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Critical appraisal of the DRG system: problem areas for DRG reimbursement in the USA.

One may conclude that the prospective payment system known as Diagnosis Related Groups is the initial thrust of the government to reduce the rate of expenditures for Medicare patients in the acute hospital setting. More will come and probably soon. Among the criticism and concern, one must not ignore the non-inclusion of the physician provider in this system. Cost shifting to the private payer will probably result in DRGs in that area also. Concern about the ability to provide the technology necessary to render quality care is utmost on the minds of providers. The shift of patients into the alternate health care field will leave hospitals with fewer patients who are overall much sicker and the hospital will have fewer dollars from which to provide that care. There is specific criticism of some of the DRG groupings and concern with the way in which physicians will be brought under the system. The issue of bad debts and care for the indigent must be addressed. A great deal of attention must be paid in the manner in which capital costs are reimbursed. Medical education costs must be satisfactorily addressed on a national basis. MEDPAR data used to provide data base for determining the DRG rates, must be upgraded to bring fairness to the system. Now medical technology must be examined quickly and the costs of those desirable technological advances incorporated into the DRG rate so as not to impede their use. Perhaps the greatest concern relates to the factors which will be incorporated into the rate basis and those which affect the allowable rate increases.(ABSTRACT TRUNCATED AT 250 WORDS)

Costs and Cost Analysis↗

Risk sharing: health care's latest challenge.

With pressure building to reduce healthcare costs, relations between providers and insurers in the years ahead increasingly will focus on risk sharing and utilization controls. Fixed price agreements and managed care plans are two approaches expected to come into wider use. To cope with coming utilization reviews and efforts to manage outpatient care, hospitals will need information systems allowing them to evaluate patient mixes and service intensities.

Financial Management↗

The German experience in reference pricing.

Price regulation schemes function both as a means for public authorities to contain costs, and as an economic tool to support the national pharmaceutical industry. This twofold contradictory aim of public intervention in pharmaceutical demand and supply makes such pricing schemes difficult to apply. This article concerns the reference price scheme which concerns setting a price cap for each active ingredient, or group of active ingredients considered equivalent according to some feature (e.g. therapeutic effects and chemical structure). In 1989, the reference price scheme for reimbursable drugs was introduced in Germany to reduce pharmaceutical expenditure, which had been steadily increasing in the past. The study investigates the economic effects of introducing reference prices in Germany in order to assess whether this system has been effective in containing public pharmaceutical expenditure. We conclude that the reference price scheme is an effective tool for price control, but cost containment requires further measures.

Analgesics, Non-Narcotic↗