unique structure of the U.S. healthcare system means that the out-of-pocket
costs for patients requiring hospitalization due to COVID-19 can vary
substantially among those with different types of health insurance. In
addition, costs to those of different age groups, living in different parts of
the country, experiencing different levels of severity, or facing the illness
at different times of the year will also vary substantially.
Although it is too early to analyze the healthcare cost data for those who have been treated for COVID-19 in the U.S., historical data from patients who have sought medical attention for influenza or pneumonia may be informative for understanding out-of-pocket costs resulting from COVID-19 treatment. The biological and clinical characteristics of COVID-19 differ from other respiratory infections, but the signs and symptoms that necessitate hospitalization and intensive care for severe cases of the disease are also seen in severe cases of other respiratory infections.
In this report by Milliman’s Stoddard Davenport, healthcare claims data from three large national research databases is used to investigate the variation in out-of-pocket costs for patients who historically experienced acute inpatient hospitalizations involving treatment of acute respiratory infections (pneumonia and influenza). In this analysis, the focus is exclusively on cases that required hospitalization.
In November 2019, the Centers for Medicare and Medicaid
Services (CMS) released a final rule establishing requirements for hospitals
operating in the United States to establish, update, and make public a list of
their standard charges for items and services they provide. The provisions of
the final rule go into effect on January 1, 2021.
The lack of price transparency in the U.S. healthcare market is well known. There are several reasons that can make estimating costs before care difficult for consumers. One of the main challenges is the variation in billed charges and negotiated rates between insurance companies and providers. The majority of Americans have health insurance coverage through insurance companies (or payers), which negotiate prices with hospitals and providers. The negotiated prices between payers and providers have historically been confidential and subject to nondisclosure agreements.
Health economists and other experts believe that
transparency in pricing is key to healthcare cost containment. Opponents of the
policies adopted in the CMS final rule say that these requirements will impose
a significant burden on hospitals and may lead to confusion without providing
any relevant information.
In this paper, Milliman actuaries and consultants provide a summary of key provisions of the final rule that apply to hospitals, briefly touching on topics that require additional consideration by parties affected by the rule.
Diagnosis-related groups (DRGs) are the standard envisioned within the Cyprus General Healthcare System (GHS—or commonly referred to as “GESY”) as the process by which public and private hospitals will be reimbursed for their services.
As part of the GHS implementation, hospitals will need to employ a customised DRG system, with a catalogue of DRG codes and related definitions. It is envisioned that this will enhance efficiency in the delivery of hospital services, more so than other hospital payment models. In this paper, Milliman’s Nicholas Kallis considers the initial development of the DRG system in the United States to assess whether or not it’s worth implementing in Cyprus, and in what form.
This paper is the first in a series about DRG systems. The series will cover the definition and objectives of these systems. The papers will also explore how different nations have developed and adopted the payment mechanism and their main advantages and disadvantages.
Hospital readmissions can add unnecessary cost to the healthcare system and can adversely affect patient health. Readmission rates are key metrics for measuring the performance of hospitals, health plans, accountable care organizations (ACOs), physicians, and post-acute care facilities because they are tied to financial rewards and penalties for those entities. This article by Milliman consultants Maggie Alston and Michele Berrios identifies key elements that should be considered when evaluating readmission rates across populations or when comparing readmission rates with different methodologies.
The Milliman RBRVS for Hospitals™ Fee Schedule provides a simple solution for comparing hospital contractual allowed amounts, billed charge master levels, relative efficiency, and patient mix differences. The fee schedule is based on Relative Value Units (RVUs). There are several advantages of RBRVS for Hospitals. For example, RVUs have been developed for all hospital services, so they reflect the relative resources required to perform the care. Also, a single conversion factor can be used to benchmark a hospital contract. Milliman actuaries provide some perspective in this paper.
Hospital and health system leadership teams now recognize the importance of a thorough post-acute care (PAC) integration strategy. Many of them are developing networks that integrate physicians and investing in population health analytics, positive steps towards value-based delivery. However, many of these organizations will not see the meaningful financial and patient care benefits of these initiatives for several more years. Given current market conditions, PAC integration is likely to immediately enhance the value of patient care and have a positive impact on hospitals’ financials in the near-term. Milliman’s Ed Jhu and Sean Slattery and Kurt Salmon’s Ross Armstrong offer more perspective in a recent Becker’s Hospital Review article.