In 1983 Congress adopted the most significant change in the Medicare program since its inception in 1965. Along with measures to ensure the solvency of the Social Security System into the next century, Congress approved a system of prospective payment for hospital inpatient services, whereby hospitals are paid a fixed sum per case according to a schedule of diagnosis related groups (DRGs). The program will be phased in over a four-year period that began October 1, 1983. Several types of hospitals and distinct part units of general hospitals are excluded from the system until 1985, when Congress will receive a report on a method of paying them prospectively. Information used to calculate the DRG rates was published September 1, 1983, as part of the interim final regulations. Other third party payers, such as state Medicaid systems and insurance companies, are considering converting to this method of payment, and several have adopted it. The implications for occupational therapy include a greater emphasis on reducing hospital length of stay, expanding outpatient care, increasing productivity, and a trend toward documentation and accounting consistent with computer technology.
Prospective payment systems are intended to motivate providers to deliver patient care effectively, efficiently and without over utilization of services.The concept has its roots in the 1960s with the birth of health maintenance organizations (HMOs). The HMO receives a flat dollar amount (i.e., monthly premiums) and is responsible for providing whatever services are needed by the patient. Thus, there is a built-in incentive for providers to create management patterns that will allow diagnosis and treatment of the patient as efficiently as possible. In contrast, conventional fee-for-service payment systems may create an incentive to add unnecessary treatment sessions for which the need can be easily justified in the medical record. There are only a few changes to make in the HMO model to describe the Medicare PPS systems for hospitals, skilled nursing facilities, and home health agencies. Instead of receiving a monthly premium to cover the whole family, the health care facility receives a single payment for a single Medicare beneficiary to cover a defined period of time or the entire inpatient stay. 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). Except for acute care hospital settings, Medicare inpatient PPS systems are in their infancy and will be experiencing gradual revisions. Some common characteristics of Medicare PPS are:
Medicare Hospital Outpatient PPS (OPPS) is not a "pure" PPS methodology consistent within the characteristics listed above because payment is made for individual evaluation and treatment visits. Following are summaries of Medicare Part A prospective payment systems for six provider settings.
A prospective payment system (PPS) is a term used to refer to several payment methodologies for which means of determining insurance reimbursement is based on a predetermined payment regardless of the intensity of the actual service provided.
It includes a system for paying hospitals based on predetermined prices, from Medicare. Payments are typically based on codes provided on the insurance claim such as these:[1] The PPS was established by the Centers for Medicare and Medicaid Services (CMS), as a result of the Social Security Amendments Act of 1983, specifically to address expensive hospital care. Regardless of services provided, payment was of an established fee. The idea was to encourage hospitals to lower their prices for expensive hospital care.
In 2000, CMS changed the reimbursement system for outpatient care at Federally Qualified Health Centers (FQHCs) to include a prospective payment system for Medicaid and Medicare.[2] Under this system, health centers receive a fixed, per-visit payment for any visit by a patient with Medicaid, regardless of the length or intensity of the visit. The per-visit rate for the Medicaid PPS is specific to the individual health center location. The rate is determined and updated by a financial accounting process conducted by State Medicaid agencies. The FQHC PPS rate for Medicare (previously called the All Inclusive Reimbursement Rate), in contrast, is fixed at the same level across different health centers. [3] [4] Aside from FQHCs, other entities that provide outpatient services to Medicaid patients, that are also paid by a PPS methodology include:
|