Question

What is the relationship between uncompensated care and cost shifting? Why do providers now have limited ability to shift costs

Answer 1

Cost shifting is a mechanism used to make up for revenue shortfalls when uncompensated care isdelivered. Costs are shifted by charging extra to payers who do not exercise strict cost controls.Most payers now use some form of cost-containment mechanisms. Capitation and prospectivereimbursement methods, in particular, have eroded the margins for cost shifting. Consequently,providers have less ability to provide uncompensated care through cost shifting than waspreviously possible.