or the Secretary of Health and Human Services.
A somewhat uncomfortable truth is that healthcare providers have largely enjoyed the benefit of the doubt when it comes to this web of reimbursement. Not that people enjoy the experience of paying for healthcare. They most certainly do not. But there’s been a certain throw-up-your-hands resignation to the conversation. That’s partly because when people need healthcare they need it, and partly because the public doesn’t know where to start with true cost reform. Too opaque to fail, perhaps.
Enter the Trump Administration. With its overarching aim of disrupting status quos, the healthcare industry begins looking like a buffet of entrenched targets.
Take site neutral payments. The phrase alone seems lab-designed to cause people to yawn but it’s catchy when compared to the long form “aligning Medicare payments for outpatient services across care settings.” The short version of the current state? Medicare and commercial insurers sometimes pay more for the same services if they are provided at a hospital outpatient department rather than at a standalone ambulatory surgical center.
If you’re inclined to point to something and call it a scam, this could very well look like one!
The reality is much more complex, due to our current Rube Goldberg machine model for paying for healthcare. Rather than just determining what the services cost and who should pay for them, the entanglement of public and private interests – overlaid with physicians, nurses and employees, reinforced (or weighed down) by squadrons of administrators, regulators (and yes, consultants) – creates a series of intended and unintended consequences.
In short, the higher prices for services at hospital-affiliated outpatient facilities offset the fact that, across government payers, commercial insurers and patients who can’t pay for care, hospitals aren’t being paid the full cost of many services they provide. The roof is leaking in 10 places, and outpatient reimbursement is a cup that can catch some water.
Here’s where health system executives cry out, “But you can’t just say that!”
Maybe not.
But the warning here is that the status quo is not going to hold. If you aren’t, right now, developing the story you can just say, it’s only a matter of time before others isolate and distort parts – site neutral payments, 340B programs – of your story. That puts your organization on the defensive and compromises your ability to deliver on the mission of care.
Don’t wait for the storm, it’s barreling down. Time to get out your message.
