Cost Plus Hospital Reimbursement – Will Hospitals Refuse to Treat You?


Cost-plus hospital reimbursement is nothing new. Years ago Blue Cross paid member hospitals their cost plus 7%. An annuity feature in their hospital contract assured participating hospitals of a steady cash flow, which is still a feature found today in a standard BCBS hospital contract (we have a complete copy of the BCBS hospital contract).

Cost plus has saved our clients on average +40% in hard dollar claims. We have not had any hospital refuse to see our members – we guarantee each hospital a fair profit; we do not promise them an open checkbook.

Yet, many brokers are advising their clients to avoid the cost-plus approach. They use fear tactics to scare their clients, such as, “if you pay hospitals on a cost plus basis, they will retaliate and refuse to admit any of your employees or family members!”

If the cost-plus approach saves their clients 40% or more in claims, and is something that BCBS pioneered many years ago, why would a broker be against the concept? After all, isnt the broker acting as an agent of the employer who pays him?

Let’s put this in perspective. Consider the cost-plus approach as kind of like buying a car. If I go to a dealership and bargain long and hard for that nice shiny new truck with a $48,000 sticker price, and get the dealer to sell it to you for $23,000, can you imagine the following dinner table discussion later that evening:

 You: Man, I really screwed Chevrolet this afternoon. They wanted $48,000. They dropped the price down to $45,000 but I held out, showing them their costs which I found on a website. The sales manager told me the information I got off the internet was wrong, but that he could give me the truck for $43,000, as long as I didnt report him to the Dealership Sales Manager. After two hours of intense haggling, I got the price down to $23,000. The salesman was smiling, but his manager said that they were losing money on this sale but that they would make it up on the next pigeon.

 Your Spouse: Oh Nooooooooooooo…………………………you should never have done that! Our whole family is going to be Black Listed now! The dealership will probably tell all our friends how bad we are. THEY WILL NEVER AGAIN LET US BUY A CAR OR TRUCK FROM THEM!!!!!!!

You: Damn, I never thought of that! I feel really bad now. What should I do?

 Your Significant Other: Go back immediately and tell them you are sorry. Give them a blank check and tell them to fill it out for you, for any amount they normally charge pigeons.

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