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PubMed1990

Psychosocial factors as predictors of length of stay of Medicare patients under the prospective payment system.

The Prospective Payment System methodology is designed to predict inpatient hospital resource utilization. The system sets standards based on medical diagnosis (Diagnosis Related Groups), but it ignores psychosocial characteristics which often determine discharge options and therefore, directly affect a patient's length of stay. A study is described which examined the psychosocial characteristics of 234 elderly hospitalized patients in relation to length of stay and route of admission (elective or emergency room). Such data can be very useful to discharge planners in identifying high social risk patients, as well as to health planners attempting to modify the DRG methodology to incorporate psychosocial factors.

Age Factors↗
PubMed2005

Development of a simulation program for estimating hospital incomes under the prospective payment system.

A prospective payment system based on diagnosis procedure combination (DPC/PPS) was introduced to acute care hospitals in Japan in April 2003. In order to increase hospital income, hospitals must shorten the average length of stay (ALOS) and increase the number of patients. We constructed a simulation program for evaluating the relationships among ALOS, bed occupation rate (BOR) and hospital income of hospitals in which DPC/PPS has been introduced. This program can precisely evaluate the hospital income by regulating the ALOS and the number of patients for each DPC. By using this program, it is possible to predict the optimum ALOS and optimum number of inpatients for each DPC in order to increase hospital income.

Bed Occupancy↗
PubMed2005

The financial impact of interim and prospective payment systems on home health providers in rural communities.

The objective of the study was to examine the financial impact of the interim payment system and prospective payment system (PPS) on home health agencies (HHAs) in rural communities. Data sources used included a survey of administrators in all rural HHAs in Pennsylvania and financial and utilization data provided by 10 rural HHAs in Northwest Pennsylvania. The results of survey showed that, under the PPS, 40% of the HHAs reported financial vulnerability and 24% expressed concern that the fiscal uncertainties arising from the PPS threatened their continued operation. Two prospective analyses were conducted to examine how HHAs would be further affected by payment rate changes implemented in October 2002 and April 2003. The Medicare margin in rural Pennsylvania was 23.3% during the period from October 2000 to June 2002. This margin was slightly higher than the free-standing home health Medicare margin (21.6%) reported in analyses conducted by the Medicare Payment Advisory Commission (MedPac). However, this Medicare margin did not include hospital-based HHAs. The payment rate changes implemented in 2002 and 2003 would increase the proportion of care episodes that incur financial losses, assuming service provision remains constant. As of April 2003, the proportion of all episodes with loss would rise to 46.9%, the proportion of low-utilization payment adjustment (LUPA) episodes with loss would rise to 91.1%, and the proportion of non-LUPA episodes with loss would rise to 40.2%. New payment mechanisms are profoundly affecting the finances of rural HHAs and the use of home health services by Medicare beneficiaries.

Home Care Agencies↗
PubMed1987

Reimbursement of sole community hospitals under Medicare's prospective payment system.

Under the prospective payment system (PPS), designated sole community hospitals (SCH's), usually smaller than other rural hospitals but offering comparable services, have had higher average cost levels, in part because of underutilization of plant and equipment. This has resulted in negative operating margins on patient revenues, although local financial support and other revenue sources bring margins on total revenues into the positive range. The PPS legislation has also provided SCH's temporary protection from volume declines. SCH's are more likely than other rural hospitals to experience large volume swings, but only for declines greater than the threshold specified under PPS.

Bed Occupancy↗
PubMed1984

Unrecognized redistributions of revenue in diagnosis-related group-based prospective payment systems.

The Medicare prospective payment system, which is based on the diagnosis-related group patient-classification system, identifies previously unrecognized redistributions of revenue among diagnosis-related groups and hospitals. The redistributions are caused by two artifacts. One artifact results from the use of labor market indexes to adjust costs for the different prices paid by hospitals in different labor markets. The other artifact results from the use of averages that are based on the number of hospitals, not the number of patients, to calculate payment rates from average costs. The effects of these artifacts in a sample data set have been measured, and it was concluded that they lead to discrepancies between costs and payments that may affect hospital incentives--the overall payment for each diagnosis-related group--and Medicare's total payment.

Costs and Cost Analysis↗
PubMed2006

Medicare program; hospital outpatient prospective payment system and CY 2007 payment rates; CY 2007 update to the ambulatory surgical center covered procedures list; Medicare administrative contractors; and reporting hospital quality data for FY 2008 inpatient prospective payment system annual payment update program--HCAHPS survey, SCIP, and mortality. Final rule with comment period and final rule.

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 and the Deficit Reduction Act (DRA) of 2005. In this final rule with comment period, we describe 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, 2007. In addition, this final rule with comment period implements future CY 2009 required reporting on quality measures for hospital outpatient services paid under the prospective payment system. This final rule with comment period revises the current list of procedures that are covered when furnished in a Medicare-approved ambulatory surgical center (ASC), which are applicable to services furnished on or after January 1, 2007. This final rule with comment period revises the emergency medical screening requirements for critical access hospitals (CAHs). This final rule with comment period supports implementation of a restructuring of the contracting entities responsibilities and functions that support the adjudication of Medicare fee-for-service (FFS) claims. This restructuring is directed by section 1874A of the Act, as added by section 911 of the MMA. The prior separate Medicare intermediary and Medicare carrier contracting authorities under Title XVIII of the Act have been replaced with the Medicare Administrative Contractor (MAC) authority. This final rule continues to implement the requirements of the DRA that require that we expand the "starter set" of 10 quality measures that we used in FY 2005 and FY 2006 for the hospital inpatient prospective payment system (IPPS) Reporting Hospital Quality Data for the Annual Payment Update (RHQDAPU) program. We began to adopt expanded measures effective for payments beginning in FY 2007. In this rule, we are finalizing additional quality measures for the expanded set of measures for FY 2008 payment purposes. These measures include the HCAHPS survey, as well as Surgical Care Improvement Project (SCIP, formerly Surgical Infection Prevention (SIP)), and Mortality quality measures.

Forms and Records Control↗
PubMed2004

[Management of hospitals in the prospective payment system].

Since last year a prospective payment system, the so-called "diagnosis procedure combination" system has been implemented at 82 hospitals, and this fiscal year national universities and national hospitals became independent agencies. Furthermore, a new postgraduate training and education system started this year. Now it is time for hospitals to transform into institutions that are opted for by health professionals, patients, and medical students. Every hospital has to transform into a hospital that provides safe health care with a minimal number of medical errors and delivers care with a degree of information, transparency and logicality that will fully satisfy patients. That care must also be distinguished by efficiency giving proper consideration to costs. For this purpose, all hospital staff including physicians, nurses, technicians, pharmacists, dietitians, and clerical staff have to pursue health care as a team. In a comprehensive health care system, practice of team-based care is imperative. As we think that the implementation of critical paths (or clinical paths) will be a strong impetus for team-centered care and, especially important, for a change in the mindset of the physicians, we have addressed this subject.

Critical Pathways↗
PubMed1991

Assessing Medicare's prospective payment system for hospitals.

The Medicare prospective payment system for hospitals was created to slow the growth of government spending on health care. This analysis has shown that the program has accomplished its cost-containment objective in the first five years of its existence. The average length of hospital stay has dropped sharply under PPS, reducing hospital costs. These reduced costs combined with payments based on higher pre-PPS historic costs have given hospitals high profits in the early years of PPS. One of the expected but unwanted outcomes, more admissions, has never occurred. The unexpected rop in admissions under PPS has been responsible for government savings on Medicare inpatient care. Although Medicare outpatient hospital and physician expenditures have grown at fast rates during PPS, there is no evidence in aggregate date that they have grown any faster because of inpatient care shifting to avoid PPS payment controls. The Medicare PPS savings have extended to all U.S. hospital spending, which has grown at much slower rates since the implementation of PPS. There have also been negative outcomes from PPS, and some questions posed about PPS remain unanswered. The inflation in "DRG creep" or upcoding that was predicted for PPS did occur. The government has since washed much of this code inflation out of the permanent payment base, but this phenomenon may not be a self-limiting problem, as was widely hoped. To date there is no convincing evidence of poorer quality of care under PPS, but most of the available evidence is based on mortality studies, which have limited use in measuring changes in quality of care. While PPS has helped to slow the growth in Medicare and national hospital spending, it has not had an appreciable effect on the rate of growth in the nation's total health spending. Although it was unintended, PPS has been providing a natural experiment on the issue of whether increased cost sharing dampens demand for health care services. By slowing the growth rate of inpatient hospital spending, PPS has increased the share of Medicare spending under SMI, where beneficiaries have higher coinsurance. The short-run beneficiary response appears to be an increase in demand for Medi-gap health insurance rather than a dampening of demand for services. To this point it appears that Medicare's PPS has been successful in containing the growth in hospital costs while avoiding, or managing, unwanted consequences. (ABSTRACT TRUNCATED AT 400 WORDS)

Data Collection↗
PubMed1984

Medicare program; changes to the inpatient hospital prospective payment system; and fiscal year 1985 rates--HCFA. Final rule.

This final rule amends the Medicare regulations published as an interim final rule on September 1, 1983 (48 FR 39752) and a final rule on January 3, 1984 (49 FR 234). Those regulations implement section 1886 of the Social Security Act, which changes the method of payment for inpatient hospital services from a cost-based, retrospective reimbursement system to a prospective payment system based on diagnosis-related groups. In addition, in the addendum to this final rule, we are making changes in the methods, amounts, and factors necessary to determine prospective payment rates for Medicare inpatient hospital services applicable to discharges occurring on or after October 1, 1984, in the case of the Federal portion of the payment, and effective with hospital cost reporting periods beginning on or after October 1, 1984, in the case of the hospital-specific portion. These changes are applicable in the second year of the three-year transition period for the prospective payment system. We are also implementing in this final rule certain changes in the inpatient hospital prospective payment system resulting from the enactment of Pub. L. 98-369 on July 18, 1984.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2004

Evaluating the planned substitution of the minimum data set-post acute care for use in the rehabilitation hospital prospective payment system.

OBJECTIVE: The objective of this study was to evaluate the payment implications of substituting the Minimum Data Set-Post Acute Care (MDS-PAC) for the FIM trade mark instrument for use in the planned prospective payment system (PPS) for inpatient rehabilitation hospitals. FIM trade mark is a trademark of the Uniform Data System for Medical Rehabilitation, a division of UB Foundation Activites, Inc. RESEARCH DESIGN: We used a prospective cross-sectional design using consecutive sampling. SUBJECTS: We studied all Medicare admissions with stays of 3 days or more over a 2-month period to 50 inpatient rehabilitation hospitals in 22 states. MEASUREMENTS AND METHODS: Each participating institution completed both the FIM and the MDS-PAC assessments on all participants. Items from the MDS-PAC were combined and translated to create "FIM-like" items. We assessed agreement of classification into prospective payment cells using FIM assessment data and also using MDS-PAC data. Statistical adjustments were applied to improve the level of agreement. RESULTS: The mean differences between the FIM motor and cognitive scales and their MDS-PAC translations were 2.4 (mean = 45) and 0.0 (mean = 28), respectively, with scale correlations of.85 and.84. Weighted kappas on individual items ranged from.32 to.64. There were substantial hospital-specific differences in scoring. Payment cell classification using FIM data agreed with that using MDS-PAC data only 56% of the time. Twenty percent of the facilities experienced revenue shifts larger than 10%. CONCLUSION: Despite better item-level agreement than previously observed, poor payment cell agreement and substantial revenue shifts indicated that the MDS-PAC should not be substituted for the FIM trade mark instrument in the rehabilitation hospital PPS.

Cross-Sectional Studies↗
PubMed1992

Multihospital system affiliation as a survival strategy for rural hospitals under the prospective payment system.

The introduction of Medicare's Prospective Payment System (PPS) has disproportionately increased financial pressures on rural hospitals and posed challenges to the survival of these institutions. Increasingly, rural hospitals are seeking strategies that can enhance their chances for survival in a turbulent and hostile environment. This study examined the survival effects of one such strategy, multihospital system affiliation. Specifically, we assessed: (1) whether and how different types of system affiliation in the post-PPS era affect the likelihood of rural hospital survival; (2) whether particular structural, environmental and hospital performance characteristics moderate the effects of system affiliation on rural hospital survival; and (3) whether systematic selection by rural hospitals into multihospital systems potentially accounts for observed relationships between system affiliation and survival. Proportional hazards analyses indicate that system affiliation with investor-owned systems significantly reduces survival probabilities of rural hospitals. Affiliation with not-for-profit systems or system affiliation under contract management arrangements does not affect survival probabilities of rural hospitals. These general findings are moderated by the effects of hospital ownership and size at the time of affiliation. Finally, study findings indicated that systematic selection by poor performing rural hospitals into investor-owned systems has occurred in the post-PPS era. No evidence of selection into not-for-profit systems was discovered.

Contract Services↗
PubMed2001

Medicare program; prospective payment system for inpatient rehabilitation facilities. Final rule.

This final rule establishes a prospective payment system for Medicare payment of inpatient hospital services provided by a rehabilitation hospital or by a rehabilitation unit of a hospital. It implements section 1886(j)of the Social Security Act (the Act), as added by section 4421 of the Balanced Budget Act of 1997 and as amended by section 125 of the Medicare, Medicaid, and SCHIP [State Children's Health Insurance Program] Balanced Budget Refinement Act of 1999 and by section 305 of the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act of 2000. Section 1886(j) of the Act authorizes the implementation of a prospective payment system for inpatient rehabilitation hospitals and rehabilitation units of hospitals. This section also authorizes the Secretary to require rehabilitation hospitals and rehabilitation units to submit data as the Secretary deems necessary to establish and administer the prospective payment system. The prospective payment system described in this final rule replaces the reasonable cost-based payment system under which rehabilitation hospitals and rehabilitation units of hospitals are paid under Medicare.

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

Challenges and opportunities for Medicare's original prospective payment system.

The Medicare program initiated prospective payment for inpatient hospital services in 1983. Although the payment system has achieved many of its goals, changes in the health care market and the public nature of the program will continue to present both challenges and opportunities for improvement. Looking forward, policymakers must consider how to balance paying accurately for services with using Medicare to achieve broader policy objectives. Paying for new technologies, responding to market segmentation and specialization, and encouraging quality improvement must also be addressed. To successfully navigate these issues, policymakers and program administrators need accurate and timely information.

Aged↗
PubMed1998

Medicare program; prospective payment system for hospital outpatient services--HCFA. Proposed rule.

As required by sections 4521, 4522, and 4523 of the Balanced Budget Act of 1997, this proposed rule would eliminate the formula-driven overpayment for certain outpatient hospital services, extend reductions in payment for costs of hospital outpatient services, and establish in regulations a prospective payment system for hospital outpatient services (and for Medicare Part B services furnished to inpatients who have no Part A coverage). The prospective payment system would simplify our current payment system and apply to all hospitals, including those that are excluded from the inpatient prospective payment system. The Balanced Budget Act provides for implementation of the prospective payment system effective January 1, 1999, but delays application of the system to cancer hospitals until January 1, 2000. The hospital outpatient prospective payment system would also apply to partial hospitalization services furnished by community mental health centers. Although the statutory effective date for the outpatient prospective payment system is January 1, 1999, implementation of the new system will have to be delayed because of year 2000 systems concerns. The demands on intermediary bill processing systems and HCFA internal systems to become compliant for the year 2000 preclude making the major systems changes that are required to implement the prospective payment system. The outpatient prospective payment system will be implemented for all hospitals and community mental health centers as soon as possible after January 1, 2000, and a notice of the anticipated implementation date will be published in the Federal Register at least 90 days in advance. This document also proposes new requirements for provider departments and provider-based entities. These proposed changes, as revised based on our consideration of public comments, will be effective 30 days after publication of a final rule. This proposed rule would also implement section 9343(c) of the Omnibus Budget Reconciliation Act of 1986, which prohibits Medicare payment for nonphysician services furnished to a hospital outpatient by a provider or supplier other than a hospital, unless the services are furnished under an arrangement with the hospital. This section also authorizes the Department of Health and Human Services' Office of Inspector General to impose a civil money penalty, not to exceed $10,000, against any individual or entity who knowingly and willfully presents a bill for nonphysician or other bundled services not provided directly or under such an arrangement. This proposed rule also addresses the requirements for designating certain entities as provider-based or as a department of a hospital.

Ancillary Services, Hospital↗
PubMed2006

Early effects of the prospective payment system on inpatient rehabilitation hospital performance.

OBJECTIVE: To assess changes in utilization and financial performance for inpatient rehabilitation facilities (IRFs) that shifted from Medicare's cost-based payment system to the IRF prospective payment system (PPS). DESIGN: A pre-post nonequivalent comparison group design. The intervention group included IRFs that changed to the PPS in fiscal year 2002. The comparison group included IRFs that were paid under the cost-based system. SETTING: IRFs in the United States. PARTICIPANTS: Final sample included 120 IRFs, with 26 IRFs in the comparison sample. INTERVENTIONS: Not applicable. MAIN OUTCOME MEASURES: Outcome measures included utilization (length of stay [LOS], total discharges, Medicare discharges) and financial performance (revenue, expenses, profitability, Medicare payment and cost). RESULTS: PPS IRFs experienced a smaller decline in LOS, whereas Medicare cost per discharge increased at a lower rate. PPS IRFs reduced operating costs per discharge, whereas profit margin had a greater increase. CONCLUSIONS: IRFs under PPS implemented cost controls that lead to lower operating costs below the fixed payment to profit under PPS. Discharge growth for PPS IRFs was similar to the comparison group. PPS facilities did not implement a strategy that attempted to admit more patients to increase Medicare payments.

Costs and Cost Analysis↗
PubMed1984

Medicare program; changes to the inpatient hospital prospective payment system; and proposed fiscal year 1985 rates--HCFA. Proposed rule.

We are proposing to amend the Medicare regulations published as interim final rules on September 1, 1983 (48 FR 39752) and final rules on January 3, 1984 (49 FR 234). Those regulations implement section 1886 of the Social Security Act, which changes the method of payment for inpatient hospital services from a cost-based, retrospective reimbursement system to a prospective payment system based on diagnosis. Generally, our proposed changes would be effective with discharges occurring on or after October 1, 1984, or with hospital cost reporting periods beginning on or after October 1, 1984. In addition, in the addendum to this proposed rule, we are proposing changes in the methods, amounts, and factors necessary to determine prospective payment rates for medicare inpatient hospital services applicable to discharges occurring on or after October 1, 1984, in the case of the Federal portion of the payment and effective with hospital cost reporting periods beginning on or after October 1, 1984, in the case of the hospital-specific portion. These changes would be applicable in the second year of the three-year transition period for the prospective payment system. Congress has passed a bill (H.R. 4170, known as the "Deficit Reduction Act of 1984") which, if approved by the President, will affect the proposed rates and rules included in this notice. We will make adjustments as necessary in the final rule to accommodate changes required by this legislation.

Centers for Medicare and Medicaid Services, U.S.↗
PubMed2003

Hospital inpatient prospective payment system: incorporating new technology.

New technologies in the impatient prospective payment system are discussed. On December 21, 2000, Congress passed Public Law 106-554 that includes a requirement to establish a mechanism to more expeditiously incorporate the costs and establish qualifying criteria for payment of new services and technologies into the hospital inpatient prospective payment system. The final ruling of this law states that a new service or technology must demonstrate substantial improvement, be inadequately paid under the DRG system, and be "new." The intent of these criteria is to identify new technologies that offer substantial improvement over existing technologies and to provide supplemental payment that encourages physicians and hospitals to utilize the new technology. In November 2001, drotrecogin alfa (activated) received fast-track FDA approval because of the robust findings from the PROWESS trial. Drotrecogin alfa (activated) is the first agent proven to reduce mortality in patients suffering from severe sepsis associated with acute organ dysfunction who are at a high risk of death (i.e., APACHE II score > 24). In August 2002, drotrecogin alfa (activated) was one of four such new technologies and the first agent approved for new technology payment under the prospective payment system (PPS). This decision offers confidence that the PPS is effectively striving to incorporate new medical services and technologies at a pace similar to that of innovation. Providers may receive up to $3400 in additional reimbursement when drotrecogin alfa (activated) is administered in the Medicare population. Pharmacy and patient accounting personnel should develop a collaborative process to identify, document, and capture this new source of payment.

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