The 8 basic payment methods in health care.

Eight basic payment methods are applicable across all types of health care. Each method is defined by the unit of payment (per time period, beneficiary, recipient, episode, day, service, dollar of cost, or dollar of charges). These methods are more specific than common terms, such as capitation, fee for service, global payment, and cost reimbursement. They also correspond to the division of financial risk between payer and provider, with each method reflecting a risk factor within the health care spending identity. Financial risk gradually shifts from being primarily on providers when payment is per time period to being primarily on payers when payment is per dollar of charges. Method 4 (per episode) marks the line between epidemiologic and treatment risk. The 8 methods are typically combined to balance risk and thus balance incentives between payers and providers. This taxonomy makes it easier to understand trends in payment reform-especially the shifting division of financial risk and the movement toward value-based purchasing-and types of payment reform, such as bundling, accountable care organizations, medical homes, and cost sharing. The taxonomy also enables prediction of conflicts between payers and providers. For each unit of payment, providers are rewarded for increasing units while decreasing their own cost per unit. No payment method is neutral on quality because each encourages and discourages the provision of care overall and in particular situations. Many professional norms and business practices have been established to mitigate undesirable incentives. Health care differs from many other industries in that the unit of payment remains variable and unsettled.

ERISA and hospital charges: granting an inch, not a mile.

Some claims review services" have cited ERISA as an authority allowing an ERISA plan administrator to reduce a hospital's billed charges based on "the reasonable value of services." However, nothing in ERISA allows a plan administrator to change the terms of a contract between a payer and a provider, or places any limitations on the structure or price of hospital charges.

VA payment for non-VA public or private hospital care and non-VA physician services that are associated with either outpatient or inpatient care. Department of Veterans Affairs. Final rule.

This document amends our medical regulations concerning VA payment for non-VA public or private hospital care provided to eligible VA beneficiaries. This document also amends our medical regulations concerning VA payment for non-VA physician services that are associated with either outpatient or inpatient care provided to eligible VA beneficiaries at non-VA facilities. With certain exceptions, these payments have been based on Medicare methodology. Sometimes VA can negotiate contracts with hospitals or physicians or with their agents to reduce the payment amounts. This document amends these regulations to allow VA to make lower payments based on such negotiations.

Sticker shock at the hospital. Freed from reins of managed care, hospitals accelerate price hikes for fourth consecutive year; blame placed on staffing, tech costs.

Free from the shackles of managed care, the nation's hospitals boosted prices for the fourth consecutive year, according to a new report released by the government last week. David Cyganowski, left, a managing director at Salomon Smith Barney, says if taxes on dividends are wiped out, hospitals could be confronted with higher long-term interest rates.

The increased concentration of health plan markets can benefit consumers through lower hospital prices.

The long-term trend of consolidation among US health plans has raised providers' concerns that the concentration of health plan markets can depress their prices. Although our study confirmed that, it also revealed a more complex picture. First, we found that 64 percent of hospitals operate in markets where health plans are not very concentrated, and only 7 percent are in markets that are dominated by a few health plans. Second, we found that in most markets, hospital market concentration exceeds health plan concentration. Third, our study confirmed earlier studies showing that greater hospital market concentration leads to higher hospital prices. Fourth, we found that hospital prices in the most concentrated health plan markets are approximately 12 percent lower than in more competitive health plan markets. Overall, our results show that more concentrated health plan markets can counteract the price-increasing effects of concentrated hospital markets, and that-contrary to conventional wisdom-increased health plan concentration benefits consumers through lower hospital prices as long as health plan markets remain competitive. Our findings also suggest that consumers would benefit from policies that maintained competition in hospital markets or that would restore competition to hospital markets that are uncompetitive.