Reimbursement Mechanisms Research Articles

Deconstructing the Columbia/HCA investigation.

Every issue raised by the current investigation into the business practices of Columbia/HCA serves as a signpost for the progress and problems inherent in market-driven health care reform. Actions against Columbia/HCA by regulators reveal deeply rooted resistance to the profit-motivated reforms embodied in the company's philosophy: the public's reluctance to accept necessary reductions in excess hospital capacity; the legal and cultural obstacles to the overdue alignment of physician and hospital economic interests; and the myriad reimbursement and accounting problems involved in the vertical integration of health care delivery. The investigation also underscores the antiquation of the reimbursement mechanisms and control systems in place for financing the delivery of care to Medicare beneficiaries.

Reimbursement for Nurse Practitioner Services

Whether a nurse practitioner (NP) is employed by a medical practice or is self-employed, the reimbursement policies of third-party payers will determine whether an NP continues to provide care on a long-term basis. The payers--Medicare, Medicaid, indemnity insurers, and managed care organizations--each have their own reimbursement policies and fee schedules, and each operates under a separate body of law. Some payers have a history of reimbursing for NP services in the same manner as they reimburse for physician services. On the other hand, some payers have recently begun to reimburse NPs directly, either as separate and apart from an employment relationship with a physician practice or following NP-specific rules and policies regarding reimbursement. This article offers basic information necessary to communicate with practice managers, billing experts, and the payers about reimbursement mechanisms and problems. It covers how to set up provider relationships with the various payers, how to submit bills, and how to deal with denial of reimbursement when it occurs.

Capitation Contracts: Opportunities for Successful Partnerships

Increasing dominance of capitation as a reimbursement mechanism to providers from health plans and integrated health systems presents opportunities. Managed care contracting for services has become more competitive, and the complexity of risk-based contracts is explored in the article. Through understanding the elements of risk and flow of funds, providers can define terms to protect against undue risk. Additionally opportunities for partnership with medical groups and institutions can be achieved.

Paying the Price for Heightened Ethics Scrutiny: Legal Defense Funds and Other Ways That Government Officials Pay Their Lawyers

This article takes a comprehensive look at a problem of growing significance for government officials: how to pay the legalfees they incur when they or their colleagues are investigated for wrongdoing. Since Watergate, an increasing number of government officials have had to hire attorneys when called before grand juries and legislative committees or subjected to internal administrative investigations. Their legalfees often outstrip their government salaries or even their net worth. This article examines three existing mechanisms for government reimbursement of legal fees-Justice Department regulations, the Independent Counsel statute, and private legislation-and identifies the shortcomings of each. It then explores the legal status of legal defense funds, which top officials have used to raise millions of dollars to pay their legal fees. Finally, the article identifies several reforms that would treat government officials much more fairly and protect against corrupting influences.

Information Pediatricians Need About Early Intervention

There is a perception that pediatricians are not always fully aware of either the services offered (e.g., eligibility criteria and state entitlement) or the system requirements (e.g., reimbursement mechanisms) of early intervention. We used a focus group format with a follow-up survey to pediatricians to identify potential barriers to early referral to early intervention and information or training needs of pediatricians as they relate to the early intervention system. Training needs were identified as knowledge based or practice based, indicating specific information about the early intervention system or specific skills, competencies, or attitudes of the physicians. It was recommended that early intervention programs develop outreach mechanisms to educate local pediatricians to attain a supportive and knowledgeable collaboration.

Managed care, capitation, and the future of nephrology.

Within the next decade, it is predicted that more than 90% of the United States population will receive its health insurance through managed care. Capitation will be the reimbursement mechanism to health care providers as the major way of controlling costs. Currently, managed care has had little experience with capitation payments for chronically ill patients, who consume large financial and physical resources. The end-stage renal disease (ESRD) population represents a vulnerable group of patients, and their care may be compromised in a capitated environment. Nephrologists will need to serve as advocates for ESRD patients through a mechanism of quality of care, driven by a continuous quality improvement model. Cost-effective delivery of care will occur as nephrologists join together to form Independent Practice Associations (IPAs). In this article, the role of a nephrologist in a capitated environment is outlined in detail, and background for the basis of managed care growth is provided as a framework for understanding the change in our health care delivery system. After formation of a nephrology IPA, there will most likely be a linkage with a management service organization (MSO). A business plan driven by the highest principles will allow nephrologists to work together as a cohesive force in accepting global risk capitated contracts. The starting point is for ESRD care, and the future includes pre-ESRD care.

‘Fit for purpose’ contractual relations: determining a theoretical framework for construction projects

Contractual relations encompass the contractual terms within a governing relationship; typically this comprises: the relationship, the risk apportionment, the division of responsibilities and the reimbursement mechanism. In the Western construction industry these have traditionally surrounded arms-length/adversarial discrete contracts. Recent moves to foster collaboration have confused the ‘end’ with the ‘means’ and thus will not maximize the business objectives. This article considers a range of ‘fit-for-purpose’ contractual relations which, when appropriate, can be linked with positive measures to foster collaboration. Consequently this effects the risks and responsibilities prescribed in the contract which, when appropriately aligned, will ensure business success.

Physician Reimbursement Mechanisms as Social Constraints: An Historical Critique of Douglass North's Theory of Institutional Evolution

Douglass North, in his seminal workInstitutions, Institutional Change, and Economic Performance, defined institutions as “the humanly devised constraints that shape human interaction,” existing within a hierarchical continuum ranging—in order of increasing formality—from taboos, customs, and traditions to more formal constraints such as individual contracts, specific bylaws, common laws, statutes, and constitutions. According to North, institutions evolve as piecemeal economic reactions to the high transaction costs attending greater social complexity. This article tests North's theory against an evolving system of humanly devised constraints: society's mechanism for reimbursing physicians. After examining eight reimbursement systems that range from primitive to complicated—(1) Zinacantan, Mexico, (2) Confucian China, (3) ancient Rome, (4) colonial America and seventeenth-century Britain, (5) the “guild free choice” model, (6) private third-party insurance, (7) government insurance, and (8) HMOs and managed care—I conclude that a “top-downward” model provides a better explanation of physician reimbursement constraints than does North's “bottom-upward” model.

Impact of an all-inclusive diagnosis-related group payment system on inpatient utilization

OBJECTIVES. Although case-based payment is one of the main reimbursement mechanisms for hospitals, little is known about its effects in the general population. Prior studies have focused on Medicare or on all-payer systems in particular states. This study estimates the effect of a prospective payment system based on diagnosis-related groups (DRGs) nationwide in the Department of Veterans Affairs. METHODS. Multiple regression analysis was used to estimate the effect of Department of Veterans Affairs's diagnosis-related group system separately for 22 diagnoses. The dependent variables were length of stay, inpatient days per patient, and discharges per patient. Covariates included patient, hospital, and area characteristics. RESULTS. Department of Veterans Affairs's

Hospital Reimbursement Incentives: An Empirical Analysis

Reimbursement systems for health‐care providers are very complex, like the production systems that they regulate. This complexity has led to some important misperceptions about the incentive consequences of major reimbursement reforms. One example is the prospective payment system (PPS), developed to provide “high‐powered” incentives through fixed prices for hospital admissions for the US elderly. In fact, various features of the DRG system allow reimbursement to vary with actual treatment decisions during an admission, and so are not prospective. This paper develops a general method for measuring actual reimbursement incentives in complex regulated price systems. The method uses regression techniques with variance decompositions to quantify the effects of particular features of the payment system on prospective and retrospective cost sharing, as well as overall generosity of payments. I apply this method to microdata on 20 percent of Medicare hospital admissions in 1987 and 1990 to summarize the incentives created by PPS in practice, and how the incentives are evolving over time. I show that PPS involves limited and decreasing cost sharing with hospitals, most of which is not prospective. The reimbursement incentives vary substantially across diagnoses, demographic groups, and types of intensive treatments, possibly with important implications for hospital behavior and medical expenditure growth. The techniques developed here can be used to analyze a broad range of provider reimbursement mechanisms.

Women's Health Issues and Counseling Behaviors: A Pilot Survey of West Virginia Pharmacists

Objective: To assess the counseling behaviors of pharmacists concerning women's health issues. Design: A 14-item survey was mailed to 1,050 pharmacists. Data were analyzed using descriptive statistics (frequency and cross-tabulation). An IBM-compatible microcomputer program, Epi Info Version 5, was used for data analysis. Stratified analysis of the data was conducted using chi-square testing. Correlation between selected variables was determined using statistical analysis software. Setting: West Virginia. Participants: Two hundred seven practicing West Virginia pharmacists who completed or partially completed the questionnaire. Outcome Measures: The degree and nature of counseling by West Virginia pharmacists pertaining to women's health issues. Results: Almost 77% of the pharmacists were engaged in community practice. Seventy-four percent (151/203) of pharmacists counsel women about healthcare issues at least sometimes during a typical week. Women most often initiate the interaction. Sixty-nine percent were somewhat comfortable counseling women. The most common topics discussed were vaginal infections and estrogen replacement therapy. The most common barriers to effective counseling were time constraints and lack of patient requests. Almost 33% of the pharmacists (n = 68) agreed that academic curricula inadequately prepared them to counsel women. If reimbursement mechanisms were available, 36% of pharmacists (n = 70) would charge up to $5 per session. Sixteen percent (n = 32) would charge no fee. Conclusions: The small sample size and design of the survey could affect interpretation of the study results. Future research should address the specific types of counseling performed and the methods used, the practice setting and its influence on counseling, curricular influences on counseling, and pharmacist reimbursement philosophy.

The resource utilization groups system of nursing home reimbursement policies: influences on occupational therapy practice.

This study explored the effects of federal and state reimbursement mechanisms on occupational therapy practice in the nursing home setting, specifically, the selection and scheduling of patients for treatment programs, the content of the therapy provided, and the documentation requirements. A questionnaire developed for the study was mailed to the chief occupational therapist in each of the 171 nursing homes located in New York city. Descriptive data on the research variables were collected from 83 respondents. Government regulation and reimbursement mechanisms specifically affected therapists' treatment decisions and patient programming and scheduling in the nursing home setting. Survey results described the clinical impact of the resource utilization groups (RUGs) data collection periods. Negative effects were seen in a substantial incidence of withholding therapies from patients and the decline in the use of some traditional occupational therapy treatments. Positive effects included an increase in staff and equipment and therapists' improved documentation skills. Occupational therapy practitioners in the nursing home setting need to find ways to live with the realities of government reimbursement without compromising professionalism or clinical judgment. Documentation is the key to assuring that patients receive the therapy they need. Therapists should be aware of the regulations, document accordingly, and review those cases that were denied reimbursement to learn of documentation errors.

Barriers to compliance with OBRA'90 regulations in community pharmacies.

To identify which barriers have been most significant to community pharmacists in their ability to comply with the Omnibus Budget Reconciliation Act of 1990 (OBRA'90) regulations during its first year of implementation. Mailing of a two-page survey in April 1994. Four hundred randomly selected community pharmacies in the Commonwealth of Massachusetts. Of 400 pharmacies surveyed, 156 surveys were completed and returned for analysis. Barriers that were considered most significant to pharmacies surveyed in their ability to implement OBRA'90 regulations were excessive workload, lack of financial compensation, and patients' attitudes. Of least significance were inadequate knowledge about drugs, inadequate references, and store layout. Almost half the responding pharmacists indicated that OBRA'90 regulations had not affected or changed their practice, one-quarter of the pharmacists believed their practice was less rewarding after OBRA'90, and about one-fifth believed it was more rewarding. Community pharmacists in Massachusetts are making an attempt to comply with OBRA'90, but there are specific barriers that are affecting their ability to do so. The OBRA'90 regulations appear to have had little impact on the practice of most community pharmacies. Community pharmacy management needs to examine (1) expanded roles of supportive personnel to give pharmacists more time to spend counseling patients, (2) reimbursement mechanisms for cognitive service, and (3) approaches to educating patients about these changes in the pharmacy profession.

Nutritionists In The Field Of Genetics: Their Roles, Reimbursement Procedures, And Educational Needs

LEARNING OUTCOME: To identify training, and reimbursement mechanisms available to nutrition personnel serving genetics patients.The Nutrition Management Committee of the Southeastern Regional Genetics Group (SERGG) conducted a national survey of 157 nutritionists involved in providing nutrition services to individuals with genetic disorders treated by dietary intervention. The purpose of this survey was to identify and characterize the level of clinical expertise, professional roles, reimbursement strategies, and future education needs of these professionals. The response rate was 57% (n=89). Of these, 99% were registered dietitians and 40% had state licensure. Although final degrees ranged from bachelor to doctorate degrees, the majority (62%) had master degrees and 21% had advanced certification in a specialty area. The respondents' roles were equally divided between acute and long-term care. Direct reimbursement was received by only 18%; 35% received indirect reimbursement and 26% participated in a packaged reimbursement system for nutrition services. Direct encounters (face-to-face procedures) were billed by half of those surveyed. Indirect encounters (non-face-to-face procedures) were felt to be of equal importance, especially for follow-up and monitoring. However, few reported reimbursement for indirect encounters, indicating a need for greater awareness of the crucial role of the nutritionist in the prevention of morbidity and mortality in many genetic disorders. Survey results documented the nutritionists' perceived need for further education in a variety of forms. The majority expressed the need for short-term training (no more than 1-2 weeks) due to demanding work schedules. The results of this survey document the important role of the specialized nutritionist in the field of genetics, and the desire among this group of professionals for more educational and reimbursement opportunities.

Differentiation and Specialization in the California Hospital Industry 1983 to 1988

This article examines changes in the service mix of California hospitals as part of their response to shifts in the system of reimbursement between 1983 and 1988. The Hospital Discharge Data Set and the Annual Hospital Disclosure Report produced by California Office of Statewide Health Planning and Development were used in this study. Characteristics of inpatient hospital services in California before and after the introduction of new reimbursement mechanisms (including the Medicare Prospective Payment System [PPS] and the growth of selective contracting plans) were compared. The factors that influence two measures of hospital service mix, one focusing on specialization and the other on differentiation, were studied. The factors included hospital characteristics and changes in hospital reimbursement. Variables describing a hospital's service mix and the level in its market were constructed from data in the annual discharge abstracts. Data pertaining to average hospital costs and reimbursements under the Medicare PPS were drawn from a file containing a 20% sample of hospital stay records for the year of PPS. Other hospital data, such as ownership and bed size, were taken from the California Annual Disclosure Report data set. The results indicate that completion among hospitals tended to increase differentiation whereas higher financial PPS pressure is associated with increased specialization. Hospitals tend to adopt some high visibility services offered by their competitors while filling market niches selectively overall. It also appears that the cost savings expected for specialization may prevail only for narrowly defined services. Study of subsequent data sets should show whether the cost containment strategies used by the hospitals to achieve these results have been maintained over a period of sustained financial pressure.

Case management in home total parenteral nutrition: a cost-identification analysis.

Home parenteral nutrition (HPN) requires intensive medical case management by practitioners with expertise in the provision of nutrition support. There is expenditure of considerable time and resources for management of these patients not covered by any of the traditional reimbursement mechanisms. The costs associated with this unreimbursed input and follow-up are most often borne by the Nutrition Support Team or individual practitioners. Reimbursement by home care agencies to physicians for management of patients after discharge cannot be done because this may be construed as a "kick-back" for referral of patients to particular home care agencies. Time and costs associated with management of HPN patients after discharge from the hospital were assessed using a cost-identification analysis of 24 different factors. Daily activity logs were kept by the Nutrition Support Team members over a 2-week period. Costs of space and furnishings were calculated. On average, a total of 25 h/d was spent by members of the Nutrition Support Team on our HPN patients. Variable activities accounted for 5640.1 hours of time with fixed support at 890.3 hours. This computes to a total annual personnel cost of $168,482 ($1982 per patient). If costs of furnishings and space are also included, the overall cost of all resources was $175,989 per year or $2070 per patient. Significant and currently nonreimbursed costs are involved in HPN patient management. These costs are most often absorbed by the Nutrition Support Team and should be considered when evaluating total costs of HPN.

Home care reimbursement for intravenous ganciclovir therapy.

Variability in reimbursement for home i.v. ganciclovir therapy among three types of payers was investigated. A survey was developed to estimate reimbursement for drug and medical supplies and nursing services associated with preparing i.v. ganciclovir and administering it to persons with cytomegalovirus (CMV)-associated retinitis in the home care setting. The questionnaire was mailed to 45 home health care agencies and 11 nursing agencies. Of the 56 surveys mailed, 26 (46%) were returned and considered usable. Of the 26 respondents, 22 were home health care companies, 4 were nursing agencies, 22 served patients covered by managed care or state assistance that reimbursed on a per diem basis, and 9 did not provide care to fee-for-service patients. The mean total daily reimbursement rate (for ganciclovir, supplies, and nursing services) from managed care per diem plans was $137.69 per patient, compared with $129.18 from fee-for-service plans and $72.68 from state assistance per diem plans. The dissimilarity may have been due to geographic variations in reimbursement and different mechanisms of reimbursement. Providers of home i.v. ganciclovir therapy for persons with CMV retinitis received the highest mean total daily reimbursement from managed care per diem plans, followed by fee-for-service plans and state assistance per diem plans.

The ethical neutrality of prospective payments: justice issues.

The U.S. healthcare system has been subject to unprecedented scrutiny over the past three years; one of the results of this scrutiny has been recognition of the serious problems that exist in both healthcare delivery and reimbursement mechanisms. While the verbal debate in Washington has essentially ceased, within the healthcare community a historic shift has taken place in the way healthcare reimbursement is structured: increasingly, traditional fee-for-service reimbursement methods are being replaced with capitation reimbursement methods. While this phenomenon originated on the West Coast, it has spread to all geographic sectors of the United States in varying degrees and can be expected to dominate the funding patterns of healthcare over the next decade.

The Economic Survival of Pediatric Practice

Many aspects of pediatric practice in the future are unclear. Among them is how pediatricians will be reimbursed. Based on trends established during the past 10 years, capitation is a likely mechanism. The advantages and disadvantages of capitation as a reimbursement mechanism--particularly as it compares with fee for service--are discussed, and a simplified description of how capitation rates are set is included.

The Acute and Long-term Care Interface: Integrating the Continuum

Acute and long-term care traditionally have been distinctly different health care services, separated by reimbursement mechanisms, types and numbers of providers, and overall approach to the management of chronic illness. Considerable effort has been made of late, primarily due to financial incentives, to integrate these two levels of care into a "seamless" continuum. Barriers to such an integration process must first be identified. Physician and other health care providers will need to develop the tools and resources necessary to manage frail, chronically ill patients in settings other than the traditional acute care hospital, as well as to develop information systems that allow communication to flow easily between all levels of care. As subacute or transitional care becomes a central piece of a health care delivery system, those tools become critical to the provision of quality, integrated care.