how do the prospective payment systems impact operations?

For these samples, Medicare Part A bills on hospital, skilled nursing facility (SNF) and home health service (HHA) use were obtained from the Health Care Financing Administration (HCFA). Finally, the transition from fee-for-service models to PPS can be difficult for both healthcare providers and patients as they adjust to a new system. The pattern of hospital readmissions that we found, for both the pre- and post-PPS periods, were similar to results derived by other researchers at other points in time, in spite of differences in methodologies applied to study this issue. The GOM techniques identified an optimum number of case-mix profiles based on maximum likelihood estimation of the set of health and functional status characteristics from the 1982 and 1984 NLTCS. PPS in healthcare has since become a widely accepted payment model across the United States and has facilitated a more standardized approach to healthcare. Some features of this site may not work without it. Sixty-seven percent (67%) indicate that their general health is good or excellent. These are the probabilities that person on the kth dimension have response level l for variable j. Increases in the role of hospital outpatient care, for example, is illustrated by the fact that the percent of surgical charges under Medicare Part B incurred in hospital outpatient settings has been increasing dramatically. Draper, David, William H. Rogers, Katherine L. Kahn, Emmett B. Keeler, Ellen R. Harrison, Marjorie J. Sherwood, Maureen F. Carney, Jacqueline Kosecoff, Harry Savitt, Harris Montgomery Allen, Lisa V. Rubenstein, Robert H. Brook, Carol P. Roth, Carole Chew, Stanley S. Bentow, and Caren Kamberg, Effects of Medicare's Prospective Payment System on the Quality of Hospital Care. By "significant" we mean whether or not the life tables estimated for each case mix group differ from those for the total population by more than chance. You do not have JavaScript Enabled on this browser. In terms of outcomes of hospital use related to quality of care, no difference in overall readmissions or mortality pre- and post-PPS were found. Presented at the APHA Annual Meeting, New Orleans, Louisiana, October 20. Patients hospitalized or institutionalized at the time of fracture, with a history of a previous hip fracture, or with a neoplasm as a known or suspected cause were excluded from the study. The unit of observation in this study was an episode of service use rather than a Medicare beneficiary. 1987. Because the PPS system has been introduced only recently, evaluations of the effects of the policy on Medicare beneficiaries have been limited. The prospective payment system rewards proactive and preventive care. This result was consistent with those of Krakauer (1987) and Conklin and Houchens (1987). Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services). Non-Prospective Payments, also called Retrospective payments, is a reimbursement method that pays providers on actual charges (Prospective Payment Plan vs. Retrospective Payment Plan, 2016). Our study was designed to provide information to assess PPS effects on the functionally impaired subgroup of Medicare beneficiaries. Outcomes. The implementation of a prospective payment system is not without obstacles, however. We selected episodes rather than Medicare beneficiaries because beneficiaries could experience different numbers of episodes of one type of care (e.g., hospital) and different patterns of multiple service use episodes (e.g., hospital, SNF, HHA) during a 12-month period. At the time the study was conducted, data were not available to measure use of Medicare Part B services. For each disease, readmission rates were unchanged; a slightly but not significantly higher percentage of patients who had been admitted from home were discharged to nursing care facilities. In our analyses, these groups were used principally to determine if overall changes in Medicare service utilization between the pre- and post-PPS periods were found for major subgroups of the disabled Medicare population, and if specific vulnerable subgroups were particularly affected by PPS. The specific aims of this study were to measure changes in Medicare service use and to evaluate the effects of these changes on quality of care in terms of hospital readmission and mortality. Doctors speaking about paperwork with hospital accountant. For the HHA episodes slightly more of the deaths in 1984 occurred within 90 days while, in SNFs fewer deaths occurred within 90 days. website belongs to an official government organization in the United States. * Probabilities of group membership converted to percentages. Statistically significant differences (p = .05) between 1982 and 1984 were detected in the hospital, length of stay for this group. In this study, hospital readmission and mortality were viewed as indicators of quality of care. A different measure of hospital readmission might also yield different results. wherexijl = the individual's score on the jth variable or attribute predicted by the model,gik = an individual's weight on the Kth pure type (or group), = a dimension's score on the jth variable or attribute,K = number of dimensions, andj = number of variables (and l is the number of different types of responses to the variable). = 11Significance level = .250, Proportion of Hospital Episodes Resulting in Death, Probability (x 100) of Death in Interval. Table 1 presents comparative hospital utilization statistics of the three subgroups of Medicare beneficiaries. Several characteristics of GOM analysis recommend it as a clustering procedure for the analysis of case-mix in this study. Rates of "other" episodes resulting in admission to HHA increased from 13.6 percent to 21.5 percent--a result consistent with recent findings from a University of Colorado study (1987). This HHA pattern reflects similar changes in the community population which becomes older and has more severely disabled persons. The seriousness of this problem is open to debate. Everything from an aspirin to an artificial hip is included in the package price to the hospital. By analyzing episodes, we were able to compare differences before and after PPS in all types of Medicare services between the two periods. The remaining four parts address different service use and outcome patterns of the subgroup of Medicare beneficiaries who have chronic disabilities. 1982: 12.1%1984: 12.5%Expected number of days before death. HOW IT WORKS CONTACTTESTIMONIALSTHE TEAMEVENTSBLOGCASE STUDIESEXPLAINERSLETS SOCIALIZE. Interprofessional Education / Interprofessional Practice, Inpatient rehabilitation hospital or distinct unit, Resource Utilization Groups, Third Version (RUG-III), Each day of care is classified into one of four levels of care. The second analysis strategy focused on outcomes subsequent to hospital admission. "The Early Effects of the Prospective Payment System on Inpatient Utilization and the Quality of Care," Inquiry, 24:7-16. Table 4 indicates that, while HHA admissions from hospitals increased, the LOS in hospitals prior to HHA admissions decreased between pre- and post-PPS periods. ** These are episodes when no Medicare hospital, skilled nursing facility or home health services are used. * Sum of discharge destination rates does not add to 100% because of end-of-study adjustments. The changes in service utilization patterns were expected as a consequence of financial incentives provided by PPS. Hence, unlike the first analysis, episodes of SNF and HHA use, for example, were included only if they were post-hospital events. These groups represent distinct subsets of medical and functional states of Medicare beneficiaries reflecting the multiple comorbidities of elderly persons which may be expected to be associated with service use patterns and possible negative outcomes of care such as hospital readmission and mortality. The patients studied were those aged 65 years or older with a new fracture. Conklin and Houchens found that while crude 30-day mortality rates increased by 9.3% between 1984 and 1985, all of this increase could be explained by the increase in case-mix severity between the two years. Similar to the patterns of hospital readmission risks found in Table 12, Table 14 shows an increased proportion of deaths occurring within 30 days of hospital admission in 1984 which was offset by a decreased proportion of deaths in succeeding intervals of time after admission. These "other" episodes refer to intervals when individuals in the sample were not receiving Medicare inpatient hospital, SNF or HHA services. While we benefited from the collective knowledge of the individuals noted, and others, we are solely responsible for the results and conclusions reported. Mary Harahan, who first recognized the unique opportunity offered by the 1982 and 1984 NLTCS to study PPS effects on disabled beneficiaries, catalyzed the research leading to this report. In the following, we briefly discuss five studies that addressed various dimensions of the effects of PPS on hospital utilization and outcomes of patients. This irregular pattern suggests that there is no consistent elevation of mortality for the total elderly population, and that any pre- and post-analysis of mortality must be interpreted with these secular irregularities in mind. Applies only to Part A inpatients (except for HMOs and home health agencies). The authors posited two possible explanations for the increased hospitalization of institutionalized persons: (1) physician manipulation of PPS by discharging nursing home residents only to have them scheduled for readmission at a later date and (2) shorter hospital stays representing premature hospital discharges that resulted in more frequent rehospitalizations. The Assistant Secretary for Planning and Evaluation (ASPE) is the principal advisor to the Secretary of the U.S. Department of Health and Human Services on policy development, and is responsible for major activities in policy coordination, legislation development, strategic planning, policy research, evaluation, and economic analysis. discharging hospital. The mean length of stay decreased from 16.6 days to 10.3 days after the implementation of PPS. Appendix A discusses the technical details of GOM analyses. Krakauer concluded that "overall, no adverse trends in the outcomes of the medical care provided Medicare beneficiaries are discernible as yet.". Finally, hospital readmissions did not change significantly between the pre- and post-PPS periods, although the measure of hospital readmission that was used was very limited, i.e., readmission to the same hospital during the same quarter of observation. First, we conducted analyses to measure changes in the length of stay and discharge status of each type of Medicare Part A services. First, we examined the proportion of hospital admissions that resulted in readmissions during the one year windows of observation. Moreover, Krakauer suggested that another part of the difference in mortality rates could be due to an increase in the severity of illness of admitted patients. The characteristics of individuals entering hospitals differed between the pre- and post-PPS periods. GOM analysis is a multivariate technique that combines two types of analyses usually performed separately (Woodbury and Manton, 1982). Population Subgroups as Case-Mix. Finally, since the analysis generates coefficients that describe how each person is related to each of the basic profiles, it offers a strategy for generating continuous measures of severity determined by a wide range of interacting medical and disability conditions. These characteristics included medical conditions, dependencies in activities of daily living (ADL) and instrumental activities of daily living (IADL). There were no statistically significant differences before and after PPS in the patterns of hospital, SNF and HHA episodes. Assistant Policy Researcher, RAND, and Ph.D. Student, Pardee RAND Graduate School, Ph.D. Student, Pardee RAND Graduate School, and Assistant Policy Researcher, RAND. While we cannot tell from the data where and what types of non-Medicare Part A services were being received, it appears that the higher mortality among the other episodes were offsetting the lower (but not statistically significantly lower) mortality associated with Medicare Part A service use. The absence of increased SNF use was surprising, but the increase in HHA use was expected. Additionally, it creates more efficient use of resources since providers are focused on quality rather than quantity. We discuss the GOM methodology in greater detail in the following section on statistical methodology. Continuous Medicare Part A bills permitted a tracking of persons in the NLTCS samples through different parts of the health care system (i.e., Medicare hospital, SNF and HHA) so that we could examine transitions from acute care hospitals to subsequent experience in Medicare SNF or HHA services. Abstract and Figures The reform of provider payment systems, from retrospective to prospective payment, has been heralded as the right move to contain costs in the light of rising health. Additionally, it helps level the playing field by ensuring all patients receive similar quality care regardless of their ability to pay or provider choice. Events of interest to the study were analyzed in two ways. For example, given that the oldest-old case-mix group was characterized by a high risk of cancer, some might have received community based hospice care. These time frames were selected because detailed patient information based on the NLTCS data were available only for the two years, 1982 and 1984. The Prospective Payment System (PPS)-exempt Cancer Hospital Quality Reporting (PCHQR) program began in 2014 as a pay-for-reporting program under which there are no penalties for the 11 PPS-exempt cancer hospitals (PCH) that fail to meet the reporting requirements. The two results suggest that for the "Mild Disability" group, there was a detectable change in utilization characterized by higher hospital discharge to SNFs and higher SNF discharges to "other" episodes with corresponding decreases in hospital and SNF lengths of stay. Our overall findings are consistent with the notion that PPS incentives result in some discharges to nursing homes being readmitted to hospitals, although the overall pattern of readmissions were not significantly different in the two time periods. Woodbury, M.A. The pre-PPS period was the one-year window from October 1, 1982 through September 30, 1983. CMS uses separate PPSs for reimbursement to acute inpatient hospitals, home health agencies, hospice, hospital outpatient, inpatient psychiatric facilities, inpatient rehabilitation facilities, long-term care hospitals, and skilled nursing facilities. An important parameter in the analysis is the number of case-mix dimensions (i.e., K). In examining the length of time and percent of cases that terminate in a particular way we see that the nondisabled community elderly and the institutionalized elderly have slight increases in hospital episodes ending in death with the community disabled experiencing virtually no change. This improvement was consistent with long-standing nationwide trends toward improved quality of care under way when PPS was implemented. This document and trademark(s) contained herein are protected by law. As with the other analysis of episodes of Medicare service use, comparisons are made between the pre- and post-PPS periods using October 1 through September 30 windows for both 1982-83 and 1984-85. The NLTCS contained detailed information on the health and functional characteristics of nationally representative samples (about 6,000) of noninstitutionalized disabled Medicare beneficiaries in 1982 and in 1984.

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