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PubMed2005

Medicare program; competitive acquisition of outpatient drugs and biologicals under Part B. Interim final rule with comment period.

This interim final rule with comment period implements provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that require the implementation of a competitive acquisition program for certain Medicare Part B drugs not paid on a cost or prospective payment system basis. Beginning January 1, 2006, physicians will generally be given a choice between obtaining these drugs from vendors selected through a competitive bidding process or directly purchasing these drugs and being paid under the average sales price system.

Biological Products↗
PubMed1987

Privatization and bidding in the health-care sector.

Public provision of health care, as under Medicare and Medicaid, traditionally "privatized" major production decisions. Providers of care, largely private physicians and hospitals (but also public hospitals), made significant decisions about public beneficiaries' access to care, the quality and quantity of individual services, and the prices to be paid. The result was high access and quality/quantity, but also high program spending, which has prompted a reassertion of public budgetary control. Newly activist program administration is using various mechanisms to promote economizing. Unable and unwilling to specify standards of public access or quality/quantity too overtly, administration instead seeks to squeeze prices--mainly through administrative price setting but also through competitive bidding and voucherlike arrangements. Under such new incentives, major choices that in many non-American systems would be public are here "reprivatized" to be resolved out of the limelight by beneficiaries, traditional providers, or new intermediaries like Competitive Medical Plans.

Competitive Bidding↗
PubMedDate not supplied

Managed competition in practice: 'value purchasing' by fourteen employers.

Many large U.S. companies have transformed their procurement of health benefits in the 1990s by combining the principles of managed competition with other business tactics to create a business-savvy hybrid of the private sector's own design, often referred to as "value purchasing." Until recently, few policymakers or health care observers believed that large firms would be a force in health system reform. Yet to implement value purchasing, the large companies in this study created new organizational forms, provided employees with financial incentives to select low-cost health plans, and used business tactics such as competitive bidding to negotiate more favorable rates and to improve quality among health plans. The financial results were impressive for the companies studied. In addition, the companies' demands on the health care delivery system are multiplying as the interface between business firms and health care organizations changes. These demands will only increase as the practices we found become more widespread.

Community Participation↗
PubMed1985

Evaluating alternatives for providing home health-care services.

Alternatives for providing home health-care services (HHC) are discussed. An institution may provide HHC services for a variety of reasons including economic incentives, physician requests, consumer demands, and a desire to provide continuity of care. In planning an HHC program, data should be collected to provide a reliable estimate for potential HHC referrals. Demographic and reimbursement information on potential referrals should also be collected. Six basic HHC functions--patients screening and selection, patient training, product compounding, supply distribution, clinical management, and reimbursement--are described. The level of institutional participation in each of these functions is determined by the number of patients who require the services, the availability of resources, and the interest and expertise of the hospital staff. Alternatives for carrying out these responsibilities are discussed. The process for screening potential HHC providers is described. The value of competitive bidding for HHC services is emphasized, and specific data for the bid request and contract development are presented. Hospitals can provide HHC services through a variety of mechanisms ranging from the total delegation of HHC responsibilities to an external organization to the independent assumption of all HHC functions by the hospital. Hospital pharmacists can play a leadership role in HHC program development.

Competitive Bidding↗
PubMed1990

Capitated Medicaid and St. Joseph's Hospital.

This case study presents the initial reactions of St. Joseph's Hospital and Medical Center, a large nonprofit hospital in Phoenix, Arizona, to the creation of a competitively bid, prepaid, managed care Medicaid program in 1982. It also presents the events in the first year of the Medicaid experiment and the subsequent reactions of the hospital. It illustrates the diverse set of issues that a hospital faces when it moves toward greater vertical integration in health care.

Arizona↗
PubMed1986

Medicare outpatient clinical laboratory services payments: relative value scale approach.

The Health Care Financing Administration is in the process of designing a competitive bidding model for the purchase of outpatient clinical laboratory services. One segment of this process involves the development of a relative value scale (RVS). The RVS could be used as part of the bidding process and as the basis of payment. The RVS could also be used as the basis of a national fee schedule, as stipulated in the Deficit Reduction Act of 1984. Potential problems with the development of an RVS from local (carrier) fee schedules for outpatient clinical laboratory services were investigated.

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

The benefits divide: health care purchasing in retail versus other sectors.

This paper is the first to compare health care purchasing in the retail versus other sectors of the Fortune 500. Employing millions of low-wage workers, the retail sector is the largest employer of uninsured workers in the economy. We found that retail companies are using the same competitive bidding process that other companies use to obtain a given level of coverage for the lowest possible cost. However, they are more price oriented than other Fortune 500 companies are. The most striking disparity lies in the nearly fivefold difference in offer rates for health care coverage. This shows that the economy's bifurcation in health benefits extends even to the nation's largest companies.

Commerce↗
PubMed1985

Evaluation of the Arizona health care cost-containment system.

This article evaluates Arizona's alternative to the acute portion of Medicaid, the Arizona Health Care Cost-Containment System (AHCCCS), during its first 18 months of operation from October 1982 through March 1984. It focuses on the program's implementation and describes and evaluates the program's innovative features. The features of the program outlined in the original AHCCCS legislation included: Competitive bidding, prepaid capitation of providers, capitation of the State by the Health Care Financing Administration, assignment of gatekeepers, beneficiary copayment, private administration, inclusion of private and public employees and county financed long-term care. An assessment of implementation during the second 18 months of the program reporting on more recent developments and is now being prepared by SRI International.

Arizona↗
PubMed1999

Requirements for anti-tuberculosis drug tender requests.

As more and more institutions and experts push for the use of fixed-dose combinations (FDC) of anti-tuberculosis drugs, the market will most probably change dramatically in the next few years. Prices should go down, but quality must remain an essential goal for managers in charge of the procurement process. General essential requirements for suppliers submitting for competitive bidding are reviewed, and in particular the WHO certification scheme. Even though the scheme does not dispense with the need to submit drugs to the quality control procedures required in the importing country, it is a very useful tool which should be encouraged in the supply process. Specific requirements for FDCs are discussed, particularly interpretation of the bioavailability tests which are compulsory for rifampicin-containing FDCs.

Adult↗
PubMed2001

Reforming Medicare: impacts on federal spending and choice of health plans.

The rising cost of Medicare and well-documented problems plaguing Medicare+Choice (M+C) have increased interest in "reforming" the program. To improve efficiency, most reform proposals would rely on competitive bidding to establish payments to M+C plans. At the same time, beneficiaries would be given financial incentives to select low-cost M+C plans. A major unknown is the extent to which Medicare reforms would generate federal budgetary savings. To examine this issue, we develop three illustrative Medicare reform options that differ greatly in how Medicare would establish its payments to plans. Our results highlight the fact that Medicare should expect modest savings from reforming the program. However, other goals of reform, such as establishing more efficient payments to plans, would be achieved.

Aged↗
PubMed1986

Setting health maintenance organization capitation rates for Medicaid in Wisconsin.

In late fall 1984, more than 110,000 Wisconsin Aid to Families with Dependent Children (AFDC) Medicaid recipients were enrolled in health maintenance organizations (HMO's). Capitation rates were set by competitive bidding, subject to a rate ceiling. Planners considered whether to adjust the rates to account for demographic changes in the AFDC population between the time that data for the rate ceilings were collected and when the rates went into effect. They also considered whether to pay a single rate or to adjust rates for the age and sex of each HMO's actual enrollees. This article is a report of the analysis that led to a decision to pay a single, countywide rate that was not demographically adjusted.

Actuarial Analysis↗
PubMed1987

Nonprofit hospitals in a competitive environment: behavior in the Arizona indigent care experiment.

The initial expectations of a group of urban nonprofit hospitals about the implementation of a prepaid, competitively bid program for the provision of indigent medical care were that their participation in the program would be limited to the provision of inpatient care on a subcontracted basis. In reality, as the program evolved, nonprofit hospitals played an increasingly active role which included the provision of care as a primary contractor on a full, risk-sharing basis. This evolution in nonprofit hospital behavior resulted from a change in the overall hospital environment in the community, as well as the somewhat negative experience of the hospitals as subcontractors and a more realistic assessment of the benefits and costs from participating in the program.

Arizona↗
PubMed1994

The effectiveness of a hospital-based strategy to reduce the cost of total joint implants.

Our hospital implemented an integrated cost-containment program designed to address the increasing disparity between the cost of orthopaedic implants used for total joint replacements and the amount of hospital reimbursement provided for these procedures. This program was divided into four phases: (1) the analysis of the specific usage of total hip and total knee implants at our institution, (2) the development of surgeons' awareness of the problem and the enlistment of their participation in the process of cost containment, (3) the initiation of a competitive bidding system to select standard prostheses that would be available for general use within the institution, and (4) the establishment of a prosthesis-utilization committee to monitor the process and to make decisions concerning the use of non-standard prostheses. Using this cost-containment program, our hospital greatly reduced the number of vendors and implant systems used; all implants were purchased on a consignment basis, which minimized the cost of implant inventory. The average cost reductions in the first year were 14 per cent for total hip implants and 24 per cent for total knee implants. Over-all implant costs were reduced by an estimated $706,477, or 23 per cent of the budget for implants for the previous year.

Competitive Bidding↗
PubMedDate not supplied

Mastering the PACS RFP.

The level of a realized picture archiving and communications system (PACS) benefit is dependent upon a careful approach to choosing a vendor that will satisfy the specific requirements of an organization, including architecture, storage, networking, hardware specifications, user interfaces, and workflow. The request for proposal (RFP) process serves to provide a systematic approach to requesting, receiving, scoring, and awarding competitive bids for contracts. Typically, administrators (and vendors) must endure a very arduous process before a vendor is ultimately selected. This can take as much as 9, 12, or even 18 months. A significant problem with the legacy RFP is the length of time the process can take. If the decision point is determined to be 12 to 18 months in the future, much of the data in a fast-changing industry will be irrelevant right now. A dynamic RFP is conducted in 3 to 5 months, depending on the product or service being reviewed. This shortened timeline will provide a better chance of having the right people on the steering committee. A shorter timeline also increases the accuracy of the steering RFP decision. The dynamic RFP creates a level playing field that will enable the committee to select the right vendor. This level playing field can be created through weighting, on-site demonstrations, and vendor presentations.

Competitive Bidding↗
PubMed1990

AIDS under a competitive Medicaid program in a "second wave" state: Arizona's experience.

Arizona is a "second wave" state, ranking twenty-first among states in a number of reported AIDS cases. Interviews with 50 administrators and providers were used to determine how Arizona's Medicaid program, the Arizona Health Care Cost Containment System (AHCCCS), has responded to the AIDS epidemic. AHCCCS is a unique Medicaid program in which care is provided by health plans selected through competitive bidding on capitated rates. Policies that foster price competition among health plans may impede a timely and appropriate response to the AIDS epidemic, unless they take the character of this epidemic into account.

Acquired Immunodeficiency Syndrome↗
PubMed2002

Successful physician-hospital integration in rural areas.

OBJECTIVES: During the 1990s hospitals competed to acquire physician practices. Those competitive bidding wars could have pushed the price of practices beyond the value obtained by gaining influence over physicians. This paper examines how hospital location and competition for physician practices affects the profitability of physician-hospital integration in rural areas. MATERIALS AND METHODS: Eight years of data covering 338 rural hospitals are used to test whether the acquisition of physician practices is more successful in more isolated, uncompetitive rural markets than in competitive rural markets. A hospital without a competitor within a 15-mile radius is deemed to operate in an uncompetitive market. Success is measured by shifts in admissions, lengths of stay, and overall profitability following the acquisition of a physician practice. RESULTS: Hospitals in uncompetitive rural markets that acquired practices showed decreased lengths of stay and increased admissions with no reduction in profitability. Hospitals in more competitive rural markets that acquired practices showed a decrease in profitability. CONCLUSIONS: Integration was a more profitable strategy for isolated rural hospitals than for hospitals with nearby competitors. Although further research is needed to determine if these results are due to the affect of competition on the cost of acquiring and operating practices, isolated rural hospitals should be open to the prospect of acquiring physician practices. Hospitals in competitive markets should be cautious about entering bidding wars for physician practices.

Catchment Area, Health↗
PubMed1988

Reducing inpatient hospital costs: an attempt at Medicaid reform in Illinois.

While California's Medi-Cal program and Arizona's Health Care Cost Containment System have been subject to scholarly analysis, little has been written about a similar attempt at competitive bidding under Medicaid by Illinois. This article describes the process of implementing the Illinois Competitive Access and Reimbursement Equity (ICARE) program signed into law in 1984. The article examines hospital data and access implications for recipients and compares the Illinois program with other Medicaid contracting programs. A more thoughtful process of policy implementation is urged for such reform attempts in Medicaid.

Cost Control↗
PubMed1993

Administrative costs in U.S. hospitals.

BACKGROUND: Previous estimates of administrative costs in U.S. hospitals have been based on figures for California, and nationwide extrapolation has been controversial. If the costs of bureaucracy are high, major policy reforms may yield substantial savings. METHODS: We obtained detailed data on hospital expenses for fiscal year 1990 from reports submitted to Medicare by 6400 hospitals. We calculated each hospital's administrative costs by summing expenses in the following Medicare cost-accounting categories: administrative and general, nursing administration, central services and supply (excluding the purchase cost of supplies), medical records and library, utilization review, and the salary costs of the employee benefits department. We classified costs in most other categories as clinical. Some small categories of expenses (e.g., gift shop) were excluded from both our clinical and administrative groupings, and for others (e.g., plant operations), a proportional share was allocated between the two groupings. RESULTS: Nationwide, administration accounted for an average of 24.8 percent of each hospital's spending in fiscal 1990. Average hospital administrative costs ranged from 20.5 percent in Minnesota to 30.6 percent in Hawaii. Administrative salaries accounted for 22.4 percent of the average hospital's salary costs. Administrative costs were similar in states with high and low rates of enrollment in health maintenance organizations (HMOs). CONCLUSIONS: Hospital administrative costs in the United States are higher than previous estimates and more than twice as high as those in Canada. Greater enrollment in HMOs, with more competitive bidding by hospitals for managed-care contracts, an important element of proposed managed-competition health care reforms, does not seem to lower hospital administrative costs.

Costs and Cost Analysis↗