Question

what are the common forms of hospital payment system?

DRG and case rate

Prospective payment

CDM

all of the above?

Answer 1

Medicare beneficiaries enrolled in thetraditional fee-for-service program receive care in about 3,400 facilities that contract with Medicare to provide acute inpatient care and agree to accept the program’s predetermined payment rates as payment in full.1 Payments made under the acute inpatient prospective payment system (IPPS) totaled $105 billion and accounted for about 32 percent of Medicare spending in 2005. These payments provide about 20 percent of hospitals’ overall revenues. Medicare’s inpatient hospital benefit covers beneficiaries for 90 days of care per episode of illness, with a 60-day lifetime reserve. Illness episodes begin when beneficiaries are admitted and end after they have been out of the hospital or a skilled nursing facility for 60 consecutive days. In 2007, beneficiaries are liable for a deductible of $992 for the first hospital stay in an episode, and daily copayments— currently $248—are imposed beginning on the 61st day. As outlined in Figure 1, the IPPS pays per-discharge rates that begin with two national base payment rates—covering operating and capital expenses—which are then adjusted to account for two broad factors that affect hospitals’ costs of

furnishing care: • the patient’s condition and related treatment strategy, and

• market conditions in the facility’s location. Medicare assigns discharges to diagnosis related groups (DRGs), which group patients with similar clinical problems that are expected to require similar amounts of hospital resources. Each DRG has a relative weight that reflects the expected relative costliness of inpatient treatment for patients in that group.

PROSPECTIVE PAYMENT:-A Prospective Payment System (PPS) is a method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service (for example, diagnosis-related groups for inpatient hospital services).