In the following sections on Medicare service use, these GOM groups are used to adjust overall utilization differences between pre- and post-PPS periods. The export option will allow you to export the current search results of the entered query to a file. The HMO receives a flat dollar amount (i.e., monthly premiums) and is responsible for providing whatever services are needed by the patient. The score represents the probability predicted by the model that the ith person has a particular attribute. Mortality rates for patients with the given conditions did not increase after PPS. However, because it contained incentives for hospitals to shorten stays and to choose the least expensive methods of care, PPS raised concerns about possible declines in the quality of care for hospitalized Medicare patients. Through prospective payment systems, each episode of care is assigned a standardized prospective rate based on diagnosis codes and other factors, such as patient characteristics or geographic region. There was a decline in average LOS for all SNF episodes from 69.9 days to 37.7 days. One continues to add dimensions until the K + l dimension is no longer significant according to the X2 criterion. Our case-mix groups are based on chronic health and functional characteristics and are independent of their state at admission to Medicare services. Prospective payment systems can help create a more transparent and efficient healthcare system by providing cost predictability and promoting equitable care. = 11Significance level = .750, Proportion of Hospital Episodes Resulting in Readmission, Probability (x 100) of Readmission in Interval, Expected Number of Days Before Readmission. Similarly, the other outcome measures evidenced no post-PPS declines in quality of care. (Part B payments for evaluation and treatment visits are determined by the, Primary diagnosis determines assignment to one of 535 DRGs. There was no change in discharges due to death which was 9.1 percent in both pre- and post-PPS periods, although patients who died in the hospital had shorter stays in the post-PPS period. Mortality rates declined for all patient groups examined, and other outcome measures also showed improvement. To export the items, click on the button corresponding with the preferred download format. These results are consistent with findings by other researchers (DesHarnais, et al., 1987). The case mix controls allowed us to examine this question. For example, all of the hospital episodes in our sample, whether they were the first, second or third hospitalization during the observation window, were included as an individual unit of observation. Schlenker, "Case-Mix, Quality, and Reimbursement Issues and Findings from Selected Studies of Long-Term Care." Management should increase the staff assigned to the supplemental pay section to insure adequate segregation of duties and efficiency of operations. These value-based care models promote doctors, hospitals, and other providers to work together to receive value-based reimbursements from CMS. Presented at the APHA Annual Meeting, New Orleans, Louisiana, October 20. Easterling. First, multivariate profiles or "pure types" are defined by the probability that a person in a given group or pure type has each of the set of characteristics or attributes. DesHarnais, S., E. Kobrinski, J. Chesney, et al. Because the PPS system has been introduced only recently, evaluations of the effects of the policy on Medicare beneficiaries have been limited. The earliest of the ACA's provisions related to provider reimbursement have slowed growth in fee-for-service payment levels. Hospital readmission rates were expected to increase after PPS in light of the incentives of PPS for hospitals to discharge patients as quickly as possible. We adjusted for differences in mortality as competing risks by employing cause elimination life table methodology. Hence a person who is 0.5 like the first profile and 0.5 like the second profile would have service use life tables that, likewise, are weighted combinations of the life tables for the first and second profiles. The study team chose patients admitted for one of five conditions: These conditions were chosen because they are severe and have high mortality rates. This section presents the results of the analyses of the pre- and post-PPS utilization of Medicare services experienced by the noninstitutionalized disabled elderly beneficiaries. Many aspects of our study are different from those of the other studies, although the goals are similar. This section discusses the service use patterns of hospital, skilled nursing facility (SNF) and home health agency (HHA) care experienced by the NLTCS chronically disabled community sample between 1982-83 and 1984-85. There were indications of service substitution between hospital care and SNF and HHA care. tem. 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. Of the hospital episodes with a subsequent SNF stay, there was a decline in the proportion of deaths for the one year observation period. In their analysis of the total Medicare population, Conklin and Houchens (1987) indicated that increases in 30-day mortality after PPS was due exclusively to increased case-mix severity of hospital admission. Prospec The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. discharging hospital. Pooling patients from the two periods to define the GOM groups enabled us to make case-mix-specific comparisons consistently across the two periods. ( 1986. Houchens. In addition, this file contains an urban, rural or a low density (qualified) area Zip Code indicator. Moreover, a particular concern was that the frail and disabled elderly would be disproportionately affected by the utilization changes resulting from the introduction of PPS. Table 6 presents the patterns of discharge for HHA episodes. In 1983 and 1984, post-hospital mortality rates were 5.9 percent at 30 days after the first hospital admission and 19.7 percent at one year after the first hospital admission. However, they might have been using non-Medicare nursing home services, or other Medicare services such as outpatient care, although, at the time of the selection of the 1982 and 1984 samples, persons in nursing homes were identified as a special subsample. DRG payment is per stay. First, we examined the proportion of hospital admissions that resulted in readmissions during the one year windows of observation. Second, for each profile defined in the analysis, weights are derived for each person, ranging from 0 to 1.0 (and summing to 1.0) reflecting the extent to which a given individual resembles each of the profiles. This can be done by examining the patterns of service use in the three major subgroups of the population as defined by the sample design of the 1982-1984 NLTCS. 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). In a further disaggregation of the total sample of disabled older persons, in which we examined changes of specific case-mix and post-acute care subgroups, we found statistically significant differences at the .05 level in only two cases. 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. We can describe the GOM model with a single equation. Proportions of episodes resulting in death in the observations periods were 12.1 % pre-PPS and 12.5% post-PPS. Disease severity was defined with the Disease Staging methodology and was used to form a patient classification system based on mortality risk. Tables of these patterns are found in Appendix B. Prospective Payment System: A healthcare payment system used by the federal government since 1983 for reimbursing healthcare providers/agencies for medical care provided to Medicare and Medicaid participants. Our analysis suggested that the overall patterns of hospital readmission risks were not different between the one year pre- and post-PPS observation periods. We benchmarked the analysis on hospital admission, rather than discharge, because we wanted to account for the possible effects of mortality in the hospital as a competing risk for hospital readmission. We discuss the GOM methodology in greater detail in the following section on statistical methodology. Humphrey Building, 200 Independence Avenue, SW, Washington, DC 20201. Sager and his colleagues also found that while mortality rates for Wisconsin's elderly population showed minimal variation during the study period (51.1/1000 in 1982 to 53.0/1000 in 1980) between 1982 and 1985, there was an increase of 26 percent in the rate of deaths occurring in nursing homes. Hence, this analysis embodied representative samples of each pair of hospital admissions (e.g., first and second, second and third, etc.) This departure from cost-based reimbursement However, the increase in six month institutionalization rates suggested that the patients entering nursing homes at discharge were not subsequently regaining the skills needed for independent living. In light of the potential effects of Medicare PPS on the utilization, costs and quality of care for Medicare beneficiaries, assessments of the effects of the new reimbursement policy have been of interest to the Administration and Congressional policy makers. The analysis also found significant changes in the proportions of hospital patients discharged home to self care and home health care. In general, our results on the impaired elderly are consistent with findings from other studies that examined PPS effects on the total Medicare population. Funds were also provided by the Health Care Financing Administration. A federal program that assigns fixed payments for services rendered to patients covered by Medicare, with adjustments based on diagnosis code and other factors. The payment amount is based on diagnoses and standardized functional assessments, but the payment concept is the same as in an HMO; the recipient of the payments is responsible for rendering whatever health care services are needed by the patient (with some exceptions). There can be changes to the rates over time due to several factors like inflation, inability to adjust and accommodate individual patients. Type II, which we will refer to as the "Oldest-Old," has many ADL and IADL problems with 72 percent being dependent in bed to chair transfers. 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. Distinct from prior studies which addressed the general Medicare population, our analysis focused on PPS effects on disabled elderly Medicare beneficiaries. The finding that admission rates to hospitals from SNFs, HHAs and the community declined between the pre- and post-periods, is also consistent with other studies results showing declining hospital admission rates for all Medicare beneficiaries (Conklin and Houchens, 1987). Doctors speaking about paperwork with hospital accountant. Moreover, SNF episodes for this group had an increase in the proportion that were discharged to the other settings. Gauging the effects of PPS proved to be challenging. If possible, bring in a real-world example either from your life or from . Section B describes the subgroups among the disabled elderly derived from the GOM analysis of pooled 1982 and 1984 NLTCS data. By default, clicking on the export buttons will result in a download of the allowed maximum amount of items. How Much Difficulty Does Respondent Have: Respondent Can See Well Enough to Read Newsprint. Measurements on each individual are predicted as the product of two types of coefficients--one describing how closely an individual's characteristics approximate those described by each of the analytic profiles or subgroups and another describing the characteristics of the profiles. In the following sections, we describe the data source, the analysis plan and the statistical methods employed in this study. With the prospective payment system, or PPS, the provider of health care, such as a hospital, receives one fixed payment for a particular type of care over a particular period of time. Stern, R.S. By following these best practices, prospective payment systems can be implemented successfully and help promote efficiency, cost savings, and quality care across the healthcare system. The .gov means its official. Second, we examined the risk of readmission as a function of duration of time after the initiating admission. Hence, the length of stay of a third hospital admission for a given beneficiary, for example, would enter the calculation of average hospital length of stay. As the entire Medicare program moves towards a risk assumption model and the financial performance of providers is increasingly put at risk, many organizations are re-engineering their data-integrity programs. Under PPS, hospitals receive a fixed amount for treating patients diagnosed with a given illness, regardless of the length of stay or type of care received. The DRG payment rate is adjusted based on age, sex, secondary diagnosis and major procedures performed. This analysis found a heterogeneous pattern of changes in mortality rates with small increases for high-risk medical admissions but marked decreases in mortality rates following hip or knee replacement and marked increases in mortality following coronary artery bypass graft surgery. Under cost-based reimbursement, patients' insurance companies make payments to doctors and hospitals based on the costs of the care provided to the patients. By establishing predetermined rates for medical services, they create a predictable flow of payments between providers and insurers. Finally, it is important to provide education and training for healthcare providers on how to use the system effectively. This helps ensure that providers are paid accurately and timely, while also providing budget certainty to both parties. 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. For this potentially vulnerable group, because of the detailed survey information, we will be able to control for detailed chronic health and functional status characteristics. However, the impact on mortality of discharge in unstable condition did not outweigh other quality improvements, because overall mortality fell. Finally, there was a marginally significant (p = .10) decrease in community episodes resulting in deaths. The prospective payment system rewards proactive and preventive care. However, since our objective in this study was to measure pre- and post-PPS changes in utilization, the application of a uniform definition for both study periods produced comparable measures for the two periods. Hospital Readmissions. Finally, the analysis was not specifically designed to evaluate the effects of PPS on the need for or use of "aftercare" in the community. Since the case-mix weights must add to one, adding up the weighted life tables must reproduce the life table for the total population, i.e., the population before stratifying by the case-mix weights. The high level of disability is associated with neurological diseases, including Parkinson's disease, multiple sclerosis and epilepsy. PPS was implemented at this hospital on January 1, 1984. Because of the recent introduction of PPS, relatively few evaluation results have been available to study its effects on Medicare service use and patients. 1987. Additionally, prospective payment systems simplify administrative tasks such as claims processing, resulting in faster reimbursement times. The contractor is directly responsible for complying with federal and State occupational safety and health (OSH) standards for its employees. That is, some hospital admissions result in death in the hospital; these cases would not be eligible for hospital readmission. By focusing on each episode of service use as a unit of observation, the analysis was able to include all episodes of the samples without benchmarking for a specific event, such as the first admission during the pre and post-PPS observation windows. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors. Per diem rate for each of four levels of care: Geographic wage adjustments determine the only variation in payment rates within each level. While differences in mortality were not statistically significant, they suggest an increase in hospital and SNF mortality and corresponding mortality decreases in HHA other settings. Hence, the readmission rates for each period are not confounded by possible differences in exposure to readmission because of differences in mortality risks between the two periods. This limitation affected our analyses of the patterns of no Medicare A service use episodes, i.e., "other" episodes. In an analysis similar to that for hospital readmissions, we examined the timing of death after hospital admission. = 11Significance level = .250, Proportion of Hospital Episodes Resulting in Death, Probability (x 100) of Death in Interval. For example, while persons who were "mildly disabled" experienced reductions in LOS (10.8 days to 8.2 days), persons who had "heart and lung" problems experienced virtually no changes in hospital LOS (10.5 days to 10.6 days). Several reasons can be suggested for the increase in HHA use. Each option comes with its own set of benefits and drawbacks. Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. Thus the HHA population has, in contrast to the SNF population, become more chronically disabled and even older. Defense Health Agency Learning Management System. Subgroup Patterns of Hospital, SNF and HHA. The authors pointed out that despite shorter stays and less rehabilitation, their results did not unequivocally demonstrate that patients were less ambulatory at hospital discharge, and that differences in the severity of comorbidity, for example, might have explained the differential referral rate to nursing homes in the two periods. There were no statistically significant differences before and after PPS in the patterns of hospital, SNF and HHA episodes. Other researchers, in contrast, addressed the PPS assessment issues using trend analysis strategies (DesHarnais, et al., 1987). The amount of the payment would depend primarily on the dis- "Characterized by multiple disabilities and impaired resilience during illness, this group of elderly is dependent on both short- and long-term care services and would seem potentially susceptible to health care policies that alter the interplay between hospital and post-hospital services.". The post-PPS period was the one-year window from October 1, 1984 through September 30, 1985. Key Findings Medicare's prospective payment system (PPS) did not lead to significant declines in the quality of hospital care. Please enable it in order to use the full functionality of our website. The study found that expected reductions in lengths of hospital stays occurred under PPS, although this reduction was not uniform for all admissions and appeared to be concentrated in subgroups of the disabled population. With a prospective system, hospitals would be at finan-cial risk if resource use exceeded the payment level. In summary, we did not find statistically significant changes in mortality patterns after hospital admissions (i.e., in hospital and after discharge to some other location). * Sum of discharge destination rates does not add to 100% because of end-of-study adjustments. They could include, for example, no services, Medicaid nursing home stays and Medicare outpatient care. 1987. Readmissions to hospitals were likely immediately following discharge, with 9-22 percent of the persons at risk of readmission in the tracer conditions being readmitted within 30 days of discharge, while the rate dropped to 4-9 percent for persons at risk of readmission beyond the period 30 days after discharge. In the fifth study, Fitzgerald and his colleagues studied the effects of PPS on the care received by hospitalized hip fracture patients. 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. Glaucoma and cancer are also prevalent in this group. In this way, comparisons between 1982-83 and 1984-85 patterns would include all hospital readmissions, rather than, for example, a "benchmark" first readmission during the observation window. Comment on what seems to work well and what could be improved. Overall, the schedules of hospital readmissions in the two time periods were not statistically different. Significant differences were detected for this group in terms of lower rates of being admitted from the community directly to HHA services and higher rates of dying in "other" types of episodes. They may also increase the risks that hospital patients are discharged inappropriately and have to be readmitted. A higher rate of other episodes terminating in deaths among the oldest-old suggests that Medicare service use changed for this group. Table 11 presents the patterns of service use for the "Severely Disabled" group, which was characterized by heavy ADL dependency, neurological problems, stroke, and senility. Thus, the benefits of prospective payment systems are based on shifting the risk of treating a population of patients to the provider, formulating a fair payment structure that encourages providers to deliver high-value healthcare. Operations Management questions and answers Compare and contrast the various billing and coding regulations which ones apply to prospective payment systems. The results are consistent with observations noted in the health care economics literature, regarding bed shortages, incentives for vertical integration, and . Note that the orientation starts a 0 when the OpMode . By providing a more predictable payment structure for hospitals, prospective payment systems have created an environment where providers can focus on delivering quality care rather than worrying about reimbursement rates. The proportion of deaths occurring in the first 30 days in the hospital increased from 75 percent in 1982-83 to 88 percent in 1984-85--a 17 percent change between the two periods. A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. Managed care organizations also known as MCOs produce revenue by effectively allocating risk. For example, for hospital episodes there was a large decline in the "Severely ADL Dependent" (i.e., from 20.3% to 16.9%) but increases in the "Oldest-Old" and "Heart and Lung" suggesting an increase in the medical acuity of the population with a significant reduction in seriously impaired persons with less medical acuity. One expected result of reductions in hospital admissions, as a result of the "channeling effects" would be a more severe case-mix of hospital admissions.