Inquiry J Health Car
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Inquiry J Health Car · Jan 1987
An analysis of methods to reform Medicare payment for physician services.
Congress and the administration are changing Medicare's method of paying for physician services, with the intention of reducing the growth in or absolute level of Medicare payment rates. We analyzed the implications of four possible strategies for payment reform: modifications to the present system of paying by customary, prevailing, and reasonable (CPR) charges; payment based on fee schedules; payment for packages of related services; and capitation payment. ⋯ The inherent danger is that constraining program expenditures may impair access to and quality of care to beneficiaries, especially for poor or infirm people, who are more vulnerable. Thus, any payment reform will require careful monitoring to safeguard beneficiaries' quality of care.
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Inquiry J Health Car · Jan 1987
The distributional implications of using relative prices in DRG payment systems.
Decisions by state Medicaid programs and other third-party payers to use DRGs as the basis of hospital payment require the resolution of numerous technical design issues, including determining relative price schedules, that are likely to have important distributional implications for payers and hospitals. At issue is the development of price schedules that reflect average resource use in the populations using DRG reimbursement. An examination of differences between the Medicare relative prices and other relative prices based on different populations in New York State revealed that significant cross-subsidies among payers and hospitals would occur if Medicare relative prices were used as the basis of payment for patients outside the Medicare program. Such unintended cross-subsidies would compromise a major goal of DRG payment: to reduce "inequitable" charge and cost differentials among third-party payers.