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PubMed1987

Do all teaching hospitals deserve an add-on payment under the prospective payment system?

Although teaching hospitals are widely discussed in terms of 115 university teaching hospitals, Medicare's prospective payment system pays about 1,000 teaching hospitals an additional amount per case. This paper investigates two frequent justifications for this add-on payment: 1) teaching hospitals have sicker patients, and 2) they produce medical education. To test assertion 1, I reviewed case-mix analyses and performed regression analyses, which provided little evidence that nonuniversity teaching hospitals have sicker patients. With regard to assertion 2, I argue that the first 10 or 15 residents per 100 beds function as hospital-based and attending physicians and, accordingly, should not be included in the add-on payment. I conclude with two policy options that would focus the add-on payment on university hospitals.

Education, Medical↗
PubMed1986

Impact of the Medicare prospective payment system for hospitals.

This article describes some of the available evidence on the impact of the Medicare prospective payment system (PPS) for hospitals during its first year, on hospitals, other payers for inpatient hospital services, other providers of health care, and Medicare beneficiaries. In addition, because the impetus for the enactment of the new system stemmed from concern over the financial status of the Medicare program, the first-year impact of PPS on Medicare program expenditures is also described.

Data Collection↗
PubMed1994

An examination of winners and losers under Medicare's prospective payment system.

Through case studies of 10 matched pairs of winner and loser hospitals under the Medicare prospective payment system (PPS), specific characteristics and management actions were identified that are related to strong financial performance. Because other payers are increasingly adopting PPS-like cost control incentives and because managed care is fundamental to the national health care reform debate, the successful strategies identified in this article may be of increasing importance to hospital managers.

Cost Control↗
PubMed1995

Effects of Medicare's prospective payment system on service use by depressed elderly inpatients.

OBJECTIVE: To determine the effects of Medicare's prospective payment system (PPS) on hospital care, changes in length of stay and intensity of clinical services received by 2,746 depressed elderly patients in 297 acute care general medical hospitals were studied. METHODS: A pre-post design was used, and differences in sickness at admission were controlled for. Data on length of stay and use of specific clinical services were obtained from the medical record using a medical record abstraction form. Care provided on units exempt from PPS was compared with care provided in nonexempt units. RESULTS: After implementation of PPS, the average length of stay fell by up to three days within the different types of acute care settings studied, but this decline was partially offset by proportionately more admissions to psychiatric units, which had longer lengths of stay. Intensity of clinical services increased after PPS implementation, especially in nonexempt psychiatric units. CONCLUSION: Despite financial incentives for hospitals to reduce clinical services under PPS, its implementation was not associated with a marked decline in length of stay, when averaged across all treatment settings, and was associated with an increase in the intensity of many clinical services used by depressed elderly patients in general hospitals.

Aged↗
PubMed1986

Prospective payment: systemic effects on the provision of community care for the elderly.

The financial incentives of Medicare's Prospective Payment System are encouraging hospitals to discharge patients sooner and at a lower functional status. This discussion analyzes the possible impact of the subacute patient on the community system of care. Three broad areas of potential impact are examined: the systemic changes in the community system of care stimulated by vertical integration and the influx of proprietaries into community service delivery; structural changes which may be experienced by community service agencies in meeting the demands of increased volume and increased acuity; the impact on the family and the informal system of care delivery as it responds to the increased demands of caring for the subacute patient.

Aged↗
PubMed1998

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 1998 rates--HCFA. Final rule.

This final rule responds to public comments received on those portions of a final rule with comment period published in the Federal Register on August 29, 1997, that revised the Medicare hospital inpatient prospective payment systems for operating costs and capital-related costs to implement necessary changes resulting from the Balanced Budget Act (BBA) of 1997, Public Law 105-33. This rule also addresses public comments on other BBA changes relating to cost limits for hospitals and hospital units excluded from the prospective payment systems as well as direct graduate medical education payments that were included in the August 29, 1997 document. Generally, these BBA changes were applicable to hospital discharges occurring on or after October 1, 1997.

Capital Expenditures↗
PubMed1990

Comparing outcomes of care before and after implementation of the DRG-based prospective payment system.

We compared patient outcomes before and after the introduction of the diagnosis related groups (DRG)-based prospective payment system (PPS) in a nationally representative sample of 14,012 Medicare patients hospitalized in 1981 through 1982 and 1985 through 1986 with one of five diseases. For the five diseases combined; length of stay dropped 24% and in-hospital mortality declined from 16.1% to 12.6% after the PPS was introduced (P less than .05). Thirty-day mortality adjusted for sickness at admission was 1.1% lower than before (16.5% pre-PPS, 15.4% post-PPS; P less than .05), and 180-day adjusted mortality was essentially unchanged at 29.6% pre-vs 29.0% post-PPS (P less than .05). For patients admitted to the hospital from home, 4% more patients were not discharged home post-PPS than pre-PPS (P less than .05), and an additional 1% of patients had prolonged nursing home stays (P less than .05). The introduction of the PPS was not associated with a worsening of outcome for hospitalized Medicare patients. However, because our post-PPS data are from 1985 and 1986, we recommend that clinical monitoring be maintained to ensure that changes in prospective payment do not negatively affect patient outcome.

Diagnosis-Related Groups↗
PubMed1989

The effect of the Medicare prospective payment system on the adoption of new technology. The case of cochlear implants.

Since the advent of Medicare's prospective payment system, beneficial but cost-increasing medical advances have been systematically assigned to existing diagnosis-related groups (DRGs) that do not cover the costs of the new technology. Recent evidence suggests that such underpayment reduces the rate at which hospitals adopt that technology. Safeguards designed to offset the negative incentives of underpayment, including the recalibration of DRG values, update factors, and the allowance of Medicare profits, appear not to have worked. We studied the case of cochlear implantation. Years after Food and Drug Administration approval and a favorable decision about Medicare coverage, payment for the device remains well below its average cost, and many hospitals ration the availability of the device to Medicare patients because of the financial losses involved. Eventually, so few patients received the implant that the original manufacturer discontinued its production. Under the DRG system, negative payment incentives compete with clinical considerations when hospitals and physicians decide whether to adopt specific cost-increasing new forms of technology of proved value. Other payment mechanisms that do not insert arbitrary financial considerations into specific treatment decisions should be considered instead.

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

Prospective payment system and impairment at discharge. The 'quicker-and-sicker' story revisited.

Since the introduction of the prospective payment system (PPS), anecdotal evidence has accumulated that patients are leaving the hospital "quicker and sicker." We developed valid measures of discharge impairment and measured these levels in a nationally representative sample of patients with one of five conditions prior to and following the PPS implementation. Instability at discharge (important clinical problems usually first occurring prior to discharge) predicted the likelihood of postdischarge deaths. At 90 days postdischarge, 16% of patients discharged unstable were dead vs 10% of patients discharged stable. After the PPS introduction, instability increased primarily among patients discharged home. Prior to the PPS, 10% of patients discharged home were unstable; after the PPS was implemented, 15% were discharged unstable, a 43% relative change. Efforts to monitor the effect of this increase in discharge instability on health should be implemented.

Aged↗
PubMed1990

Medicare program; changes to the inpatient hospital prospective payment system and FY 1990 rates; correction and technical amendment--HCFA. Final rule; correction and technical amendment.

In the September 1, 1989 issue of the Federal Register (FR Doc. 89-20481), (54 FR 36453), we made revisions to the Medicare inpatient hospital prospective payment system and set forth the prospective payment rates for FY 1990. This notice corrects technical errors made in that document. In addition, we are making a conforming change to section 412.92(a)(2)(iii) to accurately reflect the less burdensome criteria for classification as a sole community hospital. This language conforms to the change we made in section 412.92(a)(3). We intended to change both sections at the same time, but mistakenly left out the changes to section 412.92(a)(2)(iii).

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2000

Unraveling Medicare's prospective payment system for hospital outpatient care.

This article explains the construction and principal components of Medicare's new hospital outpatient prospective payment system. Examples illustrate the calculation of the payment rates and other amounts that hospitals are paid under the new system. The article concludes with observations about the new system's construction, and operational steps hospitals will likely take to comply with its reporting requirements and optimize Medicare payments.

Aged↗
PubMed1984

The Medicare Prospective Payment System and the care of the frail elderly.

The development of the Medicare Prospective Payment System based on diagnosis-relating groupings is reviewed. Special emphasis is placed on analysis of the provisions that have a potential impact on geriatric medicine and on the care of the frail elderly. The authors conclude that in its present form, the DRG system may systematically undercompensate hospitals for treating the frail elderly and, therefore, result in attempts by some hospitals to reduce or avoid altogether programs in geriatric medicine and admissions of frail elderly persons. These effects, together with federal and state efforts to limit nursing home and home care costs, may result in a major under-provision of care for the frail elderly and exclusion of clinical geriatric medicine from the medical care system.

Aged↗
PubMed2001

The road to success in PPS: guiding care for efficiency and effectiveness. Prospective payment system.

This article features one organization's attempt to interpret and form operational definitions for the initiation of the prospective payment system (PPS) by October 1, 2000. Data collection, initiated with the October 28, 1999, proposed regulations, showed inconsistent use of resources when patient needs were similar based on the initial 20 indicators used to calculate acuity and payment levels in PPS. A decision to use a clinical guidance system with the potential to control outcomes and use rates resulted in the development of a system called Care Guides. These tools help home care staff develop and implement efficient and effective home care plans.

Attitude of Health Personnel↗
PubMedDate not supplied

A decade of Medicare's prospective payment system--success or failure?

The growth in Medicare spending for inpatient hospital services slowed following the implementation of the prospective payment system (PPS) due to a decline in admission rates and limits on payment increases. Hospital costs, however, have increased faster than payments. Rather than reducing costs further, hospitals responded by charging privately insured patients more than the costs of their care and developing new revenue sources. PPS also redistributed Medicare payments across hospitals and was associated with increased spending in other settings. The PPS experience leaves policymakers with some immediate challenges and provides insights for the development of health care reform initiatives.

Costs and Cost Analysis↗
PubMed2003

Potential impact of the new medicare prospective payment system on reimbursement for traumatic brain injury inpatient rehabilitation.

OBJECTIVE: To evaluate the potential impact of the new Medicare prospective payment system (PPS) on traumatic brain injury (TBI) rehabilitation. DESIGN: Retrospective cohort study of patients with TBI. Patients were assigned to their appropriate case-mix group (CMG) based on Medicare criteria. SETTING: Fourteen urban rehabilitation facilities throughout the United States. PARTICIPANTS: Patients with TBI admitted to inpatient rehabilitation and enrolled in the Traumatic Brain Injury Model Systems from 1998 to 2001 (N=1807). INTERVENTIONS: Not applicable. MAIN OUTCOME MEASURES: Cost of inpatient rehabilitation admission, length of stay (LOS), and functional outcomes. RESULTS: The median cost of inpatient rehabilitation for patients with TBI exceeded median PPS payments for all TBI CMGs by 16%. Only 3 of the 14 hospitals received reimbursement under PPS that exceeded costs for their TBI patients. CONCLUSIONS: Compared with current costs, the new Medicare payment system may reimburse facilities significantly less than their costs for the treatment of TBI. To maintain their current financial status, facilities may have to reduce LOS and/or reduce resource use. With a decreased LOS, inpatient rehabilitation services will have to improve FIM efficiency or discharge patients with lower discharge FIM scores.

Adult↗
PubMed2006

Did the introduction of a prospective payment system for nursing home stays reduce the likelihood of pharmacological management of secondary ischaemic stroke?

BACKGROUND: Since 1998, a prospective payment system (PPS) for Medicare services provided by nursing homes in the US has been in operation. Concerns have been expressed that the PPS may affect the quality of care delivered to residents. This study evaluates the impact of the PPS on pharmacological secondary ischaemic stroke prevention in nursing homes. STUDY DESIGN: The nationally mandated Minimum Data Set and Online Survey Certification and Automated Record data system from 1997 and 2000 for four states were used. We conducted a quasi-experimental study comparing the pharmacological treatment rates for secondary stroke prevention in the pre-PPS period (1997) with those in the post-PPS period (2000) in residents who experienced an ischaemic stroke within 6 months (n1997 = 5008; n2000 = 5243) of living in nursing facilities (n1997 = 1226; n2000 = 1092) in Kansas, Maine, Mississippi or Ohio. The sample was stratified according to recommendations for use of warfarin. Logistic regression models adjusting for clustering effects of residents residing in homes using generalised estimating equations provided estimates of the PPS effect on use of antiplatelets and the use of warfarin. RESULTS: The unadjusted proportion of use of pharmacological agents for the secondary prevention of stroke was similar for warfarin in both time periods and increased for antiplatelets in 2000. Relative to the pre-PPS era, the likelihood of use of antiplatelets increased in the post-PPS era (adjusted odds ratio 1.26; 95% CI 1.15, 1.38); there was no effect on the use of warfarin. CONCLUSION: Although the lack of a PPS effect on pharmacological management of secondary ischaemic stroke is encouraging, there is still room for improvement in overall stroke management.

Aged↗
PubMed1998

Services utilization before and after the prospective payment system by patients with somatization disorder.

This study analyzed services utilization before and after the implementation of Medicare's Prospective Payment System (PPS) in psychiatric patients with somatization disorder in two samples: one recruited before the PPS and the other after the PPS. Individuals with this psychiatric disorder present with multiple unexplained medical complaints and consume a great number of health resources. The results from this study indicated that Medicare PPS was associated with fewer hospital admissions and fewer hospital days, with a greater number of physician visits (for Medicare patients) and emergency room visits (for non-Medicare patients) and with lower overall health expenditures. However, there were no significant changes in the average length of stay after PPS. In contrast to previous studies, Medicare PPS was significantly associated with changes in service utilization by non-Medicare patients as well, a possible "spillover effect." This study confirms the results from other research indicating that higher levels of efficiency may be achieved for certain psychiatric disorders through prospective payment mechanisms.

Adult↗