Growing national healthcare expenditure is an issue of major concern in the U.S. In 2019, the national health expenditure increased by 4.6% to $3.8 trillion, amounting to 17.7% of the GDP (CMS, 2020). Similarly, Medicare expenses increased by 6.7% to $799.4 billion, amounting to 21% of the country’s health expenditure (CMS, 2020). Multiple forecasts indicate that healthcare spending is expected to rise in the future owing to an increase in the elderly population. Value-based healthcare is advanced to curb the constantly increasing health costs as part of managed care programs. The program focuses on rewarding incentives to hospitals and physicians for quality care and lower costs. The total number of discharges from a facility is a key indicator of the quality of care (Mosadeghrad, 2014). To determine the efficiency of value-based care programs, there is a need to analyze the relationship between the number of discharges and the various types of medical charges.
Although the Medicare fund sets rates for various procedures, hospital charges vary significantly across multiple states due to the varying charge structure. Average covered charges refer to the amount that healthcare providers bill to medicare funds for MS-DRG services (Data, 2014). For example, the costs of similar services vary up to 17 fold across different hospitals in California (Hoffman & Bindman, 2015). There is a need to understand whether the hospital charges billed to Medicare are related to the quality of care. The average covered charges represent the hospital charges billed to the federal insurer, while total discharges represent the quality of care.
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Research question: Is there a relationship between hospital charges billed to Medicare and quality of care received?
The actual payments made to hospitals are dependent on the reimbursement rates and vary from the charges billed by healthcare providers. The average Medicare payments refer to the actual amount paid to healthcare providers by Medicare after reviewing the billed hospital charges (Data, 2014). The variation between hospital charges and the average Medicare payments partly depends on the procedures involved. Medicare pays more for complex procedures such as heart transplants and the implantation of cardiac assisting devices. Private insurers bargain with involved facilities to pay lower rates compared to Medicare who imposes their reimbursement rates. There is a need to understand whether lower average Medicare payments may discourage healthcare providers from offering quality care.
Research question: Do lower average Medicare payments discourage quality care?
Confounding variables refer to factors that are closely related to the independent and dependent variables. The relationship between a confounding variable and the dependent variable must be causal, implying that the variable’s occurrence has a direct effect on the dependent variable (Ewert & Sibthorp, 2009). The dependent variable in both research questions is the total discharges that represent the quality of care. A higher number of total discharges imply an enhanced quality of care and vice versa. Other variables such as the number of skilled employees, effective management, and availability of low-cost medical equipment and drugs may help improve the number of total discharges (Mosadeghrad, 2014). The direct effect on the quality of care implies a causal relationship between the confounding variables and total discharges (Mosadeghrad, 2014). There also exists a cause-effect relationship between the confounding variables and the independent variables. For instance, many skilled employees may trigger an increase in hospital charges and average Medicare payments due to wages and salaries. Similarly, proper management and low costs medical equipment and drugs may reduce both hospital charges and the average Medicare payments.
References
Data, P. (2014). Medicare Fee-For-Service Provider Utilization & Payment Data Physician and Other Supplier Public Use File: A Methodological Overview.
Ewert, A., & Sibthorp, J. (2009). Creating outcomes through experiential education: The challenge of confounding variables. Journal of Experiential Education .
Hoffman, A. B., & Bindman, A. B. (2015). Varying charges and questionable costs.
Mosadeghrad, A. M. (2014). Factors influencing healthcare service quality. International journal of health policy and management .
