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PubMed1995

Fundraising, government grants and donations to nonprofit hospital charities.

Using 1982-1987 tax return data from California hospital charities, this paper investigates the relationship between fundraising expenditures, government grants and donations, during a time in which significant changes were being made in the system of hospital reimbursement. Empirical results suggest that while donations have been declining, charities have been efficient in their solicitation of donations. Results also suggest that government grants worked to reduce charitable contributions in the period before the institution of Medicare's Prospective Payment System. In more recent years, government grants have been associated with increases in donations to hospital charities.

California↗
PubMed1991

Achieving cost control in the hospital outpatient department.

The rapid growth in outpatient expenditures and the congressional mandate for development of a prospective payment system (PPS) for these expenditures are discussed. Extension of diagnosis-related groups to outpatient care is shown to be infeasible. Alternative patient classification schemes and options for defining the unit of payment and establishing weights and rates are discussed. A PPS primarily controls price and can only address volume by defining a broad unit of payment, such as an episode of care. Therefore, adoption of a volume performance standard approach could be effective. Outpatient payment policies must be integrated with those of other ambulatory care providers.

Ambulatory Care↗
PubMed1986

Prospective payment for outpatient mental health services: evaluation of diagnosis-related groups.

General medical hospitals are applying diagnosis-related groups (DRGs) to define their case mix so as to make possible prospective estimates of costs per case. We apply DRGs to 1000 adults registered through an outpatient clinic. Results, based on 837 patients in eight DRGs, provide no reason to anticipate that DRGs or other selected variables thought to be associated with prognosis will help predict costs of most outpatient mental health care. We explain why these results should not be surprising, and we describe an alternative perspective that may be necessary in order to develop a viable prospective payment system that is based on costs per case.

Adult↗
PubMed1992

The trend in hospital output and labor productivity, 1980-1989.

This paper analyzes changes in hospital labor productivity from 1980 through 1989. Our primary measure is called aggregate productivity, defined as the ratio of admissions (after controlling for the complexity of patients treated) to full-time equivalent employees. To scrutinize changes in aggregate productivity more closely, we also developed two component measures. These are intermediate productivity, which examines the labor necessary to produce a set of patient care services, and the intensity of services. The data show that hospitals clearly became more efficient in producing services during the 1980s. However, these gains were overwhelmed by more services being provided, resulting in a decline in aggregate productivity. The pattern of intensity and productivity changes can be associated with some distinct phases of the Medicare prospective payment system.

Diagnosis-Related Groups↗
PubMed1992

Fairness in prospective payment: a clustering approach.

Problems of fairness in prospective payment have existed since the inception of this regulatory method in the early 1980s. While prospective payment ostensibly has sought to reward efficient producers and provide disincentives for inefficient producers of health care, many hospitals have been penalized financially as a consequence of facing systematic factors beyond their control. This article defines homogenous peer groups of Department of Veterans Affairs providers for the purpose of establishing competitive prospective reimbursement rates. An econometric analysis classifies hospitals into six categories: small affiliated, small general, midsize affiliated/tertiary, large affiliated/tertiary, midsize general, and psychiatric. The Department of Veterans Affairs adopted this classification to alter its prospective payment system in 1988.

Cluster Analysis↗
PubMed1998

Optimizing hospital reimbursement through physician awareness: a step toward better patient care.

We instituted a training program to improve the overall accuracy of medical record coding through greater physician awareness to enhance hospital reimbursement and maintain quality patient care. A physician-targeted course reviewed the prospective payment system, diagnosis-related group guidelines, ambulatory surgery reimbursement, and the relationship between accurate physician documentation and medical record coding. Annual increases in charges from prospective surgical case assignment, proper conversion of outpatient to inpatient status, and more accurate coding of inpatient comorbidities and complications led to an estimated increase in hospital charges of $1.6 million.

Ambulatory Surgical Procedures↗
PubMed1994

Payment levels and hospital response to prospective payment.

Nearly ten years after the implementation of Medicare's Prospective Payment System (PPS), some of its major impacts remain hard to explain using existing economic models. We develop a simple model of the hospital's choice of intensity of care, which affects demand for admissions. The model suggests an important role for the level of prospective payment, independent of the effect of marginal incentives. Predictions from the model are compared first with aggregate utilization data from Medicare's PPS experience, and then with various hospital-level studies which control for interhospital differences in reimbursement rates.

Financial Management, Hospital↗
PubMed1987

Predicting charges for inpatient medical rehabilitation using severity, DRG, age, and function.

We examined the effectiveness of using diagnosis related groups (DRGs), Severity of Illness Index (SII), age and function at admission to predict inpatient charges for medical rehabilitation. Data from our sample of 199 indicate that DRGs alone explained approximately 12 per cent of the variation in charges for inpatient rehabilitation while SII explained 26 per cent of the variation. SII, DRG, and age together yielded the highest regression coefficient, accounting for nearly 39 per cent of the variation in total charges; SII and age accounted for 36 per cent of the variation. Within DRG categories, SII was the only important predictor of inpatient charges accounting for 23 per cent of the variation in charges among stroke patients (DRG 014) and 28 per cent of the variation in charges among hip fracture patients (DRG 210). Function at admission was not a useful predictor of inpatient rehabilitation charges within DRGs. These results suggest that SII and age may be useful in developing a DRG-based prospective payment system for inpatient medical rehabilitation.

Activities of Daily Living↗
PubMed1999

The effects of a fixed-fee reimbursement system introduced by the Federal Government on laboratory testing in the United States.

Rapid growth of health care expenditures during the 1970s in the United States led to implementation of a prospective payment system (PPS) based on diagnosis-related groups (DRG) for Medicare inpatient reimbursement in 1983. With the introduction of DRG/PPS, hospitals encouraged earlier discharges and discouraged admission of patients who may require expensive services. Patient care has moved into more outpatient and non-hospital settings which have been less regulated and paid on a cost-reimbursement basis. The change of reimbursement system has converted hospital laboratories from "profit center" under the fee-for-service reimbursement practice to possible "cost center" at least for inpatient laboratory services with the advent of DRG/PPS. Hospitals have reduced laboratory operating expenses by constraining laboratory growth and development. Laboratory testing in non-hospital settings such as physicians' office laboratories, which were exempt from license and quality control by governmental regulations, has increased exponentially since implementation of DRG/PPS. To improve the quality of laboratory testing in such unregulated laboratories, the federal government has promulgated the Clinical Laboratory Improvement Amendments of 1988 (CLIA '88), requiring on-site survey and license under CLIA '88 for all laboratories in the United States regardless of the size, complexity, or location of laboratory. Implementation of DRG/PPS resulted in a temporary success in reducing Medicare Part A budget growth, but had only a small impact to slow the actual growth of total national health care expenditures or laboratory-related expenditures. Nevertheless, the change of reimbursement practice has created a large incentive to reduce unnecessary resource utilization, and cost-effective laboratory testing has become an essential concept during the DRG/PPS era.

Clinical Laboratory Techniques↗
PubMed1988

Health care financing policy for hospitalized nephrology patients.

The Medicare diagnosis-related group (DRG) prospective payment system is now entering its 6th year, with no reported major adverse effects on the health status of the American people. Currently 13 states are using DRG prospective "all-payer systems" for hospital reimbursement; other state may adopt DRG all payer systems. In DRG all-payer systems, Medicare, Medicaid, Blue Cross, and other commercial insurers pay by the DRG mode; New York state has been all-payer since January 1, 1988. This study simulated DRG all-payer methods on a large sample (n = 558) of adult nephrology patients for a 2-year period using both federal and New York DRG reimbursements now in effect. Both Medicare and Medicaid patients had (on average) longer hospital lengths of stay and higher total hospital costs compared with patients from Blue Cross and other commercial payers. Medicare and Medicaid patients also had greater severity of illness than patients from Blue Cross or other payers. However, all payers (ie, Medicaid, Blue Cross, Medicare, and commercial insurers) generated significant financial risk under our DRG all-payer scheme. These data suggest that federal, state, and private payers may be underreimbursing for the care of hospitalized nephrology patients using the DRG prospective hospital payment scheme. As DRG payment rates are further reduced compared with the real hospital costs of treating patients, both the access to and the quality of care for many nephrology patients may be jeopardized.

Aged↗
PubMedDate not supplied

Treatment of toxic epidermal necrolysis by burn units: another market or another threat?

A survey of burn care facilities in the United States has provided information regarding the treatment of toxic epidermal necrolysis and related diseases in burn units. The survey suggests that a disproportionate share (12% to 15%) of the projected number of cases of toxic epidermal necrolysis that occur annually are being transferred to the 2% of United States hospitals that have burn units. Because of the potential for a complex hospital course and extended length of stay, treatment of these patients in a prospective payment system poses a significant fiscal threat to hospitals with burn units.

Burn Units↗
PubMed1988

Psychiatry under prospective payment: experience in the first year.

The authors present data on changes in resource use by Medicare psychiatric patients in general hospitals after the introduction of the prospective payment system in 1984. Length of stay and charges per discharge during fiscal year 1984 fell 13.8% and 15.9%, respectively, after the new system began, even though 31.8% of the discharges for Medicare psychiatric cases were from exempt psychiatric units. The decrease in length of stay was considerably larger (23.2%) in hospitals with no psychiatric units, which were not exempt from prospective payment.

Fees and Charges↗
PubMed1988

Use and cost of hospital outpatient services under Medicare, 1985.

Presented in this article are program data on the use and cost of hospital outpatient (HOP) services rendered to aged and disabled Medicare beneficiaries during calendar year 1985. Trend data are also presented for calendar years 1974-85. The data shown in this article focus on charges, reimbursements, and reimbursements per enrollee as a means of measuring the cost of HOP services. The data provide information to help identify trends and patterns of care for monitoring the Medicare HOP benefit and for evaluating the impact of the inpatient hospital prospective payment system (PPS) on the use and cost of HOP services.

Ambulatory Care↗
PubMed1999

Medicare program; changes to the FY 1999 hospital inpatient prospective payment wage index and standardized amounts resulting from approved requests for wage data revisions. Health Care Financing Administration (HCFA), HHS. Final rule.

This final rule implements revised wage index values, geographic adjustment factors, operating standardized amounts, and capital Federal rates for hospitals subject to the inpatient prospective payment system. These changes result from requests made by hospitals in response to a final rule with comment period published in the Federal Register on November 19, 1998. These revisions will be implemented on a prospective basis.

Capital Expenditures↗
PubMed2000

Hospice: an organizational systems model for the integration of acute and long-term care.

In recent years, the realization of a need for increased integration of acute care and long-term care (LTC) systems has grown. For the most part, however, a person requiring both types of care is treated as though he or she is two discrete individuals with separate needs. Organizations that have the integration of acute and LTC as a goal serve relatively small numbers of people. Integration efforts could be facilitated through the identification and application of an organizational systems model. Hospice can provide such a model. The hospice interdisciplinary team integrates not only multiple disciplines but also acute care and LTC. The hospice model is also appropriate from a financial standpoint in that Medicare hospice funding has employed a prospective payment system (PPS) since the inception of the Medicare Hospice Benefit. In this article, the application of the hospice model to the integration of the acute care and LTC systems in the U.S. is demonstrated, using a subsystem approach.

Acute Disease↗
PubMed2003

Measuring function for Medicare inpatient rehabilitation payment.

We studied 186,766 Medicare discharges to the community in 1999 from 694 inpatient rehabilitation facilities (IRF). Statistical models were used to examine the relationship of functional items and scales to accounting cost within impairment categories. For most items, more independence leads to lower costs. However, two items are not associated with cost in the expected way. The probable causes of these anomalies are discussed along with implications for payment policy. We present the rules used to construct administratively simple, homogeneous, resource use groups that provide reasonable incentives for access and quality care and that determine payments under the new IRF prospective payment system (PPS).

Accounting↗
PubMed1993

Casemix--what is it and what does it mean to ophthalmology?

The Australian government is committed to the establishment of a prospective payment system based on casemix information for acute hospital care in the near future, because these systems are demonstrably socially equitable and more efficient than present 'historical' systems. Since ophthalmology is an outpatient-based specialty, the establishment of a good ambulatory casemix system is essential to this specialty. Considerable input from clinicians will be required to establish a satisfactory system, and to maintain it in years to come.

Ambulatory Care↗