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Final regulations on Medicare prospective pricing
Abstract:
The final regulations implementing the Medicare prospective pricing system, published by the Health Care Financing Administration in January 1984, are reviewed. The regulations differ from the proposal published in September 1983 in that payments for "outlier" cases and the regional standardized payment amounts were reduced. Also, hospitals were granted a bit more flexibility in billing Medicare beneficiaries under certain conditions. Five functions of peer review organizations that will monitor this system are also described: (1) admissions review, (2) outlier review, (3) procedure review, (4) DRG validation, and (5) quality review. Hospital pharmacy managers need to be aware of the financial incentives inherent in these recent hospital reimbursement changes.
Insights
New Medicare prospective pricing system regulations from 1984 reduced outlier payments and standardized amounts. Hospital pharmacy managers must understand these financial incentives and peer review organization functions.
Area of Science:
- Health Care Administration
- Health Economics
- Hospital Management
Background:
- The Health Care Financing Administration published final regulations for the Medicare prospective pricing system in January 1984.
- These regulations represented a modification of the September 1983 proposal.
Purpose of the Study:
- To review the final Medicare prospective pricing system regulations.
- To highlight key changes from the proposed regulations.
- To inform hospital pharmacy managers about financial implications.
Main Methods:
- Review of the final Medicare prospective pricing system regulations published in January 1984.
- Comparison with the proposed regulations from September 1983.
- Description of the five functions of peer review organizations.
Main Results:
- Reduced payments for "outlier" cases and regional standardized payment amounts compared to the proposal.
- Increased flexibility for hospitals in billing Medicare beneficiaries under specific circumstances.
- Defined five functions for peer review organizations: admissions, outlier, procedure, DRG validation, and quality review.
Conclusions:
- Hospital pharmacy managers must be aware of the financial incentives associated with these Medicare reimbursement changes.
- Understanding the peer review organization functions is crucial for navigating the system.