In 1982 the tax equity and fis cal responsibility act

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reimbursed a fixed DRG specific amount for each patient treated. In 1982, the Tax Equity and Fis- cal Responsibility Act modified the Section 223 Medicare hospital reimbursement limits to include a case mix adjustment based on DRGs. In 1983 Congress amended the Social Security Act to include a national DRG-based hospital prospective payment system for all Medicare patients. The evolution of the DRGs and their use as the basic unit of payment in Medicare’s hospital reim- bursement system represent a recognition of the fundamental role which a hospital’s case mix plays in determining its costs. In the past, hospital characteristics such as teaching status and bed size have been used to attempt to explain the substantial cost differences which exist across hos- pitals. However, such characteristics failed to account adequately for the cost impact of a hospital’s case mix. Individual hospitals have often attempted to justify higher cost by contending that they treated a more complex mix of patients. The usual contention was that the patients treated by the hospital were sicker. Although there was a consensus in the hospital industry that a more complex case mix results in higher costs, the concept of case mix complexity had histori- cally lacked a precise definition. The development of the DRGs provided the first operational means of defining and measuring a hospital’s case mix complexity. The concept of case mix complexity The concept of case mix complexity initially appears very straightforward. However, clinicians, administrators and regulators have often attached different meanings to the concept of case mix complexity depending on their backgrounds and purposes. The term case mix complexity has been used to refer to an interrelated but distinct set of patient attributes which include severity of illness, risk of dying, prognosis, treatment difficulty, need for intervention, and resource intensity. Each of these attributes has a very precise meaning which describes a particular aspect of a hos- pital’s case mix. Severity of Illness. Refers to the extent of physiologic decompensation or organ system loss of function. Risk of Mortality. Refers to the likelihood of dying. Prognosis. Refers to the probable outcome of an illness including the likelihood of improvement or deterioration in the severity of the illness, the likelihood for recurrence, and the probable life span.
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4 Treatment Difficulty. Refers to the patient management problems which a particular illness pre- sents to the health care provider. Such management problems are associated with illnesses without a clear pattern of symptoms, illnesses requiring sophisticated and technically difficult pro- cedures, and illnesses requiring close monitoring and supervision. Need for Intervention. Relates to the consequences in terms of severity of illness that lack of immediate or continuing care would produce.
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  • Fall '18
  • Diagnosis-related group, DRGs

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