Toward a prospective payment system for ambulatory surgery

Area of Science:

• Health Economics
• Surgical Services Research
• Medicare Policy Analysis

Background:

• In 1985, ambulatory surgery represented a significant expenditure within the Medicare population.
• Cataract surgeries constituted a substantial portion of the total costs associated with same-day surgical procedures.

Purpose of the Study:

• To evaluate the financial implications of ambulatory surgery for the elderly Medicare population in 1985.
• To assess the feasibility of using diagnosis-related groups (DRGs) for a prospective payment system for ambulatory surgery.
• To explore alternative payment classification systems for ambulatory surgical services.

Main Methods:

• Analysis of hospital facility charges for ambulatory surgery in 1985.
• Evaluation of the applicability of diagnosis-related groups (DRGs) for ambulatory procedures.
• Review of newly developed ambulatory payment classification systems, including ambulatory visit groups and ambulatory patient groups.

Main Results:

• Total hospital facility charges for ambulatory surgery in 1985 were estimated at $1.8 billion.
• Diagnosis-related groups (DRGs) were deemed unsuitable for a prospective payment system due to medical DRG inclusion and significant charge variations.
• The study identified limitations in using existing DRG structures for ambulatory surgery payment models.

Conclusions:

• Diagnosis-related groups (DRGs) are not appropriate for a prospective payment system for ambulatory surgery in the Medicare population.
• The variability in procedure costs within DRGs hinders consistent application for payment purposes.
• Alternative systems like ambulatory visit groups and ambulatory patient groups warrant further investigation for ambulatory surgery payment.