Medicare, Medicaid underpaid U.S. hospitals by $76.8 billion in 2017, American Hospital Association says

By | January 5, 2019

According to new data released by the American Hospital Association, Medicare and Medicaid underpaid U.S. hospitals by $ 76.8 billion in 2017. Medicare underpayments totaled $ 53.9 billion and Medicaid underpayments $ 22.9 billion for 2017.

Meanwhile, in 2017, hospitals provided $ 38.4 billion in uncompensated care, the AHA said.


This means hospitals received only 87 cents for every dollar spent by hospitals caring for Medicare patients in 2017 and the same figure applied to payment for care given to Medicaid patients.

Also in 2017, 66 percent of hospitals received Medicare payments that were less than cost, while 62 percent of hospitals received Medicaid payments that were less than cost, the AHA reported.


Underpayment occurs when the payment received is less than the costs of providing care. Underpayment is the difference between the costs incurred and the reimbursement received for delivering care to patients.

The cost of providing care includes the amount paid by hospitals for the personnel, technology and other goods and services required to provide hospital care. Underpayment happens when those costs are more than the amount paid by Medicare or Medicaid for providing care.

Underpayment is not the same as a contractual allowance, which is the difference between hospital charges and government program payments.


“Hospital participation in Medicare and Medicaid is voluntary. However, as a condition for receiving federal tax exemption for providing healthcare to the community, not-for-profit hospitals are required to care for Medicare and Medicaid beneficiaries. Also, Medicare and Medicaid account for more than 60 percent of all care provided by hospitals. Consequently, very few hospitals can elect not to participate in Medicare and Medicaid,” the AHA said.

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