The impact of capital payment options under Medicare prospective payment. An ECRI technology management assessment

In view of the upcoming legislative deadline for inclusion of capital costs within the Medicare prospective payment system, both public and private-sector entities have scrutinized various capital payment options and debated key issues relating to appropriate overall payments for capital costs, the nature of the mechanism for allocating payments to hospitals, and the method for transition from the present to the new capital payment system. The new capital payment policy will play an important role in future hospital capital decisions and technology levels. This report describes the nature and magnitude of hospital capital costs, examines alternative proposals for reflecting capital costs in the Medicare prospective payment system, and details each alternative's impact, incentives, and disincentives.