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PubMed1998

Can we afford comprehensive, supportive care for the very old?

OBJECTIVE: To address the question, "Is there enough overuse of Medicare reimbursement to hospitals that reallocation of excess could provide sufficient funds to enhance home care and community services?" DESIGN: Simulation using data from the Medicare Current Beneficiary Survey (MCBS) to estimate dollars that might be reallocated from hospital reimbursement. PARTICIPANTS: A total of 3577 persons aged 80 and older in a stratified sample of Medicare beneficiaries interviewed in September 1992 in the MCBS. MEASUREMENTS: We ranked the United States hospital service areas' (HSAs) Medicare hospital discharge rates. We assigned the beneficiaries in the MCBS to the HSAs based on their residence zip codes. The hospitalization expenditures and mortality rates of MCBS respondents living in HSAs in each quartile were compared. RESULTS: By reducing hospital utilization to the mean level now used by the lowest quartile of HSAs, $560 would be saved per Medicare beneficiary aged 80 or older (P=.004) with no difference in mortality rates. These savings could purchase 40 visiting nurse visits per year for those in need. Potential savings would be $152 per Medicare beneficiary if hospital utilization were reduced from that used by the highest quartile to the level of the lower three quartiles of HSAs, enough to purchase about 11 additional visiting nurse visits. CONCLUSION: This simulation suggests that the very old might safely receive less hospital care. Because relatively few older people need home and community services in a year, these per capita savings could be reallocated to purchase many services for those having the greatest need.

Aged↗
PubMed1995

Medicare program; additions to and deletions from the current list of covered surgical procedures for ambulatory surgical centers--HCFA. Final notice with comment period.

This final notice with comment period implements section 1833(i)(1) of the Social Security Act, which requires, in part, that the list of covered ambulatory surgical center (ASC) procedures be reviewed and updated at least every 2 years. This notice announces the specific additions to and deletions from the list of surgical procedures for which facility services are covered when the procedures are performed in a Medicare-participating ASC, as well as the assigned payment groups for each addition. The notice also announces a change in our criteria for deleting procedures from the ASC list. This notice also responds to public comments received in response to our proposed notice published December 14, 1993 (58 FR 65357). In that notice, we requested comments on the proposed additions to and deletions from the list of covered surgical procedures for ASCs; the proposed quantitative change in our deletion criteria; the development of alternatives to the proposed quantitative deletion criteria; and the assignment of payment groups for each addition. Finally, this notice solicits public comment on certain additions to and deletions from the ASC list that had not been suggested in our December 1993 proposed notice. It also solicits public comment on the assignment of payment groups for certain new procedure codes.

Medicare↗
PubMed1994

Refinement of the Medicare diagnosis-related groups to incorporate a measure of severity.

This article presents a system under consideration by the Health Care Financing Administration (HCFA) for incorporating a measure of severity of illness into the Medicare diagnosis-related groups (DRGs). DRG assignment is one of the main factors in determining the payment made for hospital inpatient services furnished to Medicare beneficiaries. Specifically, the formula used to calculate payment for a single Medicare hospital inpatient case takes an average payment rate for a typical case and multiplies it by the relative weight of the DRG to which it is assigned. Thus, it is easy to see that the DRG relative weights have a large impact on the payment a hospital receives. In this article, we describe the Medicare DRG prospective payment system (PPS), evaluate the various classification elements available for assessing severity of illness, describe the analyses used in formulating this proposal, and present the proposed DRG severity system.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed1991

Medicare short-stay hospital services by diagnosis-related groups.

The 1983 amendments to the Social Security Act (Public Law 98-21) provided for a prospective payment system (PPS), effective October 1, 1983, for most short-stay hospitals certified to provide inpatient services to Medicare beneficiaries. A brief description of the assignment process for diagnosis-related groups (DRGs) is presented, because assigning a DRG code to a short-stay hospital discharge record is tantamount to the Medicare prospective payment to the hospital, subject to certain statutory adjustments. Shifts in the distribution of the discharges and average length of stay among the DRGs since 1983 reflect the adaptation of hospitals to the incentives embedded in PPS and the ongoing refinements in the methods of assigning DRGs to discharges from short-stay hospitals. Interpretation of the shifts is based on a consideration of the significant refinements in the medical coding system, the technological and scientific advances in the practice of medicine, the effect of shifting patient treatment to alternative sites, policy or legislative changes affecting Medicare coverage, and the annual recalibration of the DRG weights.

Data Collection↗
PubMed1994

Evaluation of the costs to Medicare of covering therapeutic shoes for diabetic patients.

OBJECTIVE: A three-year demonstration was fielded in three states to evaluate the cost to Medicare of a therapeutic shoes benefit for Medicare Part B beneficiaries with severe diabetic foot disease. RESEARCH DESIGN AND METHODS: Eligible Medicare beneficiaries who applied were randomly assigned to either a treatment group that received the extra therapeutic shoe coverage or a control group that received only standard Medicare coverage. This study analyzes the Medicare payments and service use of 3,428 demonstration participants in California, Florida, and New York for whom data on a 12-month follow-up period were available. These results are comparable to those for the entire sample over a variable length follow-up period that averaged 20 months but ranged from 3 months to 3 years. RESULTS: Differences between groups are not statistically significant. However, Medicare payments for all services among the treatment group were $451 (3.8%) higher than those for all services among the control group. Similarly, Medicare payments for foot-care services were $318 (14.6%) higher among beneficiaries in the treatment group, which considerably exceeded the cost of the shoe benefit ($118). CONCLUSIONS: The demonstration produced no definitive evidence that expanding Medicare Part B to cover therapeutic shoes for beneficiaries with severe diabetic foot disease would increase total Medicare costs. However, our findings indicate that the demonstration was successful at increasing therapeutic shoe ownership and was instrumental in increasing beneficiaries' use of the shoes when walking outdoors.

Aged↗
PubMed1999

Case management for high-cost Medicare beneficiaries.

We estimated the effects of three Health Care Financing Administration (HCFA)-funded case management demonstrations for high-cost Medicare beneficiaries in the fee-for-service (FFS) sector. Participating beneficiaries were randomly assigned to receive case management plus regular Medicare benefits or regular benefits only. None of the demonstrations improved self-care or health or reduced Medicare spending. Despite the lack of effects of these interventions, case management might be cost-effective if it includes greater involvement of physicians, is more well-defined and goal-oriented, and incorporates financial incentives to generate savings in Medicare costs. Models incorporating these changes should be investigated before abandoning Medicare case management interventions.

Case Management↗
PubMed1988

Medicare: short-stay hospital services, by leading diagnosis-related groups, 1983 and 1985.

Assigning a code from any of the diagnosis-related groups to a short-stay hospital discharge covered by Medicare is tantamount to the Medicare payment to the hospital, subject to certain statutory adjustments. Therefore, diagnosis-related groups are the backbone of the prospective payment system implemented October 1, 1983. However, methods employed in the assignment of diagnosis-related groups have changed since the prospective payment system was introduced. The focus of this article is to note some of these changes in methods of assigning diagnosis-related groups, which may have caused some of the migrations, or shifts, from one diagnosis-related group to another during the period 1983-85.

Diagnosis-Related Groups↗
PubMed1996

Prior and current costs in capitated health plans: the effects of health status at enrollment.

We compared the prior and current costs of persons age 65 and older enrolling in a Social/Health Maintenance Organization in each of four sites with samples of persons using standard Medicare benefits in each site. Analyses were adjusted for individual health differences using case mix scores. Costs were examined in the year before S/HMO enrollment or prior to the sampling of a person using regular Medicare services as well as costs during the study. Costs during the study are analyzed using a two-stage procedure where first the propensity to enroll in a S/HMO is modeled and then costs derived from either Medicare sources or shadow prices assigned to service units provided in a S/HMO are modeled. The costs for case mix groups with different health and functional characteristics varied significantly. Cost differences between case mix classes differed between the S/HMO and FFS populations.

Aged↗
PubMed1990

Potential economic impact of applying DRG-based prospective payment categories to inflammatory bowel disease patients.

New incentives regarding delivery of inpatient care by physicians and administrators have resulted from Medicare's DRG-based prospective reimbursement system. As these payment systems become widely adopted by other third-party payors, implications for adequate hospital reimbursement and quality inpatient care will intensify. This study of inflammatory bowel disease inpatients examines discharge data for 300 patients comprising 507 admissions from 1983 to 1987 at a large tertiary center hospital. While only 10.8% of these discharges were Medicare patients, all discharges were assigned a diagnosis-related-group reimbursement to derive a theoretical monetary loss or gain for the hospital. Overall hospital losses averaged $127.24 per case for this patient population, in which the medical and pediatric cases were adequately reimbursed, and the surgical admissions represented greater losses. The average length of stay for all patients decreased from 11.9 to 7.4 days over the study period, mostly a result of reductions in surgical hospital stays. We conclude that reimbursement for medical and pediatric discharges under DRG 179 appear adequate for this hospital, while surgical inflammatory bowel disease reimbursement is not. These data will be useful for comparison of future trends of inpatient utilization for inflammatory bowel disease patients as prospective reimbursement practices become more widespread.

Crohn Disease↗
PubMed1988

Should DRG assignment be based on age?

The present Medicare Diagnosis Related Group (DRG) classification system contains 95 DRG pairs, where one DRG of the pair contains patients within a distinct diagnostic category who are under 70 years of age with no comorbidities or complications (CCs). The other DRG of the pair contains patients in the same diagnostic category who are over 69 or who have CCs. This study examines whether it is appropriate for reimbursement purposes to group those patients who are 70 years of age or older but have no CCs with patients who have CCs. Our findings show that age alone, in the absence of CCs, increases length of stay and cost of care only slightly. In fact, using only CCs as a classification variable reduces the within-group variance more than the present classification based on both age and CCs. Therefore, it is inappropriate to group Medicare patients who are older than 70 years of age without CCs with Medicare patients who have CCs.

Age Factors↗
PubMed1995

Balance billing under Medicare: protecting beneficiaries and preserving physician participation.

Medicare's experience with balance billing provides valuable lessons for policy making for national or state health care reform. Medicare developed several policies to encourage physicians to become participating providers who accept Medicare-allowed charges as payment in full. Only nonparticipating physicians are permitted to bill for additional amounts beyond that paid by Medicare, and there are limits on the amount of balance billing per claim. As shown by the analysis of claims presented in this article, Medicare has successfully provided financial protection to beneficiaries. In 1986, more than 60 percent of expenditures for physician services were on assigned claims for which there could be no balance billing; by 1990, 80 percent of expenditures were on assigned claims. Balance billing decreased by about 30 percent during the same period. Although these policies have been successful in reducing total expenditures for balance billing, they may not provide financial protection to the most economically vulnerable beneficiaries. Using survey and claims data, we found that the poor have lower balance billing expenditures for services provided by primary care physicians, but that there is no relationship between poverty status and balance billing expenditures for services of nonprimary care physicians. In addition, most low-income beneficiaries are liable for balance bills. Under health care reform, adoption of Medicare's incentive-based approach with mandatory assignment for the poor would allow for some choice based on price and would provide financial protection for all consumers.

Aged↗
PubMed1989

Financial consequences of joining a Medicare HMO: an application of the illness episode approach to estimating out-of-pocket costs.

To reduce Medicare costs, Medicare beneficiaries are being encouraged to enroll in "risk contract" HMOs. This paper explores the financial consequences to the elderly of joining a Medicare risk HMO. Using a new method for estimating consumer financial vulnerability called the illness episode approach, we modeled the out-of-pocket costs associated with thirteen illnesses of varying severity for beneficiaries with traditional Medicare coverage only and for beneficiaries who join one of two Los Angeles HMOs which charge no additional premium. The typical total charges for a year's treatment of these thirteen illnesses in Los Angeles in 1986 ranged from a low of $856 for moderate hypertension to a high of $28,411 for care of a severe stroke. For beneficiaries with traditional Medicare whose providers did not accept assignment, out-of-pocket costs ranged from $539 to $14,676 and from a low of 7.7 percent to a high of 84.1 percent of total charges. Out-of-pocket costs are considerably reduced in the two Medicare HMOs in this high-cost market; beneficiaries had modeled out-of-pocket costs ranging from $11 to $7,478 and from less than 0.1 percent of total charges to 60 percent of charges. Reductions in financial vulnerability ranged from over 20 percent to 99.3 percent. The relation of these reductions to altered benefit structures and the policy implications of the results are discussed.

Costs and Cost Analysis↗
PubMed1990

Medicare program; establishing procedures for transmitting information between Medicare carriers and Medicare supplemental insurers--HCFA. General notice.

This notice announces and describes the procedure for the automatic transfer of claims information from Medicare carriers to Medicare supplemental (Medigap) insurers when a beneficiary has assigned his or her right of payment to a participating physician or supplier. It delineates the roles of the Medicare carriers, Medigap insurers, State insurance departments, beneficiaries, physicians and suppliers, and HCFA. The procedure for the automatic transfer of claims is required by section 1842(h)(3)(B) of the Social Security Act, as added by section 4081(a) of the Omnibus Budget Reconciliation Act of 1987 and is intended to speed payment of Medicare supplemental insurance benefits to participating physicians and suppliers.

Centers for Medicare and Medicaid Services, U.S.↗
PubMedDate not supplied

Understanding the recent growth in Medicare physician expenditures.

This study employs several large Health Care Financing Administration data sets for 1983 and 1985 to examine the recent growth in Medicare physician services. The study concludes that the recent growth (approximately 15% in real terms between 1983 and 1985) has been more rapid in areas with higher incomes per capita and suggests that this may be related to faster adoption and diffusion of new medical technologies in these areas. The volume of physician services had grown considerably faster for those specialists who utilize newer procedures and technologies than for those who do not. The study also provides evidence that the sharp increase in assignment rates in recent years because of the introduction of the physician participation program also contributed to the growth in physician services during this period. Medicare's prospective payment system, which controlled hospital payments and encouraged hospitals to become more efficient, had at most a small positive impact on the growth in Part B spending. Finally, the freeze on physician's fees did not seem to have had a major impact on the volume of physician services.

Diffusion of Innovation↗
PubMed1989

Putting a price tag on physician services. Reform of Medicare's payment system moves ahead.

Medicare's reasonable-charge method of reimbursing physicians may be replaced soon with a fee schedule based on a relative value scale. The new system will attempt to apportion physician payments more equitably than in the past and significantly reduce long-term spending growth. The new system's linchpin will be a relative value scale derived from the resource costs that efficient physicians are expected to incur when rendering service. The higher a service's expected cost in relation to a standard service, the higher its relative value and payment amount. Harvard researchers recently developed a resource-based relative value scale based on a survey of about 410 services in 18 specialties. They divided total resource costs into two components: physician work and practice costs. The former, more difficult to measure, represents the physician's time, skill, physical and mental effort, and stress from iatrogenic risk. The ultimate objectives are to allow relative values across specialties to be comparable and to allow one conversion factor to transform these values into dollar amounts. Other critical factors include transition period, conversion factors, geographic multipliers, mandatory assignment, and volume controls.

Attitude to Health↗