Hospital Payment Rate

costs by the total annual number of inpatient days and outpatient visits to obtain a per episode

If the patient's presenting problem required hospitalization, the patient would receive a minimum of two separate bills, one from their physician for medical consultation during the hospital stay and one from the hospital for the use of hospital services. If the presenting problem required additional diagnostic procedures or multiple therapeutic interventions, the patient would receive a bill from each consulting physician as well as charges for all ancillary services used, such as pathology laboratory, radiology, etc. Each time the patient sees a different physician or other provider, he or she has to re-tell the story of the presenting problem. From the provider standpoint, he or she has to follow-up on each additional

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

Since 1984, Medicare patients have been serviced under the prospective payment system of the Medicare program. Under this system, primary care providers are reimbursed for their services using a fixed payment for each patient that is determined by the patient’s diagnosis-related group at the time of the admission. Therefore, under the prospective payment system a hospital’s reimbursement is unaffected by the actual expenditures that are required to care for a patient.

Historically, payment in the outpatient physical therapy setting has been based on billed therapy units (BTUs), billing that is based on minutes and correlated with a Current

The place of service can greatly affect reimbursement, depending on the type of service provided and the location. The reason being is that Medicare typically reimburses physicians based on a method called Relative Value Units (RVUs), which has three components: work,

| Prospective Payment System (PPS) first began in 1980 with a small number of hospitals partitioned into three groups according to their budget positions---breakeven, surplus, and deficit--- prior to the imposition of DRG payment (Diagnosis- related group). The PPS as DRG’s had been designed to limit the share of hospital revenues derived from the Medicare program budget, and in spite of doubtful results in New Jersey, it was decided in 1983 to impose DRG’s on hospitals nationwide.

“The Tax Equity and Fiscal Responsibility Act (TEFRA), signed into law September 3, 1982, mandated the development of a prospective payment methodology for Medicare reimbursement to hospitals.” http://sunlightfoundation.com/blog/2009/09/08/slug/. It changed Medicare reimbursement from a fee for service to prospective payment system. Which is where there`s a reimbursement method where`s there an amount of payment determined in advance of services being performed. The rates are done annually. Reimbursements for inpatient care by a classification scheme called diagnosis-related groups. If the patient might have to stay longer in inpatient care more than average days, the hospital may lose money on that patient.

The Inpatient Prospective Payment System is based on CMS (Medicare) standards because it is the largest reimburser. It was created to control rising healthcare costs by determining reimbursement prospectively. The costs of inpatient acute hospitals stays under Medicare Part A are fixed so that each patient case aligns with a Diagnosis Related Group (DRG).

Diagnosis related group (DRG) is a category a patient is assigned in correlation with the ICD – 9 codes. This information is the basic determining inpatient reimbursement for Medicare, Medicaid, and many other insurance carriers. Each code has a payment grid assigned to it based on location and cost of living factors. If the DRG code is wrong it can be considered fraud or the professional may not get paid properly.

When the pilot was conducted, Harbrecht and Latt (2012) state that the monthly care management fee, that was used to pay physician fees, was calculated by “multiplying the number of […] patients in each practice by the per member per month (PMPM) case management fee (pg. 2011).” To avoid discrepancy and to remain consistent throughout the financial process, each plan supported the same payment models, payment schedules, and administrative procedures adhering to the standards set forth by the National Committee for Quality Assurance (NCQA).

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).

Conversely, fluctuating fee schedules also attribute to external influences that drive change. The topic of fee schedules are a substantial category of any healthcare reform bounced around the headlines at this time. Essentially, fee schedules are subject to what each state determines as sufficient for each diagnosis and associated treatment. “The fee schedule for many states hovers around 50 percent above the Medicare reimbursement rate. That state’s reimbursement rate under its fee schedule is just over 130 percent of the Medicare rate. That anomaly sends a message regarding both the competitiveness of the Medicare rate in Illinois and the related ease of obtaining medical services at that reimbursement level”. (Stahl, 2013). Fee schedule

6. A fee schedule is a complete listing of fees that is used by Medicare to pay the doctors and or other providers, and suppliers. This listing of fee maximums is used to reimburse a doctor or other provider on a fee-for-service basis. Centers for Medicare and Medicaid Services developed fee schedules for physicians, clinical laboratory services, and durable medical equipment, as well as many other things. The Physician Fee Schedule pays for certain services that are provided by physicians and other healthcare professionals in all areas of service. These services include surgial proceduresm diagnostic tests, certain preventive services, and office visits. Payments are based upon the relative resources typically used to provide the service.

Develop payment strategies to reduce unwarranted price variation, such as reference or value pricing (e.g., analysis of price variation among network providers by procedure and service types, pilot value pricing programs,