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The Medicare prospective payment system.

S J Scott

    The American Journal of Occupational Therapy : Official Publication of the American Occupational Therapy Association
    |May 1, 1984
    PubMed
    Summary
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    Congress enacted a new Medicare prospective payment system in 1983, paying hospitals fixed amounts per case based on diagnosis-related groups (DRGs). This significant change impacts hospital operations and occupational therapy services.

    Area of Science:

    • Healthcare Policy
    • Health Economics
    • Hospital Administration

    Background:

    • The Medicare program underwent a major reform in 1983, introducing a prospective payment system for hospital inpatient services.
    • This system replaced the previous retrospective payment model with a fixed sum per case, utilizing diagnosis-related groups (DRGs).

    Purpose of the Study:

    • To outline the significant legislative changes in Medicare's payment structure implemented in 1983.
    • To describe the phased implementation of the prospective payment system and its initial exclusions.
    • To highlight the potential implications of this new payment model for healthcare providers, particularly occupational therapy.

    Main Methods:

    • The study describes the legislative action taken by Congress in 1983 to reform Medicare payments.

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  • It references the publication of interim final regulations containing information for calculating DRG rates.
  • It notes the consideration and adoption of similar payment methods by other third-party payers.

    • Main Results:

    • A new prospective payment system based on diagnosis-related groups (DRGs) was established for Medicare hospital inpatient services.
    • The system commenced a four-year phase-in period starting October 1, 1983.
    • Certain hospital types were initially excluded, with a review scheduled for 1985.

    Conclusions:

    • The implementation of the Medicare prospective payment system represents a fundamental shift in healthcare reimbursement.
    • This reform is expected to influence hospital practices, encouraging shorter lengths of stay and increased outpatient services.
    • Occupational therapy services will likely see a greater focus on productivity, efficiency, and technologically integrated documentation.