Decrease Cost Shift
Contain Health Care Cost
Cost shifting is a term used to describe the costs that one group is paying for another’s use of services. In health care, cost shifting occurs when different patients (customers) negotiate to pay different amounts for the same goods or service.
Cost shifting also occurs because there are those that don’t pay all or some of their bill (bad debt) and those that don’t have the ability to pay for their care (free care). When certain payers (such as Medicare or Medicaid) set reimbursement at less than the provider’s cost of services and underpayments result in a cost shift to commercial plans that must be paid by commercial health insurance premiums.
The Department of Banking, Insurance, Securities and Health Care Administration (BISHCA) has convened a task force to identify cost shift opportunities and to recommend statutory and administration changes to address and slow the growth rate in hospital charges and insurance premiums. The Cost Shift Task Force submitted their report to the Commission on Health Care Reform on December 1, 2006.
BISHCA also is undertaking several other initiatives related to cost shift, including a standard statewide hospital policy for bad debt and free care compensation that was submitted to the General Assembly on January 15, 2007 and changing the requirements for annual hospital reports to BISHCA on the composition of their cost shift beginning in July, 2007.
To begin to address Medicaid provider underpayments, the 2006 Health Care Reform legislation increased Medicaid provider reimbursement in the following manner:
- Payment of evaluation and management services at Medicare rates in order to support primary care physician practices;
- Supplemental payments to dentists with high Medicaid patient counts; and
- Annual increases in hospital rates until the federal upper limit is reached.
If you would like more information on this initiative, Provider Rate Increases, you should contact the Office of Vermont Health Access (OVHA).
Provider Reimbursement Related Documents:
A memorandum to the Health Access Oversight Committee on August 22, 2006 regarding Supplemental Payments for Dentists.
