Reported Costs and Payment Reform Published by Dove Medical Press

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Payment reform is intended to decrease national healthcare spending by limiting costs at the provider level, while maintaining quality.

Innovation and Entrepreneurship in Health has published the commentary paper “A practical cost-based approach to determining reimbursement rates: a necessary component of effective payment reform

As corresponding author, Professor Joiner says “In most industries, the cost of products falls over time, and/or the products are massively improved. There are two notable exceptions: healthcare and education. In healthcare, the reimbursement rates (the fancy term for prices) tend to increase or stay the same. Part of the difference is the use of synthetic prices for procedures by Medicare and other payers. These synthetic prices are the outcome of complex economic calculations that try to establish reimbursement rates without first determining cost. The outcome is an inflexible pricing system that cannot adapt, in real-time, to falling costs.”

Professor Joiner continues “Efforts to “bend the cost curve” in health care are stymied by this situation. We believe the solution is to rip up the current way of computing reimbursement rates and replace them with a cost plus approach. As the costs go down for a given procedure (as they are virtually guaranteed to do) so will the prices. With the move towards global payments, reimbursements for services and procedures can be aligned with measured costs.

Our paper outlines a strategy to introduce a detailed cost plus approach across the full range of health care delivery systems/hospitals, without requiring each individual entity to conduct this analysis.”

Innovation and Entrepreneurship in Health is an international, peer reviewed, open access journal publishing original research, reports, reviews and commentaries on innovation and entrepreneurship in health.

Dove Medical Press Ltd is a privately held company specializing in the publication of Open Access peer-reviewed journals across the broad spectrum of science, technology and especially medicine.

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Angela Jones
Dove Medical Press
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