Rewarding Provider Performance Aligning Incentives in Medicare (2007) / Chapter Skim
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Appendix A: Selected Medicare Prospective Payment Systems
Appendix A: Selected Medicare Prospective Payment Systems
Pages 143-152
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Appendixes 143
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A Selected Medicare Prospective Payment Systems ACUTE CARE HOSPITALS, INPATIENT The inpatient hospital prospective payment system (PPS) , which was established in 1983, uses a preset payment schedule based on a patient's principal diagnosis at discharge, comorbidities, and complications.
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146 APPENDIX A cover the costs of the average case. The impact of the hospital inpatient PPS on the quality of hospital care is unclear.
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APPENDIX A 147 tal scan. The per diem base payments are adjusted for geographic differences in labor costs.
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148 APPENDIX A Lacking a sophisticated case mix adjustment that accurately reflects the likely resource needs of the patient, providers have an incentive to decrease the number of visits per episode and to increase the number of episodes per patient. The impact of the payment system can be seen during the transition period, between 1997 and 2002: the average visits per episode dropped from 36 to 19 and the average length of stay from 106 to 56 days (MedPAC, 2005d)
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APPENDIX A 149 viders that home dialysis is more costly to provide or that patients find it less desirable. The dialysis program has its own quality improvement organizations that have documented improvements in care between 1999 and 2003, but it is too soon to tell whether recent changes in the payment system have had any effect on this trend.
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150 APPENDIX A Since the system is based on paying per service provided, it tends to penalize rather than reward physicians who use fewer resources or services to achieve a given level of quality or outcome (Wilensky, 2005)
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