Financing the care of the mentally ill under Medicare and Medicaid.
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On 1 October 1983, the Medicare system began a phased transition to a new payment method for hospitals based on uniform payments by diagnosis-related group (DRG). This article reviews the rationale for DRG-based reimbursement, describes the new Medicare system, and discusses its implications for hospitals, physicians, and hospital-physician relations. Although it is too early to evaluate its impact, this payment system will probably encourage more operational interaction between hospital administrators and organized medical staffs, and accelerate trends towards salaried service chiefs in community hospitals and greater external scrutiny of physicians' activities.
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Issues in current capital cost reimbursement to community hospitals by Medicare and Medicaid are described, and options for change analyzed. Major reforms in the way the federal government pays for capital costs--in particular substitution of other methods of payment for existing depreciation reimbursement--could have significant impact on the structure of the health care system and on government expenditures. While such reforms are likely to engender substantial political opposition, they may be facilitated by broader changes in the reimbursement system.
On an incentive theory background the different financing methods for health care are discussed. Three main categories of financing methods are presented: (1) global budget solutions (capitation and global budget based on historical costs), (2) per-case reimbursement (per-diem rates, fee-for-service, prospective reimbursement on the basis of product groups, episode of care-based reimbursement, result graded reimbursement with use of e.g. the Oregon model concept), (3) hybrid methods of financing. Financing methods can be used to obtain different goals. Organizations and individual physicians seem to respond generally in the same way to similar incentives. Also unwanted effects seem common. Shifts in financing methods over time may look natural to attack problems. Empirical research has demonstrated financing methods as important tools in the management of a health service. Knowledge of possible health effects for the patients as a consequence of financing methods seems limited.
The development and management of a long-term geriatric ward in an acute-care teaching hospital are described. Structure, function, and costs are discussed, and issues of service and medical education are emphasized. A full geriatric team (physician, nurse, social worker, physiotherapist, and occupational therapist) assessed 165 long-term patients in the general wards of the hospital and accepted 98 for admission to the new long-term geriatric ward. Of these, 31 were discharged; 29 per cent went to a facility that encouraged more independent living. Eighteen patients died during their stay in the geriatric ward; autopsies were obtained in 33 per cent--a higher autopsy rate than the average for general hospitals. General hospitals may continue to have large populations of chronically ill patients. This model for a geriatric ward may offer a way of dealing with a difficult situation.
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