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PubMed2003

Utilization of home health services before and after the Balanced Budget Act of 1997: what were the initial effects?

OBJECTIVE: To estimate the impact of the Balanced Budget Act of 1997 (BBA), which changed the way Medicare reimbursed for home health services, on a range of home health utilization measures, and to examine whether particular subgroups of beneficiaries were differentially impacted in the post-BBA period. DATA SOURCES: Secondary data from the Centers for Medicare and Medicaid Services (CMS) Standard Analytic Files for the 1 percent sample of Medicare beneficiaries for fiscal years 1997 and 1999, linked with information from CMS eligibility, provider, and cost report files as well as the Area Resources File. STUDY DESIGN: Logistic regression was used to estimate the effects of being in the post-BBA period on the incidence of home health service use and ordinary least squares (OLS) regression was used to estimate the effects of being in the post-BBA period on the amount and type of use by home health service users. Interaction terms we reincluded for all the independent variables to assess whether the effect was disproportionate among particular beneficiary subgroups. PRINCIPAL FINDINGS: Results show a 22 percent decrease in the percentage using home health services post-BBA and a 39 percent decrease in the number of visits per user. Stronger reductions, though not very large, were found in the incidence of use for beneficiaries aged 85 and older, those in states with high historical Medicare home health use, and those with Medicaid buy-in. More intensive reductions in the number of services were found for those aged 85 and older, in high historical Medicare use states, nonwhites, females, those using for-profit agencies, and those treated for certain diagnoses. Less intensive reductions were associated with hospital-based agencies. CONCLUSIONS: This research demonstrates that public program expenditures can be sharply curtailed with financial incentives. As reimbursement shifts to a prospective payment system legislated by the BBA, utilization should be closely monitored, especially for vulnerable subgroups.

Aged↗

PubMed1994

Use of diagnosis-related groups by non-Medicare payers.

Medicare's prospective payment system (PPS) for hospital cases is based on diagnosis-related groups (DRGs). A wide variety of other third-party payers for hospital care have adapted elements of this system for their own use. The extent of DRG use varies considerably both by type of payer and by geographical area. Users include: 21 State Medicaid programs, 3 workers' compensation systems, the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), more than one-half of the Blue Cross and Blue Shield Association (BCBSA) member plans, several self-insured employers, and a few employer coalitions. We describe how each of these payers use DRGs. No single approach is dominant. Some payers negotiate specific prices for so many combinations of DRG and hospital that the paradigm that payment equals rate times weight does not apply. What has emerged appears to be a very flexible payment system in which the only constant is the use of DRGs as a measure of output.

Data Collection↗

PubMed1998

Hospital-physician arrangements and hospital financial performance.

OBJECTIVES: The introduction of the Medicare Prospective Payment System and the more recent rise of managed care plans have greatly increased the importance of effective hospital financial management. Because physicians play a central role in directing hospital resource use, policies to influence physician behavior and to align physician and hospital interests more effectively are being advocated increasingly. This article evaluates the effect of nine strategies to facilitate physician involvement and integration into the hospital on hospital financial performance. METHODS: Data came primarily from the Prospective Payment Assessment Commission's hospital-physician relations survey of 1,485 hospitals and the Medicare Cost Reports. Both ordinary least squares and first differencing models were used to evaluate the effect of physician integration on hospital financial performance. RESULTS: Hospitals with lower margins and higher costs were more likely to have implemented strategies to integrate physicians and to modify physician behavior than their counterparts. Analysis using first differencing models indicated that making department heads responsible for the profits and losses had a significant positive effect on margins, whereas including medical staff on the hospital's board and offering physicians management services had a significant negative impact on average Medicare costs. In addition the number of strategies implemented was associated positively with financial performance. The paper also emphasizes the importance of model specification in evaluations of hospital-physician arrangements. CONCLUSIONS: Changes in hospital-physician relations may have been one reason why hospitals have been relatively successful at containing costs and retaining profitability in recent years. More research needs to be done on which specific arrangements affect hospital financial performance, as well as their effect on the quality of patient care.

Financial Management, Hospital↗

PubMed2001

A process for putting the PPS patient first.

The guiding principle of home care is to put the needs of patients before financial gain. However, Medicare's prospective payment system (PPS) offers incentives to do just the opposite--to put a dollar gain ahead of the patient. The challenge is--in spite of PPS's incentives--to put the patient first and yet remain solvent.

Aged↗

PubMed1984

Medicare program; hospice care and prospective payment for Medicare inpatient hospital services; correction--HCFA. Correction to final rules.

This document corrects errors that appeared in the final rule on hospice care published on December 16, 1983 (48 FR 56008) and the final rule on the prospective payment system for inpatient hospital services published on January 3, 1984 (49 FR 234). The former rule implemented section 122 of Pub . L. 97-248 providing coverage for hospice care and responded to comments received on a proposed rule published August 22, 1983 (48 FR 38146). The latter final rule amended, in response to public comments received, the interim final rule published on September 1, 1983 (48 FR 39752). In certain instances, we have made nonsubstantive changes in the prospective payment regulations text for purposes of clarification.

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

PubMed1992

Health services research in arthritis musculoskeletal disease.

This paper reviews recent studies in national patterns of disability related to arthritis, longitudinal studies of outcome in arthritis, the effects of the prospective payment system on outcomes of hip fracture patients, and recent studies of geographic variation in treatment of arthritis and musculoskeletal disease. It also reviews recent papers on clinimetric issues and advances in measuring disease activity.

Arthritis↗

PubMed2001

[Hospital financing in in-patient psychiatry via DRG-based prospective payment--The Salzburg experience].

Hospital financing via case-related prospective payment sometimes is suspected to be responsible for accelerating the "revolving-door"-phenomenon in psychiatry. According to this reasoning, establishing diagnoses-related groups (DRGs) ruling a prospective payment system could not only reduce lengths of stay but could also simultaneously raise hospitalization and readmission rates. This study analyses the Austrian experience after the implementation of such a payment system, the "performance-oriented financing of hospitals" (leistungsorientierte Krankenanstalten-Finanzierung, LKF) in 1997. Time series analyses based on the complete hospital discharge statistics of the Salzburg province were used as methods. Results showed that neither length of stay, nor hospitalization or readmission rates in psychiatry have substansially changed or deviated from their long-term trends after implementation of the LKF system. Other medical disciplines have experienced statistically significant changes. The possibility to transfer these results to the German psychiatric health care system is discussed.

Austria↗

PubMed2001

The story of function-related groups--please, first do no harm.

In November 2000, the Health Care Financing Administration (HCFA) published a proposed rule announcing their intention to implement a prospective payment system for rehabilitation inpatient facilities and hospital units. In this system, payments are to be scaled to patient complexity through a classification system referred to as case-mix groups (CMGs) modeled after the Functional Independence Measure-Function Related Groups, which were developed from the FIM instrument. Under the HCFA proposal, CMGs will be derived from the Minimum Data Set for Post-Acute Care (MDS-PAC). This shift to the MDS-PAC, with little scientific evidence to support it, can have a negative impact on how the system expresses patient need, on how patients access services, and on the equity of hospital payments.

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

PubMed1988

Competition, regulation, and hospital costs, 1982 to 1986.

We used data on 5490 nonfederal, short-term general hospitals to evaluate the relative effectiveness of regulatory and market-oriented cost-control policies on hospital cost inflation between 1982 and 1986. All-payer rate-regulation programs reduced inflation rates by 16.3% in Massachusetts, 15.4% in Maryland, and 6.3% in New York, compared with the control hospitals in 43 states with neither all-payer rate regulation nor an aggressive market-oriented strategy. New Jersey hospitals experienced a rate of cost inflation similar to the control hospitals. Given the effectiveness of its regulatory program in the 1970s, however, New Jersey began and ended the period from 1982 to 1986 with the lowest costs, controlling for wages and patient mix. California's market-oriented cost-control policy reduced inflation rates by 10.1%. Hospitals with large percentages of patients insured by Medicare's prospective payment system experienced cost inflation rates 16.1% lower than hospitals with small percentages of Medicare patients. Investor-owned hospitals experienced rates of cost increase 11.6% higher than private nonprofit hospitals and 15.0% higher than public hospitals.

Cost Control↗

PubMed1989

The impact of prospective reimbursement on nursing home efficiency.

Data Envelopment Analysis (DEA) was used to estimate the relative efficiencies of nursing homes in Maine for 2 years before the introduction of a prospective payment system and for 2 years afterward. A multiple regression was performed in which the DEA-estimated efficiency was the dependent variable and a number of facility characteristics and study year were the independent variables. Study findings indicate that nursing home efficiency scores fell after the introduction of prospective reimbursement; that is, generally speaking, more inputs were being used per unit of output in the period after the introduction of prospective reimbursement than in the period preceding it. This may be the result of poor management, degraded quality of inputs, improved quality of outputs, or some other unobserved trend during this same period. The study also concludes that higher occupancy rates are associated with lower efficiencies and that patients in restraints produce severe negative effects on efficiency. In addition, it appears that a sudden increase in administrative hours in the final study year played a role in that year's lower average efficiency scores, but also that all input levels generally rose while output levels remained virtually constant.

Bed Occupancy↗

PubMed1985

Assuring quality of care under DRG-based prospective payment.

The implementation of the Medicare Prospective Payment System (PPS) has sparked growing concern that economic pressures on hospitals may adversely affect quality of care. Potential problems include: premature hospital discharge, inter-hospital transfers of severely ill patients, and increased performance of high-risk procedures on an outpatient basis. Quality assurance efforts by Peer Review Organizations (PROs) and by individual institutions should help keep these forces in check. It will be necessary, however, to develop better monitoring systems containing both clinical and financial "markers" to assure the medical appropriateness of inpatient, as well as ambulatory, services offered under PPS.

Diagnosis-Related Groups↗

PubMed1998

Functional outcomes of posthospital care for stroke and hip fracture patients under medicare.

BACKGROUND: Medicare's introduction of the Prospective Payment System for hospitals has led to tremendous growth in ways of providing posthospital care. Despite substantial differences in costs per episode of care, the type of posthospital care that produces the best results for specific types of patients is not clear. This study analyzed the outcomes of different types of posthospital care for a cohort of older Medicare patients (who had diagnoses associated with the use of a range of posthospital care modalities) for up to a year after hospital discharge. METHODS: Medicare patients hospitalized with strokes and hip fractures were enrolled consecutively just before discharge from 52 hospitals in three cities in 1988-1989. These diagnosis-related groups were chosen because patients were discharged to all three major types of Medicare-supported posthospital care. Patients were interviewed in-person before discharge and again at 6 weeks, 6 months, and 1 year after discharge. The functional outcomes of posthospital care were evaluated by the instrumental variables estimation approach to correct for selection bias caused by nonrandom treatment assignment. The impacts of discharge locations on the functional outcomes were examined by one-way analyses of variance (ANOVA). RESULTS: In general, the more disabled patients went to nursing homes and rehabilitation, but the overlap in distribution was sufficient to conduct the analyses. Stroke patients discharged to nursing homes had the highest mortality rate (P<.01). Stroke patients discharged to home health had the lowest rehospitalization rates (P<.05). Hip fracture discharged to home health care had the highest adjusted rehospitalization rate, whereas those discharged to nursing homes had the lowest adjusted rehospitalization rate (P<.05). For stroke patients, posthospital care in rehabilitation facilities or home health care was associated with significantly better functional improvement compared with stroke patients discharged elsewhere. However, functional outcomes deteriorated by 1 year posthospitalization among stroke patients who received their posthospital care at nursing homes or received no formal posthospital care. For hip fracture patients, all four types of posthospital care were associated with functional improvement, but patients discharged to rehabilitation facilities experienced the most functional improvement. CONCLUSIONS: The choice of posthospital care can influence the course of Medicare patients. Careful attention should be paid to how hospital discharge decisions are made and to the financial incentives for different types of posthospital care provided under the current payment system. The current supply of nursing homes is not well suited to the demands of posthospital care.

Activities of Daily Living↗

PubMed1985

Cost incentives for peripheral angioplasty.

Hospital costs and length of stay for 86 patients with peripheral vascular disease treated by bypass or percutaneous transluminal angioplasty (PTA) were assessed. The length of stay averaged 4-4.5 times longer, and the total hospital charge was 3-3.7 times greater, for bypass than for PTA. These charges are discussed in relation to current diagnosis-related groups (DRGs) and the allowed reimbursement from the Federal Prospective Payment System. In appropriately selected patients with peripheral vascular disease, PTA should be the treatment of choice from both medical and financial points of view.

Aged↗

PubMed2002

The problem with diagnosis related group 475.

The reimbursement of hospital Part A cost by Medicare under the original prospective payment system (PPS) created serious financial problems for hospitals in many areas but was especially serious in patients receiving mechanical ventilation. Subsequent revisions of the PPS corrected some of the financial burden of the cost of such patients when the patient required tracheostomy for prolonged ventilator care, Diagnosis Related Group (DRG) 483. The problem that remains, however, is that only patients with a medical diagnostic classification (MDC) within the MDC 4 area, Diseases and Disorders of the Respiratory System, qualify for DRG 475, the only DRG other than DRG 483 that recognizes the cost of mechanical ventilation. This study evaluates the Part A costs of medical and surgical patients who received mechanical ventilation for >or= 3 days during 1 year at Saint Marys Hospital and Rochester Methodist Hospital in Rochester, MN, who did not qualify for DRG 475. The analysis of the financial effect of these patients under the Medicare system reveals a significant monetary loss and this is compared to other payor groups.

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

PubMed2003

Respiratory therapists in home care.

Since the implementation of the Medicare prospective payment system (PPS) in October 2000, many sources indicate that the average numbers of patient visits in a home care episode have decreased. Patients with respiratory system diagnosis are a significant percentage of the total episodes in home care. Respiratory therapists (RTs) can provide additional staffing, meet patient needs, and control costs through greater flexibility in resource utilization.

Aged↗

PubMed2000

Clinical implications of prospective payment in home health care.

Now that the final regulations governing the prospective payment system (PPS) for home health care have been published in the Federal Register (vol. 65, no. 128, July 3, 2000, rules and regulations, p. 41,228), home health agencies (HHAs) can begin to finalize their plans to operate efficiently under PPS. Although an undercurrent of optimism already is appreciated in response to the PPS, agency survival will hinge on fully understanding prospective pay and the data on which it is based.

Certification↗

PubMed1983

Strategic planning for outreach laboratory services.

Whether operating under short-term TEFRA regulations, or a longer-term prospective payment system in hospitals, pathologists are now evaluating alternative opportunities for developing incremental revenue. One viable alternative is the entry into the commercial reference laboratory market from a hospital laboratory. This article deals with the strategic business and marketing planning necessary to operate effectively in this competitive environment.

Hospitals↗

PubMed1989

Surgical and nonsurgical procedures associated with hospital delivery in the United States: 1980-1987.

Data from the National Hospital Discharge Survey were used to examine changes in the rates of procedures performed on women hospitalized for delivery from 1980 to 1987 in the United States. The rate of procedures reported per 100 deliveries increased 42 percent. Much of this increase was reported from 1984 to 1987, when there may have been more complete recording of secondary procedures due to the implementation of prospective payment systems. The reported rates of cesarean sections, repair of current obstetric lacerations, artificial rupture of membranes, and vacuum extraction increased throughout the whole period from 1980 to 1987, however, and thus are less likely to have risen because of changes in reporting practices.

Delivery, Obstetric↗