Health Care Industry in the USA

Table of Contents

Introduction3

Discussion3

Physician Reimbursement3

Resource-Based Relative Value Scale3

Hospital Reimbursement4

Diagnosis-Related Groups and Prospective Payments4

Per-Diem Hospital Reimbursement4

ESRD Treatment5

Hemodialysis and Peritoneal Dialysis5

ESRD Treatment and its Economics5

Patient Options and Potential Trade-offs6

Ethical Implications of Treatment Options based on Cost Evaluation8

Conclusion8

References9

Health Care Industry in the USA

Introduction

Health care industry of USA is complex with intricate reimbursement techniques from the insurers. Reform laws have been passed over the time to simplify the process and availability of the services to mass. ESRD program was introduced in 1973 to study the patterns of general health care needs of population. The model failed because renal population cannot represent general US population.

Discussion

Physician Reimbursement

Resource-Based Relative Value Scale

In response to inflation in the late 1980's, Medicare introduced bundled services as a way to draw physician services priced at reasonable rate. It was introduced in opposition to the fee-for-service (Piece-rate) mechanism. Fee-for-service system was thwarted in the wake of inflation because it was associated with higher prices since physicians were paid what they asked. The bundled service package called Resource-Based Relative Value Scale is priced after thorough research of all the resources put in by the physician. Federal Medicaid program also determined rates which were quite lower, and followed it aggressively with no price negotiations for the physicians. Medicaid was later mandated to at least raise their rate to 60% of the Medicare rates (Jonas &Konver, 2011).

Hospital Reimbursement

In case of private insurers, rates are decided by mutual consent. Whereas, public insurers (Medicare and Medicaid) determines the rates through complex formulas and then the hospitals are offered those rates without any room for negotiations. This approach came in response to the unregulated rates demanded by hospital that were initially followed by the insurers. Unregulated approach resulted in increased hospital cost inflation. This inflation influenced public insurers to follow 'take it or leave it' model with the hospitals, for the rates they offer.

Diagnosis-Related Groups and Prospective Payments

Introduced in 1983 by federal government, it works with public insurer offering an up-front fixed amount to the hospital for the stay and specific diagnosis related to the need of its covered patient. The amount will not be increased regardless of the duration of hospital stay of the patient or any other tests or care that might be required later. This prompts the hospital to increase their efficiency level by reducing unnecessary stays, and services rendered. The newer approach promoted by 2010 reform laws is “bundled payments” for entire medical treatment, where physician or hospital is provided with the fixed amount to deal one case.

Per-Diem Hospital Reimbursement

As the name suggests, per-diem calls for revising the rates daily. Private insurers extensively negotiate rates with the hospitals on daily basis. Public insurers set their per-diem rates and require the hospitals to accept them. DRG groups are not usually followed to set rates; rather per-diem approach is commonly seen to be practiced by insurers.

ESRD Treatment

End Stage Renal Disease is the last stage of the Chronic Kidney Disease (CKD). For survival, this stage requires the patient to be on ...