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Moreover, the additional expense that comes from being admitted to a relatively costly hospital is also fully insured, or nearly so.

Thus, neither patients nor physicians have much incentive to choose an economically efficient rather than an inefficient hospital, or to economize on services once a patient is admitted….[19] (2001) analyzed insurance coverage levels and health outcomes of “an older, chronically ill population” with conditions such as “diabetes, hypertension, coronary artery disease, congestive heart failure, or depression.” The study grouped “individuals into 3 cost-sharing categories: no copay (insurance pays all), low copay (insurance pays more than half but not all), and high copay (insurance pays half or less).” Per the study: We found no association between cost sharing and health status at baseline or follow-up.

In such cases, an ounce of prevention improves health and reduces spending—for that individual.

Medicare paid hospitals an average of 12% below their costs of car­ing for Medicare patients, and Medicaid paid hospitals an average of 10% below their costs of caring for Medicaid patients.[88] * As of October 2011, four states limit the number of days that Medicaid will pay for hospital stays: 45 days in Florida, 30 days in Mississippi, 24 days in Arkansas, and 16 days in Alabama.

Arizona and Hawaii are planning to limit the number of days to 25 and 10 respectively.

The fraud schemes are not specific to any area, but they are found throughout the entire country.

The schemes target large health care programs, public and private, as well as beneficiaries.

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