Implications of Medicaid Discounting on Kaiser Permanente: Week 3 Assignment

Management

Select a healthcare facility or service that accepts Medicaid. Kaiser PermanenteIdentify ways that Medicaid discounting can cause hardships on the type of facility you selected.Write a 700- to 1,050-word paper that explores how Medicaid participation has affected organizational finances and what can be done to reduce any loss incurred.Cite 3 reputable references to support your […]

Implications of Medicaid Discounting on Kaiser Permanente

Medicaid is critical in ensuring that financially challenged members of society have access to healthcare services. It also promotes economic well-being among care providers, allowing more patients to visit healthcare facilities and receive care services through federal funding. However, the effectiveness of Medicaid in increasing access to care among members of society and improving the financial capacity of care providers is often limited by inequitable policies and regulations developed by the federal and state governments. State governments have a great deal of discretion in determining the rates of payment for Medicaid. Similar to other public funding sources for healthcare services, Medicaid payments are often below the actual cost of care, which attracts payment shortfalls to affect the providers’ economic progress. Recent Medicaid regulations require healthcare service providers to allow a specified amount of discount for all patients whose costs of care are covered by Medicaid. Such a regulation causes serious implications among healthcare providers and eventually makes them less likely to accept Medicaid than other insurance. This study investigates how Kaiser Permanente experiences hardships due to Medicaid discounting. Medicaid discounting reduces Kaiser Permanente’s revenue, increases the hospital’s administrative overhead, and reduces the number of hospital visits by patients.

Medicaid discounting reduces Kaiser Permanente’s revenue. Since the federal and state governments often determine Medicaid payments, their establishment process rarely involves negotiations between providers and policymakers (Schulman & Milstein, 2019). As a result, hospitals receive payments that fall below the actual cost of care, which imposes a financial burden. The introduction of the Medicaid discounting program further reduces the amount of payment that care providers receive for providing services to insured individuals. As a result, hospitals experience a rapid decline in profits. With its commitment to providing quality and affordable care services to members of society, Kaiser Permanente accepts Medicaid payments. Despite the prevailing challenge of underpayment by Medicaid, the organization is committed to providing care services to insured individuals to support the federal government’s initiative for equitable access to healthcare for all. However, with the introduction of the Medicaid discounting program, Kaiser Permanente has experienced a decline in its profit levels, which has reduced its revenue and economic potential. Since hospital participation in Medicare and Medicaid is voluntary, Kaiser Permanente may limit the number of insured patients it accepts to avoid risks associated with a decline in revenue.

The organization has also experienced an increased administrative overhead due to the introduction of the Medicaid discounts program. When providing care to Medicaid patients, healthcare organizations often experience significant expenses related to general management and administration (Garfield, Rudowitz & Musumeci, 2018). Since such costs are not related to the organization’s productivity, they limit economic progress in the long run. For example, the level of documentation required for reimbursement by Medicaid after providing care to insured patients often exceeds the amount required by other commercial insurers (Holahan & McMorrow, 2019). Pre-authorization delays and requirements for detailed annual audits also cause a significant increase in running costs among providers. After the introduction of the Medicaid discounting program, hospitals often experience an increase in administrative overhead as the policy brings about a more complicated pre-authorization and reimbursement process. For example, as the Medicaid discounting program complicates the reimbursement process, insured patients who receive care at Kaiser Permanente may not fully understand their liability for medical fees. The hospital, therefore, records a decline in productivity as more time is spent during patient discharge processes. To counter this challenge, policymakers should allow providers’ participation while developing Medicaid policies to ensure that their interests are addressed. Such a decision-making strategy could help hospitals avoid high.

The hospital also experiences a decline in the level of patient satisfaction with care and a reduction in the number of patient visits. As a result of the Medicaid discounting program, the number of payments that the organization receives for providing services to insured patients is often lower than that of private coverage. As the organization’s level of revenue declines, its economic capacity to provide quality care services to patients decreases, causing a decline in the level of patient satisfaction. Eventually, the organization’s outlook and reputation continue to decline, which reduces its competitiveness in the long run. Moreover, as the hospital strives to avoid the economic implications of the Medicaid discounting program, it develops strategic measures to attract more non-Medicaid patients while reducing the number of insured patients who receive care. However, since Medicaid seeks to ensure that individuals on the lower end of the income spectrum have access to healthcare, reducing the number of Medicare-insured patients in its facilities and prioritizing self-supporting patients discourages many people from visiting the hospital. The organization should, therefore, develop strategies to reduce its overhead costs to continue providing care to its clients despite the application of the Medicaid discounting program.

As a result of the application of the Medicaid discounting program, Kaiser Permanente experiences a decline in revenue, increasing administrative overhead, and a reduction in the number of hospital visits. The program reduces the amount of payment the hospital receives for providing services to insured individuals. Kaiser Permanente’s administrative overhead also escalates as the amount of expense related to general management and administration increases. The hospital also experiences a decline in the level of patient satisfaction with care and a reduction in the number of patient visits as it prioritizes non-insured patients. To safeguard the profitability of healthcare organizations, the government should develop strategies to allow providers’ participation while developing new Medicaid policies.

References

Schulman, K. A., & Milstein, A. (2019). The implications of “Medicare for All” for US hospitals. JAMA321(17), 1661-1662. https://jamanetwork.com/journals/jama/article-abstract/2730485

Garfield, R., Rudowitz, R., & Musumeci, M. (2018). Implications of a Medicaid work requirement: national estimates of potential coverage losses. Kaiser Family Foundation27https://kymedicaidtracker.com/wp-content/uploads/2019/05/Issue-Brief-Implications-of-a-Medicaid-Work-Requirement-National-Estimates-of-Potential-Coverage-Losses.pdf

Holahan, J., & McMorrow, S. (2019). Slow Growth in Medicare and Medicaid Spending per Enrollee Has Implications for Policy Debates. Urban Institute, February 11https://www.urban.org/sites/default/files/publication/99748/rwjf451631.pdf


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