In responding to at least two of your classmates’ posts, agree or disagree with their conclusion on the ethics of ‘cream-skimming.’ What role do Medicare and Medicaid play in this deter

Keziah Discussion:

Cost-shifting is the theory that organizations offer free care by passing the excess costs onto patients who have private insurance (Henderson, 2018).  The shift usually results from changes in reimbursement rates or how payments are structured.  The impact of the flow in money can affect an organization in several ways.  It affects the payer mix, meaning that as reimbursement rates are decreased, the organization may focus on treating patients who have higher-paying insurance plans.  Medicare and Medicaid reimbursements are much less than what private insurance would pay (Lopez, et al., 2020). The organization will need to look for other options to make up for the difference in the reimbursement rates. This focus shift attempts to make up the revenue that would be lost from the lower-paying plans (Darden, et al., 2018).  

Cost-shifting can also affect negotiations.  Since organizations often negotiate with private payers to gain higher reimbursement rates, if successful, higher rates can offset the lost revenue from other payers.  If an organization is unsuccessful in cost-shifting, it may face financial hardships and challenges.  Cash flow is directly impacted, and challenges may arise in paying salaries and bills which could lead to service disruptions.    

“Cream skimming” refers to insurance policies pricing the policy so that individuals who are in generally good health, are more likely to purchase it then their less-healthy counterparts (Henderson, 2018).    Cream skimming influences the finances of the organization as well.  Providers may encourage unnecessary tests or treatments knowing that the insurance company will cover it.  This can lead to both over and under utilization of services which has the potential to increase healthcare costs. Cream skimming is an unethical business practice, particularly in healthcare.  Not only does it add to disparities, but it also has the potential to compromise patient care, decrease public trust, and undermine the core principles of the profession (Chareyon, et al., 2023; Werbeck, et al., 2021).

References

Chareyon, S., L’Horty, Y. & Petit, P. (2023). Cream skimming and discrimination in access to medical care: A field experiment.  Health Economics,32(8), 1868-1883.  https://onlinelibrary.wiley.com/doi/full/10.1002/hec.4692#hec4692-bib-0050

Darden, M., McCathry, I. & Barrette, E. (2018).  Hospital pricing and public payments [PDF]. National Bureau of Economic Research.  https://www.nber.org/system/files/working_papers/w24304/revisions/w24304.rev0.pdf

Frakt A. B. (2011). How much do hospitals cost shift? A review of the evidence.  The Milbank quarterly,  89(1), 90–130.  https://doi.org/10.1111/j.1468-0009.2011.00621.x

Henderson, J. W. (2018).  Health Economics and Policy (7th ed.). Cengage Learning US.  https://bookshelf.vitalsource.com/books/9781337668279

Werbeck, A., Wubker, A., Ziebarth, N.R. (2021). Cream skimming by health care providers and inequality in health care access: Evidence from a randomized field experiment.  Journal of Economic Behavior & Organization, 188, 1325-1350.  https://www.sciencedirect.com/science/article/abs/pii/S0167268121002146?via%3Dihub

Jamal Discussion:

Module 7-1: Discussion

To examine the relationship between cost-shifting and flow of hospital dollars, we need to first understand what “cost-shifting” is. Cost-Shifting occurs when one payer (insurance company) pays less relative to costs while another payer would pay more. In relation to cost-shifting, it is assumed that public payers (Medicare or Medicaid) will decrease in payments while private insurers will increase. (Frakt, 2011)

“Cream Skimming” is a practice that chooses patients for some differing characteristics other than their current need for care, which may increase the hospital’s profitability or reputation of the practice or provider. This often refers to choosing less ill patients. Cream-skimming is an unethical practice. Cream-skimming promotes discrimination for most of these patients can be refused care based on situations outside of their control like social status (Chareyon et al., 2022).

There are numerous reimbursement systems in healthcare all having their strengths and weaknesses. One system, Fee for Service, is a healthcare system in which each item of care is reimbursed retrospectively but this may encourage excessive services or unnecessary care. Reimbursement systems may foster undertreatment, an over referral of complex patients, and large patient numbers to enhance income, increasing workload and reduce quality of care (Britton, 2015).

References:     

Britton, J. R. (2015). Healthcare reimbursement and Quality Improvement: Integration using the electronic medical record comment on “fee-for-service payment – an evil practice that must be stamped out?”  International Journal of Health Policy and Management,  4(8), 549–551. https://doi.org/10.15171/ijhpm.2015.93

Chareyon, S., L’Horty, Y., & Petit, P. (2022).  Cream skimming and discrimination in access to medical care: A field … CREAM SKIMMING AND DISCRIMINATION  IN ACCESS TO MEDICAL CARE:  A FIELD EXPERIMENT. https://www.tepp-repec.eu/RePEc/files/teppwp/TEPP-wp-22-02-sc-yl-pp.pdf

FRAKT, A. B. (2011). How much do hospitals cost shift? A review of the evidence.  Milbank Quarterly,  89(1), 90–130. https://doi.org/10.1111/j.1468-0009.2011.00621.x

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