Health care financing policy for hospitalized pulmonary medicine patients

Several federal bodies provide ongoing analyses of the Medicare DRG prospective hospital payment system. Many states are using DRG prospective "all payor systems" for hospital reimbursement (based on the federal model). In All Payor Systems, Medicare, Medicaid, Blue Cross and other commercial insurers pay by the DRG mode; New York State has been All Payor since 1/1/88. This study simulated DRG All Payor methods on a large sample (n = 1,662) of pulmonary medicine patients for a two-year period using both federal and New York DRG reimbursement now in effect at our hospital. Medicare patients had (on average) a longer hospital length of stay and total hospital cost compared to patients from Medicaid, Blue Cross, and other commercial payors. Medicare patients also had a greater severity of illness compared to patients from Blue Cross Medicaid or other payors. All payors, however, (Medicaid, Blue Cross, Medicare and commercial insurers) generated significant financial risk under the DRG All Payor scheme. These data suggest that federal, state, and private payors may be underreimbursing for the care of the hospitalized pulmonary medicine patients using the DRG prospective hospital payment scheme. Health care financing policy, as demonstrated in this study, may limit both the access and quality of care for many pulmonary medicine patients in the future.