The WSJ explains:
“Medicare allows hospitals to collect for such patients based on the actual costs of treating them. But because hospitals don’t provide cost data until many months after patients are treated, the government has to estimate costs using a formula that relies heavily on list prices.
”When prices rise faster than actual costs, the government overpays. Medicare can seek to claw back overpayments when it gets fresher information about costs, but it rarely does, hospital records show.”
”A Wall Street Journal analysis of Medicare claims data and financial filings from medical facilities shows that many hospitals increased prices faster than costs rose, affecting outlier payments.”
