Health care financing policy for hospitalized rheumatology patients

The federal Medicare Diagnostic Related Group (DRG) prospective payment model is changing hospital payment. Currently many states are using DRG prospective "All Payor Systems" for hospital reimbursement. 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 January 1, 1988. This study simulated DRG All Payor methods on a sample (N = 298) of rheumatology patients for a 3-year period using both federal and New York DRG reimbursement now in effect. Both Medicare and Medicaid patients had (on average) a longer hospital length of stay and total hospital cost compared to patients from Blue Cross and other commercial payors. All payors (i.e., Medicaid, Blue Cross, Medicare and commercial insurors) generated significant financial risk under the DRG All Payor scheme. If these findings are replicated at other hospitals, rheumatology patients could suffer a decline in both access and quality of care.