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How Medicare Pays For Inpatient Care

Have you ever wondered how hospitals get paid by MedicareThe New York Times has an excellent and simple explanation of this highly complicated process. It’s simple really.

First the hospital labor component is adjusted for geographic location and then added to the capital depreciation expenditures adjusted for geographic location and then a medical severity adjusted diagnosis related group multiplier is added (MS-DRG).

Once this adjusted payment rate is calculated, the hospital is given a bonus to cover the costs incurred if they are a teaching hospital, through the indirect medical education payment. Added to that is the disproportionate share payment for hospitals that see a lot of uninsured or Medicaid patients (strange that Medicare subsidizes Medicaid, isn’t it?) If you have a patient that is extremely sick or spends mulitple extra days in the hospital, they may get an extra outlier payment. Read more »

*This blog post was originally published at The Happy Hospitalist*

Latest Interviews

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How To Be A Successful Patient: Young Doctors Offer Some Advice

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Latest Book Reviews

Book Review: Is Empathy Learned By Faking It Till It’s Real?

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The Spirit Of The Place: Samuel Shem’s New Book May Depress You

When I was in medical school I read Samuel Shem s House Of God as a right of passage. At the time I found it to be a cynical yet eerily accurate portrayal of the underbelly of academic medicine. I gained comfort from its gallows humor and it made me…

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Eat To Save Your Life: Another Half-True Diet Book

I am hesitant to review diet books because they are so often a tangled mess of fact and fiction. Teasing out their truth from falsehood is about as exhausting as delousing a long-haired elementary school student. However after being approached by the authors’ PR agency with the promise of a…

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