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A comparison of hospital performance under the partial-payer Medicare PPS and state all-payer rate-setting systems
1Graduate Program in Health and Medical Services Administration, Widener University, Chester, PA 19013.
Abstract:
Although the passage of PL 98-21 was accompanied by a flurry of interest in all-payer rate regulation, the popularity of all-payer systems has waned recently. This article attempts to determine if the move away from all-payer systems constitutes a lost opportunity. The performance of the partial-payer Medicare PPS is contrasted with that of the all-payer systems in Maryland and New Jersey. The analysis suggests that all-payer systems not only control costs more effectively than partial-payer systems, but also have inherent structural features conductive to limiting cost shifting and to funding uncompensated care. Analysis of data suggests that from the perspectives of payers, providers, and patients, all-payer rate-setting is more equitable than partial-payer systems.
Insights
All-payer rate-setting systems offer superior cost control and equitable care funding compared to partial-payer systems. Moving away from these comprehensive models represents a significant lost opportunity in healthcare finance.
Area of Science:
- Health Policy
- Healthcare Economics
- Public Health
Background:
- The popularity of all-payer rate regulation has declined despite initial interest following PL 98-21.
- Recent trends show a move away from comprehensive all-payer systems towards partial-payer approaches.
Purpose of the Study:
- To evaluate whether the shift from all-payer systems represents a lost opportunity in healthcare cost containment and equity.
- To compare the performance of all-payer systems with partial-payer systems.
Main Methods:
- Comparative analysis of healthcare payment systems.
- Contrasting the performance of Medicare's partial-payer prospective payment system (PPS) with all-payer systems in Maryland and New Jersey.
Main Results:
- All-payer systems demonstrate more effective cost control than partial-payer systems.
- All-payer systems possess structural advantages for limiting cost shifting and funding uncompensated care.
- Data analysis indicates all-payer rate-setting is more equitable for payers, providers, and patients.
Conclusions:
- The move away from all-payer rate-setting may be a missed opportunity for better healthcare cost management and equitable care provision.
- All-payer systems offer a more equitable and effective framework for healthcare financing compared to partial-payer models.