Inpatient_PPS - MedicareMedicaidProspective...

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Medicare-Medicaid Prospective  Payment Systems for Inpatients: An Introduction
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Retrospective vs. Prospective  Payment Systems Retrospective – costs, charges and  reimbursement to the hospital increase  as the LOS increases Prospective – costs and charges  increase as the LOS increases, but the  reimbursement does not increase  because it is fixed or pre-established
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Prospective Payment Systems MS-DRGs (Medicare Severity- Diagnosis Related Groups) RBRVS (Resource Based Relative  Value Scale) ASCs (Ambulatory Surgery Centers) APCs (Ambulatory Payment  Classification)
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Prospective Payment Systems RUGS (Resource Utilization Groups) HHRGs (Home Health Resource  Groups) CMGs (Case Mix Groups) MS-LTC-DRGs (Medicare Severity- Long Term Care-Diagnosis Related  Groups) IPFs (Inpatient Psychiatric Facilities)
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Medicare Reimbursement History Prior to prospective payment Cost-based payment Reasonable cost Cost of services Per-diem cost
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Why Move to Prospective  Payment? Incentive for hospitals to operate more efficiently Prior 3 years Medicare payments had increased 19% or 3 times the overall rate of inflation The deductible for beneficiaries continued to increase Healthcare costs were on the rise—draining the Medicare Trust Fund No money available for Medicare to fund other programs Hospital payment greatly varied from hospital to hospital for the same services Eliminate burdensome reporting requirements
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Concept of Prospective Payment Demonstration Projects in 1972 Establish payment rates in advance (prospective) and apply as “fixed” Rates not automatically determined by the hospital’s past or current actual cost Payment is payment in full Hospital retains profit or loss Create an incentive for cost control Connecticut, Maryland, Massachusetts, New Jersey, New York, Rhode Island, Washington, and Wisconsin
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Results of Demonstration  Projects Prospectivity was effective in reducing the rate of increase in hospital costs Small rural hospitals required special exceptions Case mix levels must be considered Hospital costs could be controlled while still providing adequate reimbursement
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Legislation Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) Extensive changes to Medicare Mandated the implementation of a PPS for inpatient facilities Adopted classification system from New Jersey’s demonstration project Diagnosis Related Groups (DRGs) Implemented 10/01/1983
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Original DRGs Under the original DRG system, there  were approximate 500 DRGs that  reflected a split based upon the  presence or absence of a CC Severity was really not addressed
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IPPS: MS-DRGs Inpatient Prospective Payment System (IPPS) Acute care facility Excludes Psychiatric unit Long term care unit
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Inpatient_PPS - MedicareMedicaidProspective...

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