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PubMed1987

Capital payments under the inpatient hospital prospective payment system; correction--HCFA. Notice of correction.

In the September 1, 1987 issue of the Federal Register (FR Doc. 87-20081), beginning on page 33168, we amended the Medicare regulations governing the inpatient hospital prospective payment system to incorporate capital costs into that system. This notice corrects inadvertent errors we made in the preamble and regulations text of that document. We note that the change in the regulations text of 42 CFR 412.92 is necessary because of the interaction of the mandatory language concerning Section 412.92 that was issued in the final rule with comment period published on August 14, 1987 (52 FR 30367) and in the subject final rule.

Capital Financing↗
PubMed2004

Pharmaceutical "charge compression" under the Medicare outpatient prospective payment system.

Analysis of the actual acquisition costs of a sample of pharmaceuticals demonstrates that payment rates for pharmaceutical therapies under the Medicare hospital outpatient prospective payment system (OPPS) are systematically biased against fully reimbursing high cost pharmaceutical therapies. Under the Centers for Medicare and Medicaid Services' (CMS') methodology, which assumes a constant markup, a bias in the cost estimate occurs when hospitals apply below average markups in establishing their charges for pharmaceutical products with above average costs. We developed a model of the relationship between product costs and charge markups. The logarithmic model shows that an increase in the acquisition cost per episode can be expected to lead to a reduction in the charge markup multiple. When markups for pharmaceuticals decline as acquisition cost increases, a rate-setting methodology that assumes a constant markup results in reimbursement for higher cost products that can be far below acquisition cost. The incentives in the payment system could affect site of care choices and beneficiary access.

Ambulatory Care↗
PubMed2000

The role of critical access hospital status in mitigating the effects of new prospective payment systems under Medicare.

This article examines rural hospitals that potentially qualify as critical access hospitals (CAH) and identifies facilities at substantial financial risk as a result of Medicare's expansion of prospective payment systems (PPS) to nonacute settings. Using Health Care Financing Administration (HCFA) cost reports from the federal year ending Sept. 30, 1996, combined with county-level sociodemographic data from the Area Resource File (ARF), characteristics of potential CAHs were identified and their finances analyzed to determine whether they could benefit from the cost-based reimbursement rules applicable to CAH status. Rural hospitals were identified as potential CAHs if they met a combination of federal and state criteria for necessary providers. Rural facilities were classified as "at risk" if they had poor financial ratios in conjunction with high levels of dependence on outpatient, home-care or skilled nursing services. Almost 30 percent of all rural hospitals were identified as potential CAHs. Ninety percent of potential CAH facilities were identified as "at risk" by at least one of five possible risk criteria, and one-third were identified by at least three. Of those classified "at risk," 48 percent might not benefit from conversion to CAH because their inpatient Medicare reimbursement would likely be less under CAH payment rules than under their current PPS payment rules. Many potential CAHs were doing well under inpatient PPS because they were sole community hospitals (SCH) and were therefore eligible for special adjustments to the PPS rates. The Rural Hospital Flexibility Act would be more beneficial to the population of isolated rural hospitals if those eligible for both CAH and SCH status were given the option of retaining their SCH inpatient payment arrangements while still qualifying for outpatient cost-based reimbursement.

Costs and Cost Analysis↗
PubMed1990

The effects of the DRG-based prospective payment system on quality of care for hospitalized Medicare patients. An introduction to the series.

In 1985, we began a 4-year evaluation of the effects of the diagnosis related groups-based prospective payment system on quality of care for hospitalized Medicare patients. This article provides an overview of the study's background, aims, design, and methods. We used a clinically detailed review of the medical record supplemented by data on postdischarge outcomes drawn from the files of the Health Care Financing Administration and fiscal intermediaries to (1) compare outcomes of care after adjustment for sickness at admission, (2) assess the process of in-hospital care and relationships between processes and outcomes, and (3) assess status at discharge for a nationally representative sample of patients hospitalized before and after prospective payment was implemented.

Diagnosis-Related Groups↗
PubMed2006

Medicare program; inpatient rehabilitation facility prospective payment system for federal fiscal year 2007; certain provisions concerning competitive acquisition for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS); accreditation of DMEPOS suppliers. Final rule.

This final rule will update the prospective payment rates for inpatient rehabilitation facilities (IRFs) for Federal fiscal year (FY) 2007 (for discharges occurring on or after October 1, 2006 and on or before September 30, 2007) as required under section 1886(j)(3)(C) of the Social Security Act (the Act). We are revising existing policies regarding the prospective payment system within the authority granted under section 1886(j) of the Act. In addition, we are revising the current regulation text to reflect the changes enacted under section 5005 of the Deficit Reduction Act of 2005. This final rule will also establish certain requirements related to competitive acquisition for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) and establish accreditation of DMEPOS suppliers as required under section 302 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Accreditation↗
PubMed1997

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 1998 rates; corrections--HCFA. Final rule with comment period; correction notice.

In the August 29, 1997, issue of the Federal Register (62 FR 45966), we published a final rule with comment period revising the Medicare hospital inpatient prospective payment systems for operating costs and capital-related costs to implement necessary changes resulting from the Balanced Budget Act of 1997, Pub. L. 105-33 and changes arising from our continuing experience with the system. This document corrects technical errors made in that document.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed1990

An all-payor prospective payment system (PPS) based on diagnosis-related-groups (DRG): financial impact on reimbursement for trauma care and approaches to minimizing loss.

To assess the financial impact of the new all-payor prospective payment system (PPS), data for 430 patients admitted to a Level I Trauma Center were compared to all hospital discharges (n = 35,309). Trauma patients had a LOS of 13.1 days, average Trauma Score of 15, and operating loss for trauma patients totalled $1,310,625. Trauma as compared to all patients showed a greater variance in LOS (6.3 vs. 2.0 days), a higher case mix index (CMI) (1.93 vs. 1.40), and a greater loss per case (-$3,404 vs. -$979), respectively. The trauma group DRG weights correlated with revenue (r = 0.89; p less than 0.0001); however, there was no relation to profit/loss. Review of trauma patients' records revealed inaccurate coding. Corrections led to an increase in reimbursement of $132,000. Five DRGs were added in 1989 for multiple significant trauma (MST). Using the 1989 grouper, 30 patients were reassigned, with an increase in reimbursement of $250,000. Although these strategies reduce operating deficit by 29%, reimbursement for trauma care must be addressed further.

Costs and Cost Analysis↗
PubMed1998

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 1998 rates; corrections--HCFA. Final rule with comment period; correction notice.

In the August 29, 1997, issue of the Federal Register (62 FR 45966), we published a final rule with comment period revising the Medicare hospital inpatient prospective payment systems for operating costs and capital-related costs to implement necessary changes resulting from the Balanced Budget Act of 1997, Pub. L. 105-33, and changes arising from our continuing experience with the system. This document corrects errors made in that document.

Capital Expenditures↗
PubMed2001

Medicare program; announcement of the calendar year 2002 conversion factor for the hospital outpatient prospective payment system and a pro rata reduction on transitional pass-through payments. Final rule.

This final rule announces the Medicare hospital outpatient prospective payment system conversion factor for calendar year (CY) 2002. In addition, it describes the Secretary's estimate of the total amount of transitional pass-through payments for CY 2002 and the implementation of a uniform reduction in each of the pass-through payments for that year.

Ambulatory Care↗
PubMed1991

Changes in rates of unscheduled hospital readmissions and changes in efficiency following the introduction of the Medicare prospective payment system. An analysis using risk-adjusted data.

The purpose of this study was to analyze changes in rates of unscheduled readmissions and changes in technical efficiency following the introduction of the Medicare Prospective Payment System (PPS). We developed the Risk-Adjusted Readmissions Index (RARI), which allowed us to make comparisons in rates of unanticipated readmissions across hospitals and over time. Data envelopment analysis (DEA), a linear programming technique, was used to measure changes in technical efficiency by comparing the inputs used and the outputs produced across a cohort of hospitals, while adjusting for changes over time in case mix and case complexity. Rates of unscheduled readmissions and efficiency scores were computed for a sample of 245 hospitals for each year. Although both readmission rates and efficiency scores increased for most hospitals, there was no evidence that those hospitals that experienced the greatest increases in efficiency had the largest increases in their rates of unscheduled readmissions.

Abstracting and Indexing↗
PubMed1986

An assessment of the impact of the Medicare Prospective Payment System on level II fieldwork.

The health care industry has undergone radical change because of the implementation of the Medicare Prospective Payment System (MPPS). This study is an assessment of the effect of MPPS on Level II fieldwork. Six factors that have the potential to influence fieldwork delivery patterns formed the basis of a questionnaire that was mailed to 23 occupational therapy directors in acute care Wisconsin hospitals. The 21 returned questionnaires were tallied by frequency of response and analyzed to ascertain current practice and changes resulting from MPPS. Findings indicate a strong commitment to professional and technical Level II fieldwork education. Departments reporting a decrease in staff were able to deflect the impact of the reductions by modifying their clinical education programs. Although changes were noted in all of the six identified categories, there was only minimal evidence that they were directly related to MPPS. Monitoring change during the 3rd and 4th year of the transition was recommended.

Education, Medical, Graduate↗
PubMed1996

Evaluation of a prospective payment system for VA contract nursing homes.

An evaluation of a pilot program for community nursing home care reimbursement by Department of Veterans Affairs Medical Centers (VAMCs) was undertaken. Eight VAMCs began using the Enhanced Prospective Payment System (EPPS) in 1992. These sites were compared to eight customary payment sites in a pretest/posttest quasi-experimental design. Outcomes included access to care, administrative workload, quality of care, and cost. As expected, per diem costs were significantly higher for EPPS than customary reimbursement patients ($106 vs. $87). However, EPPS sites placed veterans more quickly (81 days vs. 113 days; p < .01) than comparison sites and reduced administrative workload associated with placement. EPPS sites also increased the number of Medicare-certified homes under contract (76% vs. 54%) and placed significantly more veterans who received therapy (20% vs. < 1%). Savings in hospital days more than offset the increased cost of nursing home placement. Because the findings were attributed largely to a few veterans with long lengths of hospital stay, the early success of EPPS may diminish as the backlog of these long-stay patients decreases.

Chi-Square Distribution↗
PubMed1997

Prospective payment systems and hip fracture treatment costs.

We studied the health care consumption and costs after a hip fracture in 1,060 and 1,178 elderly patients admitted from their own home before and after the implementation of a prospective payment system in Stockholm. The total number of bed-days was estimated by merging the inpatient database and the municipal records of living accommodations for the elderly. By using a detailed patient-related accounting system and separating cost for surgery and "hotel" cost, we could compare costs in different types of rehabilitation. After the change in reimbursement system, the orthopedic stay was almost halved from 20 to 12 days. This was achieved by earlier and increased discharge to geriatric wards, where bed-day consumption doubled (107%), so that the total cost actually increased by 12%. This is not readily apparent from the official heath care statistics, which depict a more favorable cost development, as diagnosis-related registration for a large part of the geriatric care is no longer included. In contrast, a rehabilitation program in one of the acute hospitals, emphasizing continuity in the postoperative phase, reduced the total cost for treatment and rehabilitation by 12%. A prospective reimbursement aiming at reducing the costs of acute care does not necessarily result in overall savings.

Aged↗
PubMed1994

Quality of care for depressed elderly pre-post prospective payment system: differences in response across treatment settings.

We evaluated the quality of care for depressed elderly patients (n = 2,746) hospitalized in general medical hospitals (n = 297) before or after implementation of Medicare's Prospective Payment System, focusing on whether the response to time period differed for hospitals that in the post-PPS period had no psychiatric unit, an exempt psychiatric unit, or a nonexempt unit, and by ward placement within hospitals with psychiatric units. Quality of care increased over time, and for most measures of quality of care the level of improvement did not differ significantly across different types of hospitals or by ward placement. The intensity of use of therapeutic services, such as rehabilitation, occupation, or recreation therapy, increased over time, particularly in nonexempt psychiatric units and hospitals without psychiatric units, such that these locations caught up some over time in the level of use of these services to the level for exempt psychiatric units. Several outcomes of care improved over time, and the degree of improvement in the rate of inpatient medical and psychiatric complications and other outcomes was significantly greater for psychiatric units that were exempt post-PPS than for nonexempt treatment locations.

Aged↗
PubMed1991

Nosocomial pneumonia in Medicare patients. Hospital costs and reimbursement patterns under the prospective payment system.

To determine the extent to which hospitals are reimbursed for Medicare patients who develop nosocomial pneumonia, we analyzed hospital accounting costs, reimbursements received, and the net income from 33 Medicare patients who developed nosocomial pneumonia. In 31 of the 33 cases, hospital costs for the entire admission exceeded reimbursements, with a median net loss of $5800 per case. Eleven randomly selected pneumonia cases were compared with control patients matched by diagnosis related group, age, sex, and service. Cases had significantly longer hospital stays, had greater total hospital costs, and caused greater net losses than did matched controls. We conclude that hospitals are seldom reimbursed adequately for Medicare patients who develop nosocomial pneumonia. With the advent of the prospective payment system, hospitals now have substantial financial incentives for implementing cost-effective measures for preventing nosocomial pneumonias.

Aged↗
PubMed2003

Medicare outpatient prospective payment system.

More and more services that once required hospital stays now are provided on an outpatient basis. However, recent changes to the Medicare payment system for these services have left consumers and professionals confused about how much they should be paying for outpatient procedures. In this brief, we explore the Outpatient Prospective Payment System, including which services are covered (and not covered) and how the costs to your clients are calculated.

Aged↗