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Excluded facility financial status and options for payment system modification.

J E Schneider1, J Cromwell, T P McGuire

  • 1Department of Health Services and Policy Analysis, University of California, Berkeley.

Health Care Financing Review
|December 4, 1993
PubMed
Summary
This summary is machine-generated.

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Modifying the Tax Equity and Fiscal Responsibility Act (TEFRA) reimbursement system is crucial as facilities face declining profits. Rebasing target amounts with a blend of own and national costs is recommended for financial stability.

Area of Science:

  • Health economics
  • Healthcare policy
  • Reimbursement systems

Background:

  • Facilities for psychiatric, rehabilitation, long-term care, and children operate under the Tax Equity and Fiscal Responsibility Act (TEFRA) of 1982.
  • Increasing numbers of TEFRA facilities and discharges coincide with declining average profit rates.

Purpose of the Study:

  • To analyze the financial trends within TEFRA facilities.
  • To propose modifications to the TEFRA reimbursement system to address declining profitability.

Main Methods:

  • Simulations of alternative payment systems were conducted.
  • Analysis focused on rebasing target amounts and adjusting cost-sharing mechanisms.

Main Results:

  • Rebasing target amounts using a 50/50 blend of own costs and national average costs is proposed.

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  • Increasing cost sharing above the target amount, with greater government loss sharing, is suggested.

    • Conclusions:

    • The proposed modifications aim to improve the financial viability of TEFRA-participating facilities.
    • Adjusting reimbursement structures is essential for the sustainability of specialized healthcare facilities.