Certified Rehabilitation Registered Nurse (CRRN) Practice Exam

What is cross-subsidization in healthcare?

1. Discounting services for low-income patients

2. When some patients are assigned more costs than they create and others less

3. A method of billing patients for multiple services

4. The process of providing free services to those in need

The correct answer is: When some patients are assigned more costs than they create and others less

Cross-subsidization in healthcare refers to the practice where the costs of care for one group of patients are balanced by charging another group of patients different amounts, often resulting in some patients paying more than the actual cost of their care and others paying less. This is an essential concept in managing the financial stability of healthcare organizations, particularly in systems where there is a mixture of privately insured patients and those who are uninsured or on government assistance programs. For instance, hospitals may charge higher prices to privately insured patients to help offset the costs of providing care to uninsured individuals or those on Medicaid, who may not fully cover the cost of their services. This balancing act ensures that healthcare facilities can continue to operate while providing necessary services to all segments of the population. Understanding cross-subsidization helps in recognizing the complexities of healthcare financing and the ethical considerations that arise when determining pricing strategies in a multifaceted healthcare environment.