Activity Based Funding Analysis

In 1974, the federal government adopted the Uniform Hospital Discharge Data Set (UHDDS) as the standard to help improve the uniformity and comparability of hospital discharge data, the principal diagnosis, and other diagnoses for hospital procedures; including comparable data that could help to determine which hospitals were best at treating patients and for reporting inpatient data in acute care, short-term care, and long-term care hospitals. This dataset works towards a standardized system of reimbursement for the federal government nationwide which in turn could lower costs, UHDDS helps in collecting general information pertaining the patient and the specific care including the age, sex, and race of the patient. The data elements are collected

This model reimburses hospitals based on quality of care instead of the volume of patients. The quality of care is assessed by patient questionnaires and if hospitals are unsatisfactory penalties may be imposed (Edwoldt, 2012). The value-based system also affects Medicare and Medicaid. It was reported that Medicare readmissions within 30 days of discharge cost 17 billion dollars annually (Edwoldt, 2012). Due to the high costs of readmissions Medicare and Medicaid have implemented a Hospital Readmission Reduction program. A formula is utilized to evaluate readmission rates within 30 days of discharge for any medical reason related to their original admission such as heart failure and pneumonia. Upon review the hospital is potentially penalized. It is important that nurses strive to provide excellence in care despite their beliefs on the ACA. Nurses have the ability to provide a safe patient environment and reduce the risk of hospital associated infections by following hospital protocols such as hand washing.

The reimbursement method used at St. Anthony’s hospital is quite distinct depending on the party doing the payments. Payments are received from Medicare, Medicaid, private insurers and also directly from patients. The party responsible for Medicare payment is the Federal government and it offers payment mainly for the elderly. With the Medicare payment, hospitals receive a flat fee depending on the case. According to Gee (2006), most hospital revenue has declined because of the revised payment set by the Diagnosis-Related Groupings. The fee for most cases varies according to the Diagnosis-Related Group (DRG) it can be classified under. For example, Medicare pays only a fixed amount for an elderly patient suffering from pneumonia regardless

In 2013 readmission following hospital stays for AMI, CHF, COPD or pneumonia the cost for readmissions totaled $7.0 billion, which accounted for 13 percent of the cost for total readmissions in the nation (Fingar & Washington, 2015). The highest readmissions fell with HF, followed by COPD, pneumonia then AMI. Trends from 2009-2013 showed a decrease in the overall hospital Medicare readmissions by an average of 9 percent and this was from these top four diagnosis (Fingar & Washington, 2015). This information came from Healthcare Cost and Utilization Project (H-CUP) which is a group of healthcare data bases. Through technological use of several software tools the data needed for this project was abstracted. This is a perfect example of using technology to improve the processes for healthcare improvement by supplying needed data for analyzing to gain the knowledge for change within the healthcare systems (Fingar & Washington, 2015).

In healthcare system the highest quality medical care means” the greatest benefit to patients at the lowest possible cost” (Burke & Ryan, 2014, p. 3). “The Agency for Healthcare Research and Quality (AHRQ) defines quality health care as doing the right thing for the right patient, at the right time, in the right way to achieve the best possible results” (NCQA, p. 3) According to American college of physicians, the single most reason for the health care cost is higher healthcare spending. There are several factors involved in the high health care cost such as inappropriate use of technologies, lack of patient centered care, overuse of the reimbursement, excessive price for health care facilities, increased organizational cost, and health accountability are some of the reasons for increased health care cost. In order to decrease the cost, the available health resources be used judiciously and equitably. Understanding these factors and identifying the potential factors of health care costs assists in providing quality and effective services and thus improves the health outcomes (ACP, 2009).

Cost has different perspectives depending on whom we are speaking about. Consumers refer to cost in reference to the price of healthcare, bills to insurance or payments to doctors directly. Nationally we refer to healthcare spending as a reflection of all healthcare spending that occurs in the nation and is normally measured in a percentage of the Gross domestic product or GDP. Provider costs are seen as the cost to pay staff, buying medical equipment and capital costs for buildings and the maintenance of the buildings infrastructure (Shi & Singh, 2005).

Healthcare in the U.S is most expensive than any other developed country. The U.S spends far more on per capita as compared to any other developed. U.S scores low on many outcome measures, inefficiencies and wastes and quality measures as compared to other countries. The Patient Protection and Affordable Care Act is developed to strengthen these failures in the health care system. The U.S healthcare is transforming care from volume based reimbursements to value based payments. The healthcare law works around providing more patient centered care and better preventive care. One of the payment reforms with Obamacare is to penalize the hospitals with high readmission rates for the three conditions – Acute Myocardial Infarction, Heart Failures and Pneumonia.

Quality physician documentation is not only essential to providing superior clinical communication, but also allows for the delivery of useful data that “supports quality metrics, acuity of care, billing, and accurate representation of medical conditions” (Rosenbaum et al., 2014). The Centers for Medicare and Medicaid Services (CMS) uses a system to classify Medicare patient’s hospital stays into various groups in order to facilitate payment of services called Medicare Severity-Diagnosis Related Group (MS-DRG). Some payers also use all patient refined (APR)-DRG reimbursement systems. MS-DRG groups are outlined by a specific collection of patient characteristics which include areas specific to the “principle diagnosis, specific secondary diagnoses,

The second step is the major diagnostic category determination in which the principal diagnosis is assigned to an encounter for one of the 25 MDCs (Casto & Forrestal, 2015). The 3rd step is the medical/surgical determination to determine whether a procedure was performed and can be assigned a surgical status (Casto & Forrestal, 2015). The MS-DRG Definitions Manual and many of ICD codebooks verifies which procedures are valid or not valid (Casto & Forrestal, 2015). For example, minor procedures and testing do not qualify (Casto & Forrestal, 2015). Also, when a qualifying procedure is not performed, the case is assigned a medical status (Casto & Forrestal, 2015). The fourth step involves using different refinement questions to figure out the correct MS-DRG assignment (Casto & Forrestal, 2015). Therefore, once the medical and surgical classification groups for an MDC are formed, each class of patients is evaluated to determine if complications, comorbidities, the patient’s age or discharge status consistently affected the use of hospital resources (Design and Development,” n.d.).

In 1983, the Medicare prospective payment program was implemented which allowed hospitals to be reimbursed a set payment based on the patient’s diagnosis, or Diagnosis Related Groups (DRG), regardless of what treatment was provided or how long the patient was hospitalized (Jacob & Cherry, 2007). To keep the costs below the diagnosis related payment, hospitals had to manage efficiently the treatment provided to a client and reduce the client’s length of stay (Jacob & Cherry, 2007). Case management, or internal case management “within the walls” of the health care facilities was created to streamline costs while maintaining quality care (Jacob & Cherry, 2007).

Both commonwealth and state funding flow through National Health Funding Pool directly to providers within the Local Hospital Networks. In the case where ABF is not practicable, such as low volume of service, block funding can be made payable to the states of which the pricing is based on the National Efficient Cost (NEC) determined by the IPHA. Public

Quality and financial viability being closely tied is an extremely salient point. Furthermore, the Affordable Care Act has influenced the requirement for high-quality, cost-effective care provision by implementing Value Based Purchasing (Aroh, Colella, Douglas, & Eddings, 2015). In addition, there are presently Centers for Medicare and Medicaid (CMS) quality indicators that effect reimbursement for hospitals (Xu, Burgess Jr, Cabral, Soria-Saucedo, & Kazis, 2015). For example, if a facility does not meet the indicator threshold for catheter associated urinary tract infections, central line infections and/or pressure ulcers their reimbursement is affected. Given that the quality of care provided by a hospital is

Without the cash flow coming in to medical facilities, the government would see this as a failure. With the cash market resting at $260 billion in the United States alone it is no wonder why this balance has to co-exist (Newswire Association, 2014). A shortage of doctors has already been anticipated by this new initiative, and means to pay cash has been a popular option among many individuals. With a fast paced society it is no wonder why citizens choose not to wait in long lines at the behest of insurance companies, or public health exchanges.

The Australian Institute of Health and Welfare (AIHW) states that chronic illnesses may not resolve on their own accord and require very intensive long-term care to manage (8). A survey conducted by the AIHW showed that from 2004-2005 over 7 million people were reported to have at least one chronic condition (8). Furthermore, the overall burden of illness to the Medicare system was estimated at $19 billion last year and is projected to increase to a whopping $23 billion by 2016 (9). Considering again that by definition a chronic illness is both ‘long term’ and ‘requires intensive long-term care’, and by combining these two statistics, we can see that the inclusion of allied health care for sufferers of chronic illness can pose a real burden on the Medicare scheme. In order to regulate Medicare claims for patients of allied health care professionals, Medicare Australia has implemented the use of a 5 treatment policy where the rebate is accepted if the patient has been referred by a General Practitioner (GP).

The cost of the health care industry has always been rising since the early 1980s. It has been a growing concern in both the industry and society. Massachusetts General Hospital (MGH) is no exception. Even though the average length of stay (LOS) for the patients in MGH has been declining (Exhibit 10), it is still the highest compared to their competitors (Exhibit 6). Besides the cost, there is no uniformity of process and standardization across different facilities and departments of the hospital. MGH lacks communication and coordination between the facilities.