My Proposal for Hospital Medicare Pricing Discount Programs+Patient $+Private Catastrophic Coverage

08/28/2017 | Brian Griffin

[Brian Griffin]

There has been a strong demand here and elsewhere for plans based on catastrophic insurance.

Those plans are only suitable for those with substantial amounts of savings of at least $10,000.

If you are thinking of $5,000, that would be a typical PPACA bronze plan.

Healthy people often want catastrophic plans to get the potentially massive cost-savings of substantial self-insurance.

Fortunately, the people most likely to have very high premiums, people aged 50 to 64, often have $10,000 or much more.

Payment for hospital-billed care, in-patient and out-patient, would come from the patient, and if the case was expensive enough, the private insurer providing the patient's catastrophic coverage.

There would be no governmental subsidies for catastrophic plan associated hospital care. Payment would come from prospective and actual patients and their private insurers.

HOSPITAL MEDICARE PRICING DISCOUNT PLAN ANNUAL FEE

The key to my proposal is to have a plan-participating hospital offer a prospective patient Medicare pricing for both its in-patient and out-patient care in exchange for the prospective patient paying an annual fee.

I propose Medicare pricing because Medicare coverage is fairly broad and the amounts are comparatively well-known to involved persons. Hospitals might offer additional services at prices published in their discount plan pricing contract.

The payment of a fee (annually) would generally be necessary since Medicare rates are quite often somewhat lower than what insurers might pay.

The fee might vary by age, since older people tend to need more care.

I would expect the fee to range from maybe $49/year for a "young invincible" to maybe $399/year for a person in their early 60's.

Another possibility, for future years, is to have a (near) nationwide network of hospitals contracted (and their Medicare price discounts paid for) via a covered person's catastrophic plan.

Hospitals would like to participate because offering Medicare-pricing discounts for annual fees to basically healthy people would provide healthy profits and lock-in some additional business.

Costco happily gets millions of dollars annually from membership fees.

MEDICARE IN-PATIENT DIAGNOSTIC-RELATED GROUP (DRG) PRICING BASICS

Medicare hospital in-patient pricing, due to the Reagan-era DRG reform, is based on a Standard Federal Rate with a Labor related portion and a Non-labor related portion.

The Labor related portion is adjusted by a local wage index factor. The nurses and other hospital workers make much more in San Francisco and metro New York and they must get paid.

The sum of the two are then multiplied by the DRG Weight of the type of major service provided (because some types of operations are more complex than others).

The result is then often adjusted by Disproportionate Share Hospital and Indirect Medical Education factors (sometimes by +20% together) to help hospitals pay for inordinately large percentages of EMTALA freeloaders and for doctor training.

The Medicare-based pricing I propose would include both factors since:
a. failure to include them might not be legally possible and
b. the hospitals would probably need to get the money and
c. it would prevent errors and simplify the lives of hospital billing clerks and patients
by using the most common billing amounts, those of Medicare

OTHER HOSPITAL-BASED PROVIDERS

There are additional billing parties involved with hospital-based care: the ER doctors, the hospitalists (in-house doctors), the surgeons and the anesthesiologists.

One might buy what used to generally be called Blue Shield coverage for their care from an insurance company or riders from the hospital.

This would generally be private insurance, not normally merely a discount plan, since the doctors (and others) would normally have to be paid more than the standard Medicare amounts.

The exact form might vary. One possibility might have the patient paying just the Medicare allowable amount.

Another possibility might have the patient paying just 20% of the Medicare allowable amount.

The balances would be paid by the insurer.

However, the rider might merely be for a (discount) plan with a list of Medicare allowable amount multiples, such as one for each care provider.

OTHER HOSPITALS

There exists the possibility that someone might need emergency care at a hospital other than the hospital they have a direct contract with.

This might be contractually handled by one or more riders either to a discount plan(regional network only) or to a catastrophic coverage plan(nationwide network).

DRUGS

Inherently expensive drugs might be (substantially, i.e. ~80%) covered via a catastrophic plan.

I have proposed several potentially federal subsidy eligible drug plans (initially mainly for lower cost drugs) in other proposals:
http://www.freerepublic.com/~briangriffin
https://www.freerepublic.com/focus/f-chat/3578549/posts

The first link also describes my Federal Drug Marketplace proposal, mainly for more expensive drugs. These drugs, like health care payment coverage, could be subsidized based on household/individual income.

Drugs on offer via the Federal Drug Marketplace would be generally affordable to consumers and makers of premium drugs would get paid pretty much what "market" buyers could afford to pay.

Drug-only coverage plans could easily be nationwide offerings, sold across state lines.

Of course, for those of you opposed to any sort of federal subsidy, CVS and Walgreens eagerly await your bank-issued plastic and Federal Reserve Notes.

OFFICE CARE

Doctors will generally accept bank-issued plastic and Federal Reserve Notes.

Some catastrophic coverage plans might offer chemotherapy infusion coverage.