You are exactly right.

In the example above, we would force the CAH coinsurance to the national co-payment rate of $22.42 and have Medicare pay the difference based on the cost of care (shift it back to them). That way it wouldn’t be based on the charge anymore. A decent chunk of the Medicare population would have some sort of supplement to cover this coinsurance and never see the bill. The proportion of patients in a CAH market with a supplement plan is likely smaller than an Urban setting. I am really surprised we don’t see more complaints about this on the news.

Good point on the smaller critical access hospitals not having the negotiating power of the larger systems while also facing volume issues.

Take care,

Max

This is an interesting post and I was not aware of the amount that Medicare beneficiaries pay in coinsurance at critical access hospitals. It really seems that coinsurance calculations from charges are one of the big issues you point out in your post and the payment methods from CMS differ for critical access and acute care hospitals. In order to fix the issue, it seems like Medicare would have to apply the same methodology to both types of hospitals and it would have to pay more for the cost of service. Does shifting the cost away from the patient mean adding it back Medicare?

Given the rural location of critical access hospitals, it seems like an interesting political proposal- a larger role for Medicare serving politically conservative communities. I wonder how far this would go in today’s political environment.

I agree with your point that lowering charges seems like a solution, but some readers may not know that critical access hospitals can’t negotiate the same rates with private insurers as large hospital groups can and they also have lower patient volumes and higher rates of uninsured patients. As you say, they face some thin margins.