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Background: Diagnosis-related group (DRG)-based hospital payment can potentially be inadequately low (or high) for highly variable, highly specialized, and/or low volume care. DRG-based payment can be combined with other payment mechanisms to avoid unintended consequences of inadequate payment. The aim of this study was to analyze these other payment mechanisms for acute inpatient care across six countries (Germany, Denmark, England, Estonia, France, the United States [Medicare]). Methods: Information was collected about elements excluded from DRG-based payment, the rationale for exclusions, and payment mechanisms complementing DRG-based payment. A conceptual framework was developed to systematically describe, visualise and compare payment mechanisms across countries. Results: Results show that the complexity of exclusion mechanisms and associated additional payment components differ across countries. England and Germany use many different additional mechanisms, while there are only few exceptions from DRG-based payment in the Medicare program in the United States. Certain areas of care are almost always excluded (eg, certain areas of cancer care or specialized pediatrics). Denmark and England use exclusion mechanisms to steer service provision for highly complex patients to specialized providers. Conclusion: Implications for researchers and policy-makers include: (1) certain areas of care might be better excluded from DRG-based payment; (2) exclusions may be used to incentivize the concentration of highly specialized care at specialized institutions (as in Denmark or England); (3) researchers may apply our analytical framework to better understand the specific design features of DRG-based payment systems.

Background Compact county medical communities (CCMCs) have emerged as a key strategy to strengthen primary healthcare delivery in China. The objective of this study was to assess the impact of the global capitation prospective payment (GCP) reform on CCMCs performance. Methods This research collected data from 2018 to 2022 across three pilot regions in China. Using interrupted time series analysis (ITSA), we assessed how the implementation of GCP affected CCMCs development. Results The ITSA results show that the average length of stay at the lead hospital decreased by 0.105 days ( P  < 0.001) after the reform in pilot A, while the average hospital cost increased by 62.272 yuan per month ( P  < 0.05). The lead hospital in Pilot B had a decrease in average inpatient costs of 54.203 yuan per month ( P  < 0.001). Conversely, Pilot C’s the lead hospital had an increase in average inpatient costs of 26.610 yuan per month ( P  < 0.001), and the average length of stay at the lead hospital increased by 0.028 days ( P  < 0.05). Conclusion GCP has reasonably promoted the benign development of CMCCs. However, the diversity of strategies and operations has resulted in a different focus on effectiveness. Based on local resource endowments, future reforms should pay more attention to the synchronization of payment reforms and organizational changes.

England, France, Germany, the Netherlands, and Sweden spend less as a share of gross domestic product on hospital care than the United States while delivering high-quality services. All five European countries have hospital payment systems based on diagnosis-related groups (DRGs) that classify patients of similar clinical characteristics and comparable costs. Inspired by Medicare's inpatient prospective payment system, which originated the use of DRGs, European DRG systems have implemented different design options and are generally more detailed than Medicare's system, to better distinguish among patients with less and more complex conditions. Incentives to treat more cases are often counterbalanced by volume ceilings in European DRG systems. European payments are usually broader in scope than those in the United States, including physician salaries and readmissions. These European systems, discussed in more detail in the article, suggest potential innovations for reforming DRG-based hospital payment in the United States. [PUBLICATION ABSTRACT]

Medicare pioneered add-on payments to facilitate the adoption of innovative technologies under its hospital prospective payment system. US policy makers are now experimenting with broader value-based payment initiatives, but these have not been adjusted for innovation. This article examines the structure, processes, and experience with Medicare's hospital new technology add-on payment program since its inception in 2001 and compares it with analogous payment systems in Germany, France, and Japan. Between 2001 and 2015 CMS approved nineteen of fifty-three applications for the new technology add-on payment program. We found that the program resulted in $201.7 million in Medicare payments in fiscal years 2002-13-less than half the level anticipated by Congress and only 34 percent of the amount projected by CMS. The US program approved considerably fewer innovative technologies, compared to analogous technology payment mechanisms in Germany, France and Japan. We conclude that it is important to adjust payments for new medical innovations within prospective and value-based payment systems explicitly as well as implicitly. The most straightforward method to use in adjusting value-based payments is for the insurer to retrospectively adjust spending targets to account for the cost of new technologies. If CMS made such retrospective adjustments, it would not financially penalize hospitals for adopting beneficial innovations.

Background The Hospital Value Based Purchasing Program (HVBP) in the United States, announced in 2010 and implemented since 2013 by the Centers for Medicare and Medicaid Services (CMS), introduced payment penalties and bonuses based on hospital performance on patient 30-day mortality and other indicators. Evidence on the impact of this program is limited and reliant on the choice of program-exempt hospitals as controls. As program-exempt hospitals may have systematic differences with program-participating hospitals, in this study we used an alternative approach wherein program-participating hospitals are stratified by their financial exposure to penalty, and examined changes in hospital performance on 30-day mortality between hospitals with high vs. low financial exposure to penalty. Methods Our study examined all hospitals reimbursed through the Medicare Inpatient Prospective Payment System (IPPS) – which include most community and tertiary acute care hospitals – from 2009 to 2016. A hospital’s financial exposure to HVBP penalties was measured by the share of its annual aggregate inpatient days provided to Medicare patients (“Medicare bed share”). The main outcome measures were annual hospital-level 30-day risk-adjusted mortality rates for acute myocardial infarction (AMI), heart failure (HF) and pneumonia patients. Using difference-in-differences models we estimated the change in the outcomes in high vs. low Medicare bed share hospitals following HVBP. Results In the study cohort of 1902 US hospitals, average Medicare bed share was 61 and 41% in high ( n  = 540) and low ( n  = 1362) Medicare bed share hospitals, respectively. High Medicare bed share hospitals were more likely to have smaller bed size and less likely to be teaching hospitals, but ownership type was similar among both Medicare bed share groups.. Among low Medicare bed share (control) hospitals, baseline (pre-HVBP) 30-day mortality was 16.0% (AMI), 10.9% (HF) and 11.4% (pneumonia). In both high and low Medicare bed share hospitals 30-day mortality experienced a secular decrease for AMI, increase for HF and pneumonia; differences in the pre-post change between the two hospital groups were small (< 0.12%) and not significant across all three conditions. Conclusions HVBP was not associated with a meaningful change in 30-day mortality across hospitals with differential exposure to the program penalty.

Background To evaluate the performance of the patient clinical complexity level (PCCL) mechanism, which is the patient-level complexity adjustment factor within the Korean Diagnosis-Related Groups (KDRG) patient classification system, in explaining the variation in resource consumption within age adjacent diagnosis-related groups (AADRGs). Methods We used the inpatient claims data from a public hospital in Korea from 1 January 2017 to 30 June 2019, with 18 846 claims and 138 AADRGs. The differences in the total average payment between the four PCCL levels for each AADRG was tested using ANOVA and Duncan’s post hoc test. The three patterns of differences with R -squared were as follows: the PCCL reflected the complexity well (valid); the average payment for PCCL 2, 3, and 4 was greater than PCCL 0 (partially valid); the PCCL did not reflect the complexity (not valid). Results There were 9 (6.52%), 26 (18.84%), and 103 (74.64%) ADRGs included in the valid, partially valid, and not valid categories, respectively. The average R-squared values were 32.18, 40.81, and 35.41%, respectively, with an average R -squared for all patterns of 36.21%. Conclusions Adjustment using the PCCL in the KDRG classification system exhibited low performance in explaining the variation in resource consumption within AADRGs. As the KDRG classification system is used for reimbursement under the new DRG-based prospective payment system (PPS) pilot project, with plans for expansion, there should be an overall review of the validity of the complexity and rationality of using the KDRG classification system.

China has developed and widely piloted a new case-based payment, ie, the \"Diagnosis-Intervention Packet\" (DIP) payment, which has a granular classification system. We evaluated the impact of DIP payment on the quality of care in a large pilot city in China and explored potential mechanisms of quality change. The city started to implement DIP payment with a hospital-level cap on July 1, 2019. Using a 5% random sample of discharge records from July 2017 to June 2021, we employed a difference-in-differences approach to compare two mortality measures (in-hospital mortality, mortality of surgical patients), two readmission measures (all-cause readmission within 30 days, readmission with the same principal diagnosis within 30 days) and a patient safety measure (operation associated complications or adverse event) in 13 pilot hospitals and 27 non-pilot hospitals before and after DIP payment reform. Of 122,637 discharge records included, 43,023 (35.1%) were from pilot hospitals. After DIP payment, the readmission rate within 30 days and readmission rate with the same principal diagnosis in pilot hospitals decreased significantly by 3.2 percentage points ( <0.001) and 1.8 percentage points ( <0.001), respectively. The in-hospital mortality rate, the mortality rate of surgical patients, and the rate of operation-associated complications or adverse events did not have significant changes. The decrease in quality measures was primarily driven by tertiary hospitals, was more obvious over time after the policy adoption, and was more pronounced in groups with higher intensity of care. This study indicated that DIP payment with a cap in the study city was associated with improved quality of care among patients in pilot hospitals. The provider's behavior of increasing the intensity of care, especially for more severe patients, may partially contribute to the results.

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

This paper evaluates the impact of market competition on health care volume and cost. At the start of 2005, the financing system of Dutch hospitals started to be gradually changed from a closed-end budgeting system to a non-regulated price competitive prospective reimbursement system. The gradual implementation of price competition is a 'natural experiment' that provides a unique opportunity to analyze the effects of market competition on hospital behavior. We have access to a unique database, which contains hospital discharge data of diagnosis treatment combinations (DBCs) of individual patients, including detailed care activities. Difference-in-difference estimates show that the implementation of market-based competition leads to relatively lower total costs, production volume and number of activities overall. Difference-indifference estimates on treatment level show that the average costs for outpatient DBCs decreased due to a decrease in the number of activities per DBC. The introduction of market competition led to an increase of average costs of inpatient DBCs. Since both volume and number of activities have not changed significantly, we conclude that the cost increase is likely the result of more expensive activities. A possible explanation for our finding is that hospitals look for possible efficiency improvements in predominantly outpatient care products that are relatively straightforward, using easily analyzable technologies. The effects of competition on average cost and the relative shares of inpatient and outpatient treatments on specialty level are significant but contrary for cardiology and orthopedics, suggesting that specialties react differently to competitive incentives.

Background A series of policy changes in 2011 altered reimbursement arrangements and guidance on use of erythropoiesis-stimulating agents for end-stage renal disease (ESRD) patients with anaemia in the US. While the policy changes were principally directed at care delivered in an outpatient setting, these had the potential to affect inpatient care also. This study used HCUP-NIS data (2008–2016) to examine trends in recorded anaemia among ESRD hospitalizations and analyse disparities in inpatient outcomes among ethnic groups following policy changes. Methods The International Classification of Diseases codes were used to identify ESRD admissions, recorded anaemia due to chronic kidney disease (CKD), and to generate an age-adjusted Deyo-Charlson comorbidity index. Linear splines with a knot placed at the time point of policy changes and multivariable logistic regression were used to examine the likelihood of recorded anaemia, adjusted for a range of socio-demographic and clinical covariates. Difference-in-difference analyses investigated the impact of policies on recorded anaemia. Other outcomes included hospital cost, mortality and place of discharge. Results The percentage of inpatient episodes with recorded anaemia arising from CKD increased from 26.2% in 2008 to 50.0% in 2016. Anaemia was more likely to be recorded as a complication of ESRD among minority ethnic groups and Native American admissions, in particular, (OR 1.20, 95%CI 1.15–1.25) relative to White American admissions; and these disparities widened following changes to reimbursement. Minorities were less likely to die in hospital and to be discharged to another healthcare facility, and (with the exception of Black American admissions) they were more expensive to treat. Conclusions Our findings provide evidence of an increase in recorded anaemia consistent with a shift of patients from outpatient to inpatient settings in the wake of changes to reimbursement enacted in 2011. In addition, the study highlights the existence of ethnic disparities that widened after the policy initiated reimbursement changes.