What happens when your hospital is also your insurance company? We're starting to see the effects
Historically, hospitals have provided care for people, while separate insurers have paid for that care.
In recent years, hospitals have begun to take on the role of insurers, leading to a new type of entity known as "payviders." These hospitals offer insurance plans, putting them on both sides of the healthcare transaction. This shift has raised questions about the implications for patients, providers, policymakers and researchers. As scholars studying policy, practice and economics, our research aims to understand the benefits and drawbacks of hospitals owning insurance plans.
Medicare Advantage is a private version of traditional Medicare, administered by the federal government. Many hospitals now own Medicare Advantage plans, and nearly one-sixth of people enrolled in this program are insured by a plan owned by a hospital. This arrangement can lead to better communication between insurers and doctors, potentially reducing administrative burdens.
Some studies suggest that patients with Medicare Advantage plans administered by hospitals that own the hospital have fewer prior authorizations, better experiences, care quality and coordination, and lower readmissions, mortality and surgical complications. However, there are concerns about the potential for hospitals to manipulate regulations to increase taxpayer money and profits.
While the government pays a fixed amount for each person enrolled in Medicare Advantage plans, the plans use this money to pay for patients' healthcare. Risk adjustment ensures that plans receive more money for people with more health diagnoses, as they typically have higher medical costs. However, hospitals owning insurance plans may encourage doctors to record more diagnoses to receive higher government payments, potentially driving up taxpayer costs.
Additionally, plans that spend less than 85% of their premiums on health care, as required, could pay their affiliated hospitals higher prices for the care provided, allowing the company to increase profits while superficially meeting government regulations.
Written by urgent.news from Medical Xpress's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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