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Why Hospitals Cry Poor: Cross-Subsidization Explained

Why Hospitals Cry Poor: Cross-Subsidization Explained. The story of senior citizen 'Rick' who was hospitalized with pneumonia illustrates underpayment by Medicare to hospitals. Hospitals then Over-charge employer-sponsored plans via their health insurance carriers to 'Cross-Subsidize' the Medicare underpayments. This process of 'Cross-Subsidization' involves the insurance carrier 'tacking on' an additional 15% in administrative fees, commissions to insurance brokers and consultants and profit margin. Therefore, insurance carriers are incentivized for Medicare to underpay hospitals by even more in order to maximize the carriers' 15% additional fees/commission/profit. Hospitals could create their own health insurance companies (and indeed some have) and work to decrease their costs and lower administration fees... However, most hospitals lack the will and the skill to execute such a strategy. As a result, hospitals 'Cry Poor' to the Government via lobbying efforts to increase Medicare reimbursement and 'Cry Poor' to insurance carriers to negotiate higher payments. Sources: https://www.kff.org/medicare/issue-br... https://www.aha.org/fact-sheets/2020-... Other AHealthcareZ Video on Cross-Subsidization with more sources HERE:    • Hospital Cross Subsidization: Overcha...   AHealthcareZ is 400+ Healthcare Finance Educational Videos. 💥 BOOK: Check out Dr. Bricker’s Book 16 Lessons in the Business of Healing here: https://www.ahealthcarez.com/healthca... AHealthcareZ Viewers Include: Employee Benefits Professionals, HR, CFOs, Insurance Brokers, Benefits Consultants, Doctors and Nurses in Leadership Roles, Hospital and Health System Administrators, Health Insurance Carrier and PBM Professionals, Pharma and Med Device Professionals, Academic Professors and Students in Healthcare Administration and Public Health. 90,000+ Views Per Month Across All Platforms. Visit AHealthcareZ.com to Subscribe to the Healthcare Finance Video Newsletter.