Medicare payment policy: does cost shifting matter?

Payment Policy : Does Cost Shifting Matter ?

We examine cost shifting within the context of Medicare payment policy. We briefly review economic theory and available data and discuss the importance of cost shifting for policy. Then we present four central findings on cost shifting based on the views of former high-level policymakers. First, Medicare’s early (pre-prospective) payment policy was a boon to hospitals. Second, Medicare payment ...

Hospitals respond to Medicare payment shortfalls by both shifting costs and cutting them, based on market concentration.

The coverage expansions planned under the Affordable Care Act are to be financed in part by slowing Medicare payment updates to hospitals, thereby reigniting the debate over whether low prices paid by public payers cause hospitals to increase prices to private insurers--a practice known as cost shifting. Recently, the Medicare Payment Advisory Commission (MedPAC) proposed an alternative explana...

Medicare payment policy and the controversy over hospital cost shifting.

This article examines (i) the background and debate over cost shifting; (ii) hospitals as business institutions that often shift the financial responsibility for their costs in the form of differential pricing; and (iii) how the cost-shifting debate affects and is affected by Medicare. The aim is to gain a better understanding of how changes in reimbursement by large government health insurance...

Payment Policy and Competition in the Medicare+Choice Program

Over the last 2 years, Medicare+Choice (M+C) plans raised premiums and reduced benefits to an unprecedented degree, arguing that these were unavoidable consequences of inadequate payments. We investigate plan premium and benefit decisions, taking advantage of a natural experiment to separate the influences of payment rates, the intensity of interplan competition, and the underlying cost of prov...

Cost Shifting or Cost Cutting?: the Incidence of Reductions in Medicare Payments