A practical cost-based approach to determining reimbursement rates: a necessary component of effective payment reform
Keith A Joiner,1 Theresa R Kramer,2 Robin Cooper3
1College of Medicine and Eller College of Management, The University of Arizona, Tucson, AZ, USA; 2Ophthalmology Resident Clinic, Krieger Eye Institute, Life bridge Health, Baltimore, MD, USA; 3Nottingham University Business School, The University of Nottingham, Nottingham, UK
Abstract: Payment reform is intended to decrease national health care spending by limiting costs at the provider level, while maintaining quality. The underlying cost basis for current payment reform initiatives is revenue, charges or claims, all of which are proxies for cost, not measured cost. Methods for costing of health care services and procedures are established, not standardized. We propose the creation of an internet-cloud-based, national level, open-source health care cost system for data mining of reported costs of health care services and procedures. This data set can be applied to any payment reform initiative, and will inform policy decisions on health care spending.
Keywords: reported costs, payment reform, activity-based costing
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