Changing the Rules of the Reimbursement Game

Abstract

Recently enacted federal and state legislation reflect a gradual transition from cost-based reimbursement to rate-based reimbursement for hospital services; the implications of this trend for hospital pharmacists are discussed. Under "The Tax Equity and Fiscal Responsibility Act of 1982," Medicare hospital reimbursement is limited based on total hospital costs, effective for the 1983 fiscal reporting period. In addition, a target limit of costs for each hospital will be computed and hospitals will have positive and negative incentives to keep costs below this amount. These reimbursement changes calculate limits on the basis of costs per case, not costs incurred. These changes increasingly require hospitals to share in the risk of expenditures attributed to use of services. For hospital pharmacists, this means that the focus is changing from maximizing revenue from drug products to controlling unnecessary use and reducing departmental expense. Clinical pharmacy services will survive only if they are shown to be cost effective. Hospital pharmacists cannot afford to ignore the changing patterns of reimbursement; the consequences of unpreparedness and inaction may be decreased budgets and the relegation of hospital pharmacy practice to assembly-line economics.