Reimbursement Mechanisms Research Articles

An annotated bibliography on home care technologies.

Curtiss, F. R. (1984). Reimbursement dilemma regarding home health-care products and services. Am. J. Hosp. Pharm., August, 41(8), 1548–57.Reimbursement mechanisms for home health-care products and services are discussed in detail. The two major categories of the home health care industry—(1) skilled nursing, homemaker, and other services, and (2) equipment, supplies, and other products (including drugs)—are reimbursed by third-party payers differently. While prospective pricing of inpatient care encourages the growth of home-care services, government administrators are concerned about potential spending growth at time of ballooning deficits, and private health insurers are uncertain about coverage criteria. Nuances of Medicare coverage criteria and private insurance reimbursement for home health care services are described. Medicaid coverage of drugs and biologicals for home patients is also described. The Health Care Financing Administration (HCFA) is expected to clarify and restrict Medicare coverage and payment of home-care products, equipment, and supplies. Medical justification will probably become more specific with greater attention to patient diagnoses and prognosis of patient therapies. Per-case payment methods will be refined to encompass home care. The government and private insurance programs will move toward capitation payment methods under which institutions will have even greater incentives to develop sophisticated home-care programs to substitute for institutional care. L.A.M.

Prognosis for the autopsy.

Over the past three decades there has been a substantial decline of autopsy rates within community hospitals and academic medical centers. In the years after World War II the autopsy rate approached 50 percent. The current rate is 10 to 15 percent. In teaching hospitals the rates are generally higher (75 percent in 1960, 71 percent in 1970, 38 percent in 1980) than in community hospitals; however, the decline is dramatic for these hospitals as well. In view of this marked downward trend, coupled with uncertainties surrounding the restructuring of the payment system of medical care, we undertook this study to: (1) assess the current benefits derived from the autopsy; (2) identify those factors responsible for the decline; (3) analyze and project the potential impact of prospective reimbursement on the finance mechanisms for the autopsy; and (4) identify those steps most likely to reverse the current trend. As part of this study we conducted a survey of autopsy rates and reimbursement mechanisms within the hospitals in the Washington, D.C. metropolitan area. The word “autopsy” comes from Greek, meaning “a seeing for oneself.” The autopsy is a post-mortem medical examination for studying the pathologic changes present and determining the cause of death. The autopsy includes three kinds of examinations: an inspection of the external body; an examination and dissection of the internal organs and vital structures; and a microscopic examination of selected tissues. The extent of the autopsy varies according to the purpose for which it is performed. It may be limited to an external examination (as is done for some forensic cases); it may involve a limited dissection of specified organs; or it can consist of an extensive gross and microscopic evaluation. Incisions are limited to portions of the body which are not displayed during funeral

Alternatives to financing.

Comprehensive care for hemophilia patients has clearly demonstrated that it is cost effective and offers the patient a better, more active life. However, the cost of underwriting the core personnel has not been adequately addressed or resolved.Alternatives are presented which include a) federal or state support, b) third party reimbursement mechanisms, c) liaisons with blood programs and, d) cost overrides on product.

Health care institutions

The health care system in the United States has been altered by recent economic and political events, including a major recession and a retrenchment in federal nonentitlement spending programs. The economic recovery and the continuing high federal deficits prompt new questions about both the future expansion and the distribution of health spending. Long-term economic forecasts and public opinion polls suggest that health will consume a growing share of the national resources. Nevertheless, the level of health spending will not grow as rapidly as in the past, and the distribution of that spending may also change. Because of these changes, the growth in health spending will not guarantee the survival of existing institutions. New competitive forces and revised reimbursement mechanisms will lead to a redistribution of the health dollar, and this redistribution will create both risk and opportunity for America's important health care institutions and their health professionals.

Reimbursement dilemma regarding home health-care products and services

Reimbursement mechanisms for home health-care products and services are discussed in detail. The two major categories of the home health-care industry--(1) skilled nursing, homemaker, and other services, and (2) equipment, supplies, and other products (including drugs)--are reimbursed by third-party payers differently. While prospective pricing of inpatient care encourages the growth of home-care services, government administrators are concerned about potential spending growth at a time of ballooning deficits, and private health insurers are uncertain about coverage criteria. Nuances of Medicare coverage criteria and private insurance reimbursement for home health-care services are described. Medicaid coverage of drugs and biologicals for home patients is also described. The Health Care Financing Administration (HCFA) is expected to clarify and restrict Medicare coverage and payment of home-care products, equipment, and supplies. Medical justification will probably become more specific with greater attention to patient diagnoses and prognosis of patient therapies. Per-case payment methods will be refined to encompass home care. The government and private insurance programs will move toward capitation payment methods under which institutions will have even greater incentives to develop sophisticated home-care programs to substitute for institutional care.

Postgraduate preventive medicine: where do we stand today.

It appears that the specialty of preventive medicine is declining as a viable specialty, with inadequate numbers of practitioners and with a declining number of physicians entering residency training programs. However, additional data are needed to make rough estimates of the level of need in the future. Even without that data, we must begin to address the potential shortage in trained manpower, because there is a trend that cannot be ignored pointing to a potential shortage. Several points must be pursued. All medical students must be exposed to the excitement we all feel about preventive care. Our teaching programs in medical schools must be strengthened to assure that there is rigor in these programs and that the potential of preventive medicine is conveyed. It is imperative to examine the field to discover why so many of our self-designated specialists in preventive medicine are not board-certified. Obviously one reason could be that a hungry job market is taking individuals who have not been trained in preventive medicine; another reason could be that for some reason specialists in the field of preventive medicine may feel that board-certification is not necessary for their career goals. This issue raises many questions about the importance of academic training in preventive medicine. It also points to the importance of addressing mid-career training needs on the part of those self-designated specialists. The question of financing must be addressed as well. Efforts must be developed to assure that the preventive field is reimbursed by major third-party payors, Medicare and Medicaid. Perhaps through these reimbursement mechanisms a way could be found to provide, at least in part, resident stipends. In addition, other mechanisms must be developed to provide support for residents in training in preventive medicine. If as a people we are to fulfill our potential of healthiness and achieve the Objective For Health Promotion and Disease Prevention, we must have trained personnel to do the job.

Preferred Provider Organizations: Antitrust Aspects and Implications for the Hospital Industry

The hospital industry is currently undergoing a substantial transformation as a result of changes in third party reimbursement mechanisms and a tendency toward a more competitive economic environment. Hospital administrators will have to demonstrate substantial flexibility in considering and implementing innovative institutional arrangements to ensure survival in this time of austerity. The Preferred Provider Organization (PPO) is a recent development in the health care industry involving the selective contracting for health care services. This Article examines the role of section 1 of the Sherman Antitrust Act in scrutinizing the PPO for anticompetitive effects, considering the divergent requisites for competition in the health care sector. The Article also proposes a modified Rule of Reason for application to the PPO and other innovative cost containment arrangements in the industry and considers the implications of such flexible application of conventional antitrust principles for the future of the hospital industry.

Policy issues for cardiac rehabilitation programs.

Policy issues for cardiac rehabilitation programs.

Nursing's newly emerging social contract

Social contracts are the mechanisms by which society legitimizes professions and grants them authority and autonomy to carry out their functions. The nursing profession is currently renegotiating its contract with society in a manner which clearly reflects a change from physician dominance, and emphasis on ‘illness care’ to increased independent and autonomous functioning within a newly developing framework of nursing science which emphasizes ‘health care’. In return for their services, nurses are also negotiating for those benefits which historically they have not received. These include legitimization of their newly acquired autonomous role functions, and adequate reimbursement mechanisms and structures. When the contemporary role of the nurse is fully legitimzed, the impact on contemporary society and health care is likely to be enormous.

Overview of the Community Mental Health Centers Program from an evaluation perspective.

The 18-year Community Mental Health Center (CMHC) Program of the National Institute of Mental Health (NIMH) was a complex and ambitious social experiment. This review identifies nine of the major goals of the program and examines available evaluative information on how well each was achieved. The most significant achievements of the program include increasing the quantity and range of public mental health services. Equality of access to services was also improved but all inequities were not removed. Problems continue to exist in funding services on the basis of need, in providing services to chronic clients, and in coordinating services. Prevention efforts suffered from uncertainties and perhaps overly optimistic expectations. The achievements of the program are currently threatened by third-party reimbursement mechanisms, the loss of federal leadership and oversight, and the loss of a community orientation in public mental health services. A great deal can be learned from the achievements and the shortfalls of the CMHC program that may be useful in state and federal mental health planning.

Involvement of a state society of hospital pharmacists in third-party reimbursement for nondistributive services

The investigation by a state society of hospital pharmacists of the possibilities for third-party reimbursement for nondistributive services is described. A questionnaire was sent to all hospitals in the state to determine what nondistributive services were being performed that might qualify for third-party reimbursement. A committee was established to investigate what nondistributive services were being reimbursed separately and which nondistributive services had reimbursement potential, and to establish guidelines that hospitals might use in seeking reimbursement for these services. Of 150 hospitals in the state, 71 returned the questionnaire and 44 (62%) of those hospitals indicated that they offered at least one nondistributive service, but only two reported that they were receiving reimbursement. The committee found that there are two reimbursement mechanisms available to cover cost of nondistributive services: (1) direct billing of the third parties for the individual service, or (2) inclusion of the cost of the service with patient charges for drugs. After meeting with Blue Cross & Blue Shield, the major third-party payer in its state, the committee determined that BC & BS would reimburse the institution for the costs incurred in patient-care services plus an additional 13% overhead fee. In general, the cost of providing the nondistributive service should be reflected in the cost of the pharmacy operating budget, and reimbursement is made to the hospital rather than to the direct provider of the service. A statewide effort can help establish reimbursement procedures for nondistributive services and prevent duplication of efforts by individual institutions investigating reimbursement.

Independent reimbursement from third-party payers to nurse-midwives

The type of health care available, the manner in which it is provided, and the cost of providing care depend on the mechanism and amount of reimbursement to different providers from third-party payers. An analysis of reimbursement must consider what services would be covered, what amount would be reimbursed, and who would control the reimbursement process. The paper discusses the implications of differing payment mechanisms, analyzes precedents in nurse-midwifery reimbursement and current legislative proposals before Congress, and outlines suggested strategies to precipitate change. Without independent reimbursement, which is a cornerstone of independent practice, the freedom of nurse-midwives to engage in their chosen profession is seriously jeopardized.

Strategies for the reimbursement of short-term hospitals.

The form and amount of payment to suppliers is an important determinant of the output characteristics of any industry. Ordinarily, these payments are market prices that reflect industry demand and supply conditions. In the hospital industry, however, financing arrangements are complicated by the existence of public and private underwriters who purchase hospital services on behalf of their beneficiaries. Some of these third parties deal only with beneficiaries, leaving the fee­ for-service payment mechanism essentially unchanged. Others enter into direct contracts with the institutions, offering various methods of compen­ sation usually based on costs rather than on a predetermined schedule of service-specific charges. The purpose of this chapter is to contribute to the current debate regard­ ing the impact of these different payment strategies on industry perfor­ mance. Although most observers agree that the method of provider payment greatly affects the equity and efficiency of resource allocation in this industry, there is less agreement as to how poorly our current methods perform and how we can improve them. As the share of public payment for services increases, the importance of this debate grows. An understanding of the hypothesized impact of alternative reimbursement mechanisms, com­ plemented by empirical tests of these hypotheses, is an essential first step in developing sensible public policy in this area. This chapter examines present reimbursement mechanisms and assesses their implications for supplier behavior. In addition to the conceptual argu-

The Catch-22’s of Cost Containment

While exploring the problem of escalation of health care expenditures in urology and analyzing various means to curtail this escalation, we noted a recurrent problem relating to the negative incentives inherent in presently used reimbursement mechanisms. Proposed solutions to a particular problem usually are accompanied by new economic difficulties arising from the solution. A series of Catch-22’s are encountered in many different problems concerning economic health care delivery. We herein elucidate a number of these problems and propose a novel reimbursement system in which there are positive incentives provided to those urologists who make an honest effort at cost containment.

The application of diagnostic specific cost profiles to cost and reimbursement control in hospitals.

A system has been developed to generate hospital budgets based on the types of patients served. Several hundred classes of patients are defined according to clinical attributes such as diagnoses and surgical procedures, and for each class a profile of resources consumed is determined. The class definitions are based both on homogeneity of patient care processes as well as resource consumption. These profiles are expressed as revenues generated by charging departments and as costs both direct and indirect for all services. A methodology has been developed to associate all indirect costs with their source for each service included in the profile. From a forecast of patient load by class, budgets can be computed from the cost profiles and revenues determined from the charging profiles. Further analysis thus can include the effect of changes in case mix as well as changes in patient care processes. The effect on revenues of different reimbursement mechanisms can also be projected as a function of the case mix. The system is currently being implemented for demonstration and evaluation of the Yale-New Haven Hospital.

Cost and quality control of laboratory services: the New York City medicaid centralized laboratory proposal.

Faced with constantly increasing costs for the provision of laboratory services to Medicaid recipients, the New York City Department of Health last year attempted to implement a program to fundamentally restructure the organizational patterns and financing mechanisms of New York City's clinical laboratory industry. The program, based on competitive bidding, gave one laboratory in each of New York's five boroughs exclusive rights to process Medicaid lab samples and replaced presently existing fee-for-service reimbursement mechanisms with a unique system combining unit pricing and capitation. This paper outlines the principal provisions of the City's proposed contract, analyzes the underlying motivations of the City's decision, and describes the reactions of the existing laboratory service delivery system. In addition, the generic problems of implementing effective administrative techniques for cost and quality control of laboratory services are discussed.

Analyzing reimbursement mechanisms for resource development projects

A procedure for analyzing reimbursement mechanisms for natural resource development projects is presented and applied to a case study of a proposed water transfer project in Wyoming. The analytic framework presented consists of an impact matrix and a reimbursement matrix. Efficiency, equity, revenue‐raising ability, and administrative feasibility criteria are utilized to assess the reimbursement mechanisms in light of information displayed in the two matrices. Application of the analytic framework to the case study indicates its usefulness to state and regional planners responsible for project financing and reimbursement analyses. By utilizing separate impact and reimbursement matrices the framework described helps to distinguish between impacts of a project on groups within a region and how those groups might share in or be reimbursed for project and related costs. Also in contrast to conventional repayment analyses focusing primarily on user charges the framework permits consideration of a wide range of reimbursement mechanisms.

The Family Practitioner-Clinical Pharmacist Group Practice—A Model Clinic

The establishment, organization, and operation of a pharmaceutical component within a primary care facility is delineated. This setting allows the pharmacist an opportunity to provide innovative clinical services. A mechanism of reimbursement is suggested which rewards the pharmacist for performing functions not directly related to the dispensing activity. The indications are that this arrangement could be financially feasible for a group practice including a pharmacist and one or two physicians.

Direct and Indirect Financing of Family Planning Programs: Project Grants and Reimbursement Mechanisms

This article is an analysis of the likely consequences of one proposed mechanism for implementing new federal policy in the delivery of family planning services by tying the financing into state-administered public welfare systems, specifically through SSA Titles XIX and IV-A. These were amended by Congress in 1972 to provide federal reimbursements for 90% of all expenditures related to the offering, arranging and furnishing of family services and supplies. Title IV-A is intended primarily for support of social services; whereas Title XIX is intended for support of medical services. However, regulations permit financing of family planning medical services under Title IV-A. Under these regulations, the states must provide family planning services for all current AFDC recipients (married or unmarried, including sexually active minors) who want these services. The minimum number eligible for AFDC and at risk of unwanted pregnancy is probably an average of 1.8 million women. Table 1 presents the maximum annual income levels that families of 1, 2 and 4 could have in each state and still be potentially eligible for Title IV-A family planning services; Table 2, distribution of states according to annual family income cutoffs; Table 3, the estimated maximum number of women ages 15-44 at risk of unwanted pregnancy and potentially eligible under Title IV-A regulations. The number of eligible individuals under Medicaid (Title XIX) is smaller because elibility requirements are stricter. The future impact of these mechanisms cannot be gauged accurately because it depends on the ability and willingness of the states to utilize these reimbursement mechanisms effectively.

Decentralized socialism: medical care in Yugoslavia.

The health care system in Yugoslavia is based on the principles of reciprocity and solidarity, as regulated by constitutional provisions which guarantee medical care and use of health services as the basic right of all citizens. Medical care is organized on the basis of needs and resources of the society. Its funds are generated through individual contributions of citizens and sociopolitical, working, and other organizations which are accumulated into social insurance funds, for reimbursement of health institutions for the services they provide. Coordination among health institutions, associations of social insurance, and sociopolitical and other concerned organizations is regulated by law. Insured persons within their associations decide on the extent of medical care to which to subscribe and on all rights emanating from the insurance. There are several reimbursement mechanisms such as fee–for–service, capitation, and daily charges. Insured persons through their associations influence the administration of social insurance by means of specifying priorities in terms of certain needs and by deciding on specific contracts with health institutions. The emphasis in contract arrangements is placed on preventive services, home care services, and dispensary care, for which health institutions proportionally receive more money than for hospital services. This arrangement influences the pattern of organization of health institutions and health workers. The new type of institutions that are more and more dominant are integrated health services, so–called medical centers, which provide both preventive and curative services for the population they cover.