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Use of inpatient psychiatric care at a VA medical center after implementation of a prospective payment system.

A retrospective audit of patients' utilization of inpatient psychiatric care at a Department of Veterans Affairs medical center before and after implementation of a prospective payment system compared patterns of utilization by chronic and nonchronic patients. It also examined changes over time in the size of the two groups, total number of bed days used, mean number of admissions, mean length of stay, and mean cumulative two-year length of stay. Four years after implementation of the prospective payment system, chronic patients constituted 3 percent of the patient population but used 15.2 percent of all bed days. Both chronic and nonchronic patients had a similar decrease in mean length of stay over the period, but chronic patients' mean number of admissions rose by more than 70 percent. The mean cumulative two-year length of stay of chronic patients remained stable over the period while that of the nonchronic patients decreased by 33.2 percent.

Adult↗

Medicare program; home health prospective payment system rate update for calendar year 2006. Final rule.

This final rule sets forth an update to the 60-day national episode rates and the national per-visit amounts under the Medicare prospective payment system for home health agencies. This final rule is the first update of the home health prospective payment system (HH PPS) rates that uses the revised area labor market Metropolitan Statistical Area designations for calendar year 2006. In implementing the new area labor market designations, we are allowing for a one-year transition period. This transition consists of a blend of 50 percent of the new area labor market designations' wage index and 50 percent of the previous area labor market designations' wage index. In addition, we are revising the fixed dollar loss ratio, which is used in the calculation of outlier payments.

Home Care Services↗

The initial effects of the prospective payment system on nursing home patients.

We examined the discharge outcomes and admission characteristics of patients admitted to Southern California skilled nursing facilities (SNFs) for the first time following an episode of hospitalization in 1980, 1982-83 (all pre-prospective payment system), and all admissions during July through September 1984 (post-prospective payment). The proportion of patients covered by Medicare on admission was 18 per cent in 1980, 36 per cent in 1982-83, and 57 per cent in 1984. For patients discharged within 30-60 days to SNFs, in all three time periods more Medicare than non-Medicare patients were bed-bound, had indwelling catheters, and were comatose. There were only modest case-mix differences between the groups and no changes over time in discharge outcomes, including the proportion dying in the SNF, or being returned to a hospital. The time-related changes that were found preceded the implementation of the diagnosis related group (DRG) based prospective payment system.

Aged↗

Client characteristics and the cost of home care in the prospective payment system.

There has been much speculation in the literature about the effect of the prospective payment system (PPS) on the home care industry but few reports of systematic investigation. Clearly, comprehension of client characteristics is essential for categorizing home care clients into the correct Home Health Resource Groups, for allocating resources appropriately, and for implementing necessary organizational changes to accommodate clients who require variations in the amount of resources predicted by the PPS. The purposes of this study were to compare the characteristics of home health clients that resulted in a financial gain or a financial loss for one agency under the PPS with those of the interim payment system. A secondary data analysis of 140 cases compiled by one not-for-profit hospital-affiliated home care organization was completed. Results suggested that client characteristics of the projected loss group had more recertifications on admission and at the end of the 60-day episode, a longer stay (3 weeks), and more visits, particularly from skilled nursing. Comprehension of client characteristics and the subsequent ability to adjust for the proper case mix will be crucial if home care agencies are to remain financially viable under the PPS. Replication of this project needs to be done using more variables and multiple sites.

Adult↗

The prospective payment system: information for the medical librarian and a selected annotated bibliography.

The implementation of the prospective payment system for inpatient Medicare services and the usage of Diagnosis Related Groups as a vehicle for allocation of monies to providers has impacted significantly the health care industry as a whole. Librarians are instrumental in providing information to key health care personnel to meet the strategic challenge of prospective payment. This article reviews the evolution of prospective payment by DRG and provides selected sources of information as a beginning in developing a knowledge of the facets of prospective payment and the health care environment.

Bibliographies as Topic↗

The financial effects of emergency department-generated admissions under prospective payment systems.

The purpose of this study was to assess the financial impact (revenues vs expenses) as measured by hospital charges and costs vs diagnosis-related group (DRG) revenues of prospective payment systems on emergency department-generated admissions for a large teaching hospital under two payment systems: Medicare and an all-payor system. All emergency department admissions were analyzed for the years 1983 (N = 4,273) and 1984 (N = 4,125) under both systems, using standard DRG methodology. Our findings were as follows: (1) With charges as a measure of expense under both payment schemes, all clinical departments had large groups of unprofitable patients: Medicare, $12,895,038; all-payor system, $15,553,893. (2) When costs were computed as the expense measure (using our hospital's cost-to-charge ratio), Medicare patients produced a deficit ($2,363,163); however, under an all-payor system there was a small net profit ($4,267,859). (3) The implementation of federalized DRG reimbursement rates increased our losses for this population from 1983 to 1984. (4) Reductions in outlier reimbursement (10%) and teaching costs (25%) caused our revenues to drop substantially, potentiating our losses. These findings suggest that hospitals with large emergency department admission populations, particularly Medicare patients, may be at a significant financial disadvantage under prospective payment systems.

Costs and Cost Analysis↗

An evaluation of the impact of the prospective payment system on antidepressant use in nursing home residents.

OBJECTIVES: To determine the impact of the prospective payment system (PPS) for skilled nursing facilities on the pharmacologic treatment of depression. METHODS: We used a quasi-experimental study comparing the pharmacological treatment rates for depression in the pre-PPS period (1997) to the post-PPS period (2000) in 8149 residents with documented depression living in over 500 nursing facilities in Ohio. Logistic regression models adjusting for clustering effects of residents residing in homes using generalized estimating equations provided estimates of the PPS effect on use of any antidepressant and the use of selective serotonin reuptake inhibitors (SSRIs). We evaluated the extent to which the PPS effect was modified by organizational characteristics, including structural characteristics, resource characteristics, and staff resources available in the homes. RESULTS: Overall, there was no difference in the likelihood of any antidepressant [odds ratio (OR), 1.05; 95% confidence interval (CI), 0.93 to 1.18, resident-adjusted model] or an SSRI being used (OR, 0.98; 95% CI, 0.86 to 1.12, resident-adjusted model) after the introduction of PPS compared with 1997 when this reimbursement system was not in place (referent group). These trends did not appear to be modified substantially by organizational characteristics. CONCLUSION: Although PPS did not appear to have influenced the treatment of depression in nursing homes, systems that provide checks and balances in relation to PPS are warranted.

Aged↗

Assessment of impact of Medicare Prospective Payment System on care of persons with diabetes mellitus.

Professional review organizations (PROs) have been reviewing hospital admissions on diagnosis-related groups (DRGs) 294 and 295 (uncomplicated diabetes mellitus) at the direction of the Health Care Financing Administration (HCFA) to control inappropriate hospital admissions. Because of the possibility of an adverse effect from this policy on the quality of medical care for people with diabetes, letters were sent and/or telephone calls were made to each PRO to request information on denials of admissions or of reimbursement for the hospitalization of patients with diabetes. The answers revealed variations in PRO review procedures, little attention to quality of care, and an apparently inadequate data retrieval system. These inadequacies of the Medicare Prospective Payment System (PPS), which currently obscure its impact on the quality of the hospital care of diabetic patients, can be remedied.

Adolescent↗

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 2006 rates. Final rule.

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this final rule, we describe the changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. We also are setting forth rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the IPPS that are paid in full or in part on a reasonable cost basis subject to these limits. These changes are applicable to discharges occurring on or after October 1, 2005, with one exception: The changes relating to submittal of hospital wage data by a campus or campuses of a multicampus hospital system (that is, the changes to Sec. 412.230(d)(2) of the regulations) are effective on August 12, 2005. Among the policy changes that we are making are changes relating to: The classification of cases to the diagnosis-related groups (DRGs); the long-term care (LTC)-DRGs and relative weights; the wage data, including the occupational mix data, used to compute the wage index; rebasing and revision of the hospital market basket; applications for new technologies and medical services add-on payments; policies governing postacute care transfers, payments to hospitals for the direct and indirect costs of graduate medical education, submission of hospital quality data, payment adjustment for low-volume hospitals, changes in the requirements for provider-based facilities; and changes in the requirements for critical access hospitals (CAHs).

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

Developing an outpatient prospective payment system based on APGs for the Iowa Medicaid program.

This article describes the development of an outpatient prospective payment system (PPS) based on ambulatory patient groups (APGs) for the Iowa Medicaid Program. Currently, hospitals in Iowa are reimbursed for outpatient services on the basis of cost. Because of concern about escalating costs, the Iowa General Assembly mandated development of a hospital outpatient payment system to promote efficient use of resources and high quality care. The first use of APGs for payment across the full spectrum of services will be a testing ground that should have long term implications for outpatient prospective payment and quality improvement efforts.

Ambulatory Care↗

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 2004 rates. Final rule.

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital costs to implement changes arising from our continuing experience with these systems. In addition, in the Addendum to this final rule, we are describing changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. These changes are applicable to discharges occurring on or after October 1, 2003. We also are setting forth rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the IPPS that are paid on a cost basis subject to these limits. Among other changes that we are making are: changes to the classification of cases to the diagnosis-related groups (DRGS); changes to the long-term care (LTC)-DRGs and relative weights; the introduction of updated wage data used to compute the wage index; the approval of new technologies for add-on payments; changes to the policies governing postacute care transfers; payments to hospitals for the direct and indirect costs of graduate medical education; pass-through payments for nursing and allied health education programs; determination of hospital beds and patient days for payment adjustment purposes; and payments to critical access hospitals (CAHs).

Diagnosis-Related Groups↗

Medicare program; changes to the hospital inpatient prospective payment systems and fiscal year 2005 rates. Final rule.

We are revising the Medicare hospital inpatient prospective payment systems (IPPS) for operating and capital-related costs to implement changes arising from our continuing experience with these systems; and to implement a number of changes made by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 that was enacted on December 8, 2003. In addition, in the Addendum to this final rule, we describe the changes to the amounts and factors used to determine the rates for Medicare hospital inpatient services for operating costs and capital-related costs. These changes are applicable to discharges occurring on or after October 1, 2004. We also are setting forth rate-of-increase limits as well as policy changes for hospitals and hospital units excluded from the IPPS that are paid in full or in part on a reasonable cost basis subject to these limits. Among the policy changes that we are making are: Changes to the classification of cases to the diagnosis-related groups (DRGs); changes to the long-term care (LTC)-DRGs and relative weights; changes in the wage data, labor-related share of the wage index, and the geographic area designations used to compute the wage index; changes in the qualifying threshold criteria for and the approval of new technologies and medical services for add-on payments; changes to the policies governing postacute care transfers; changes to payments to hospitals for the direct and indirect costs of graduate medical education; changes to the payment adjustment for disproportionate share rural hospitals; changes in requirements and payments to critical access hospitals (CAHs); changes to the disclosure of information requirements for Quality Improvement Organization (QIOs); and changes in the hospital conditions of participation for discharge planning and fire safety requirements for certain health care facilities.

Humans↗

Physician behavior changes following CME on the prospective payment system in long-term care: a pilot study.

INTRODUCTION: Physicians must understand regulatory changes in long-term care (LTC) and adhere to prospective payment system (PPS) guidelines for minimum data set (MDS), resource utilization groups (RUG) and resident assessment instrument (RAI) processes, documentation, and evaluation. We pilot-tested "Prospective Payment System in LTC," a 7.5 hour continuing medical education (CME) program designed to help participants make plans to implement and adhere to PPS guidelines and regulatory requirements. METHODS: Twelve medical directors or attending physicians participated. A "commitment to change" evaluation assessed whether participants' plans were reasonable and were implemented, and what barriers interfered. Participants identified 3-5 changes they intended to make. Three months later, participants estimated actual implementation of intended changes, identified obstacles to success, and rated PPS's impacts on patient care. RESULTS: Respondents "committed" to an average of 3.4 changes ranging from "better monitor transfers from LTC to acute care" to "train nurses re MDS and RUGs." Of 40 commitments, 0%100% progress were reported on 9 (23%) each. Mean implementation rate was 41%. Removing responses reporting 0% implementation, the rate was 53%. Common barriers were "lack of time," and "can't get attending MDs to meetings." MDs' ratings of PPSs' impacts were neutral (2.9 on a scale where 1 = "PPS causes great deterioration in quality of care," 3 = "...no change." and 5 = "...great improvement.") both immediately and 3 months post-course. CONCLUSIONS: Participants made reasonable plans consistent with course objectives and made progress implementing most intentions. LTC physicians who attended the CME course intended to alter their behaviors, but significant obstacles interfered, at least in the short term. Most thought PPS would not change the quality of care provided in their institutions. Future courses should address implementation barriers.

Journal Article↗

Medicare program; home health prospective payment system rate update for calendar year 2005. Final rule.

This final rule sets forth an update to the 60-day national episode rates and the national per-visit amounts under the Medicare prospective payment system for home health agencies. As part of this final rule, we are also rebasing and revising the home health market basket to ensure it continues to adequately reflect the price changes of efficiently providing home health services. In addition, we are revising the fixed dollar loss ratio, which is used in the calculation of outlier payments. This final rule will be the first update of the home health prospective payment system (HH PPS) rates on a calendar year update cycle. HH PPS was moved to a calendar year update cycle as a result of the provisions of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003.

Home Care Services↗

The early effects of Medicare's prospective payment system on psychiatry.

In this paper, we study the effects on psychiatry of Medicare's prospective payment system (PPS) during 1984, as PPS was implemented. We examined data on psychiatric discharges before and after PPS from three kinds of hospitals--those with psychiatric units exempt from PPS, those with nonexempt units, and those that treated psychiatric patients in scatter beds--as well as data on all hospital discharges. We conclude that the providers of psychiatric services responded to the incentives inherent in PPS much the way hospitals as a whole did--with significantly reduced lengths of stay. Of the three kinds of hospitals that rendered psychiatric care, those that treated patients in scatter beds had the greatest reduction in length of stay. Using readmission rates as a gross indicator of quality, we conclude that quality did not suffer because of the shortened stays.

Data Collection↗

Medicare program; changes to the hospital outpatient prospective payment system and calendar year 2006 payment rates. Final rule with comment period.

This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system and to implement certain related provisions of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. In addition, the final rule with comment period describes changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. This final rule with comment period also changes the requirement for physician oversight of mid-level practitioners in critical access hospitals (CAHs). In this final rule with comment period, we also are responding to public comments received on the November 15, 2004, final rule with comment period pertaining to the ambulatory payment classification (APC) group assignment of Healthcare Common Procedure Coding System (HCPCS) codes identified in Addendum B of that rule with the new interim (NI) comment indicator. These changes are applicable to services furnished on or after January 1, 2006.

Ambulatory Care↗

Medicare program; changes to the hospital outpatient prospective payment system and calendar year 2005 payment rates. Final rule with comment period.

This final rule with comment period revises the Medicare hospital outpatient prospective payment system to implement applicable statutory requirements and changes arising from our continuing experience with this system and to implement certain related provisions of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003. In addition, the final rule with comment period describes final changes to the amounts and factors used to determine the payment rates for Medicare hospital outpatient services paid under the prospective payment system. These changes are applicable to services furnished on or after January 1, 2005. In this final rule with comment period, we are responding to public comments received on the January 6, 2004 interim final rule with comment period relating to MMA provisions that were effective January 1, 2004, and finalizing those policies. Further, we are responding to public comments received on the November 7, 2003 final rule with comment period pertaining to the ambulatory payment classification assignment of Healthcare Common Procedure Coding System (HCPCS) codes identified in Addendum B of that rule with the new interim (NI) comment indicators (formerly referred to as condition codes).

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

Rehabilitation therapy in skilled nursing facilities: effects of Medicare's new prospective payment system.

In 1998 the Centers for Medicare and Medicaid Services (CMS) began phasing in a new prospective payment system (PPS) for Medicare payments to skilled nursing facilities (SNFs). I examine the effects of the new PPS on the level of rehabilitation therapy provided in SNFs. The percentage of residents of freestanding SNFs receiving extremely high levels of rehabilitation therapy dropped significantly, and the percentage receiving moderate levels increased. Freestanding SNFs, particularly for-profits, dramatically altered the services they provided in response to new financial incentives. This responsiveness underscores the importance of efforts now under way to refine the SNF PPS.

Aged↗