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Prospective payment systems
\"This book from the Healthcare Payment Systems series reviews and discusses the various types of payment systems in use by healthcare providers and third-party payers. Emphasizing the basic elements of any prospective payment system, it considers the variations that exist for paying for hospital inpatient and outpatient services, skilled nursing facilities, home health agencies, long-term hospital care, and rehabilitation facilities and providers. It pays particular attention to the Medicare MS-DRG, Medicare APCs, Medicare HHPPS, and the Medicare Skilled Nursing Resource Utilization Groups, as well as private third-party payers\"-- Provided by publisher.
Book
How Denmark, England, Estonia, France, Germany, and the USA Pay for Variable, Specialized and Low Volume Care: A Cross-country Comparison of In-patient Payment Systems
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.
Journal Article
Does global capitation prospective payment promote integrated delivery networks? Evidence from China’s compact county medical communities
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.
Journal Article
The Impact of a New Case-Based Payment System on Quality of Care: A Difference-in-Differences Analysis in China
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.
Journal Article
Competition in the Dutch hospital sector: an analysis of health care volume and cost
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.
Journal Article
Hospital Payment Based On Diagnosis-Related Groups Differs In Europe And Holds Lessons For The United States
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]
Journal Article
Predictors of High Profit and High Deficit Outliers under SwissDRG of a Tertiary Care Center
Case weights of Diagnosis Related Groups (DRGs) are determined by the average cost of cases from a previous billing period. However, a significant amount of cases are largely over- or underfunded. We therefore decided to analyze earning outliers of our hospital as to search for predictors enabling a better grouping under SwissDRG.
28,893 inpatient cases without additional private insurance discharged from our hospital in 2012 were included in our analysis. Outliers were defined by the interquartile range method. Predictors for deficit and profit outliers were determined with logistic regressions. Predictors were shortlisted with the LASSO regularized logistic regression method and compared to results of Random forest analysis. 10 of these parameters were selected for quantile regression analysis as to quantify their impact on earnings.
Psychiatric diagnosis and admission as an emergency case were significant predictors for higher deficit with negative regression coefficients for all analyzed quantiles (p<0.001). Admission from an external health care provider was a significant predictor for a higher deficit in all but the 90% quantile (p<0.001 for Q10, Q20, Q50, Q80 and p = 0.0017 for Q90). Burns predicted higher earnings for cases which were favorably remunerated (p<0.001 for the 90% quantile). Osteoporosis predicted a higher deficit in the most underfunded cases, but did not predict differences in earnings for balanced or profitable cases (Q10 and Q20: p<0.00, Q50: p = 0.10, Q80: p = 0.88 and Q90: p = 0.52). ICU stay, mechanical and patient clinical complexity level score (PCCL) predicted higher losses at the 10% quantile but also higher profits at the 90% quantile (p<0.001).
We suggest considering psychiatric diagnosis, admission as an emergency case and admission from an external health care provider as DRG split criteria as they predict large, consistent and significant losses.
Journal Article
Medicare prospective payment and the shaping of U.S. health care
This is the definitive work on Medicare's prospective payment system (PPS), which had its origins in the 1972 Social Security Amendments, was first applied to hospitals in 1983, and came to fruition with the Balanced Budget Act of 1997. Here, Rick Mayes and Robert A. Berenson, M.D., explain how Medicare's innovative payment system triggered shifts in power away from the providers (hospitals and doctors) to the payers (government insurers and employers) and how providers have responded to encroachments on their professional and financial autonomy. They conclude with a discussion of the problems with the Medicare Modernization Act of 2003 and offer prescriptions for how policy makers can use Medicare payment policy to drive improvements in the U.S. health care system. Mayes and Berenson draw from interviews with more than sixty-five major policy makers—including former Treasury secretary Robert Rubin, U.S. Representatives Pete Stark and Henry Waxman, former White House chief of staff Leon Panetta, and former administrators of the Health Care Financing Administration Gail Wilensky, Bruce Vladeck, Nancy-Ann DeParle, and Tom Scully—to explore how this payment system worked and its significant effects on the U.S. medical landscape in the past twenty years. They argue that, although managed care was an important agent of change in the 1990s, the private sector has not been the major health care innovator in the United States; rather, Medicare's transition to PPS both initiated and repeatedly intensified the economic restructuring of the U.S. health care system.
eBook
US Hospital Payment Adjustments For Innovative Technology Lag Behind Those In Germany, France, And Japan
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.
Journal Article
For Medicare's New Approach To Physician Payment, Big Questions Remain
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) established a new framework for Medicare physician payment. Designed to stabilize uncertain payment rates for Medicare's fee-for-service (FFS) system and incentivize physicians to move into new alternative payment systems, MACRA contains several uncertainties of its own. In a textbook illustration of why it's important to be careful what you wish for, it's increasingly easy to predict that implementation of MACRA will be delayed as a result of both regulatory and legislative breaches of its statutory timeline. This article traces the contemporary history of the Medicare physician payment system and efforts to implement additional changes.
Journal Article