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Medicare program; changes to the inpatient hospital prospective payment system; and fiscal year 1985 rates--HCFA.
Abstract:
This final rule amends the Medicare regulations published as an interim final rule on September 1, 1983 (48 FR 39752) and a final rule on January 3, 1984 (49 FR 234). Those regulations implement section 1886 of the Social Security Act, which changes the method of payment for inpatient hospital services from a cost-based, retrospective reimbursement system to a prospective payment system based on diagnosis-related groups. In addition, in the addendum to this final rule, we are making changes in the methods, amounts, and factors necessary to determine prospective payment rates for Medicare inpatient hospital services applicable to discharges occurring on or after October 1, 1984, in the case of the Federal portion of the payment, and effective with hospital cost reporting periods beginning on or after October 1, 1984, in the case of the hospital-specific portion. These changes are applicable in the second year of the three-year transition period for the prospective payment system. We are also implementing in this final rule certain changes in the inpatient hospital prospective payment system resulting from the enactment of Pub. L. 98-369 on July 18, 1984.
Insights
This final rule updates Medicare regulations for inpatient hospital services, shifting from cost-based to diagnosis-related group (DRG) based prospective payment systems. Changes affect payment rates for the second year of the transition period.
Area of Science:
- Health Policy
- Healthcare Management
- Medical Economics
Background:
- The Medicare program previously used a cost-based, retrospective reimbursement system for inpatient hospital services.
- Amendments to Section 1886 of the Social Security Act mandated a transition to a prospective payment system.
Purpose of the Study:
- To finalize amendments to Medicare regulations concerning inpatient hospital services payment.
- To implement changes in prospective payment rates for the second year of the transition period.
- To incorporate legislative changes from Public Law 98-369 into the inpatient hospital prospective payment system.
Main Methods:
- Amending existing Medicare regulations published in interim and final rules.
- Revising methods, amounts, and factors for determining prospective payment rates.
- Implementing legislative mandates impacting the payment system.
Main Results:
- Established a prospective payment system based on diagnosis-related groups (DRG) for inpatient hospital services.
- Updated payment rates effective October 1, 1984, for Federal and hospital-specific portions.
- Incorporated changes resulting from Public Law 98-369.
Conclusions:
- The finalized rule governs the second year of the prospective payment system transition.
- The changes aim to standardize and control costs for Medicare inpatient hospital services.
- The diagnosis-related group (DRG) system is the foundation for prospective Medicare payments.