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Impact of diagnosis-related groups' prospective payment on utilization of medical intensive care
M Ahmad1, L Fergus, P Stothard
1Division of Medicine and Finance, Cleveland Clinic Foundation.
Abstract:
We examined the financial impact of diagnosis-related groups (DRGs) payment for Medicare patients receiving medical intensive care and looked for any change in the type of patients admitted to the medical intensive care unit (MICU) after one year's experience with DRGs. During 1984, payment for 267 Medicare patients receiving medical intensive care at a large, multispecialty referral hospital was calculated to be $2.6 million below cost, representing an average loss per discharge of $9,794. For those who died (42 percent), the average payment per case was $11,418 below the average per discharge cost. In 1985, 241 Medicare patients treated in the MICU showed an average loss per discharge of $14,113, which rose to $20,271 for those who expired (39.4 percent). There was no significant difference in mortality between the two groups and in type of patients per DRG assignment (p = 0.56 and p = 0.88, respectively) by Chi-squared test. Despite the 1984 DRG experience, there was no change in admission practices or utilization of MICU beds during 1985. Appropriate management responses are needed from both the Federal government and the medical profession for better utilization of MICU resources.
Insights
Diagnosis-Related Groups (DRGs) significantly impacted Medicare patients in medical intensive care units (MICUs), causing substantial financial losses for hospitals. Despite a year of DRG experience, MICU admission practices and patient types remained unchanged.
Area of Science:
- Health Economics
- Healthcare Management
- Critical Care Medicine
Background:
- Diagnosis-Related Groups (DRGs) are a payment system used by Medicare.
- Medical Intensive Care Units (MICUs) provide critical care for severe illnesses.
- Understanding the financial implications of DRGs on MICU operations is crucial for resource management.
Purpose of the Study:
- To assess the financial impact of DRG payments on Medicare patients in MICUs.
- To determine if DRG implementation altered patient admission patterns or MICU bed utilization.
Main Methods:
- Retrospective analysis of financial data for Medicare patients admitted to an MICU in 1984 and 1985.
- Comparison of costs versus payments under the DRG system.
- Chi-squared tests to analyze mortality rates and patient types by DRG assignment.
Main Results:
- In 1984, DRG payments were $2.6 million below cost for 267 Medicare MICU patients, averaging a $9,794 loss per discharge.
- In 1985, the average loss per discharge increased to $14,113 for 241 Medicare MICU patients.
- No significant changes in mortality rates or patient types admitted to the MICU were observed between 1984 and 1985.
Conclusions:
- DRG payments resulted in significant financial losses for MICU care of Medicare patients.
- The initial year of DRG experience did not alter MICU admission practices or bed utilization.
- Strategic management responses are necessary to optimize MICU resource allocation under the DRG payment system.