Effect of a prospective payment method for health facilities on direct medical expenditures in a low-resource setting: a paired pre-post study.

Almost all sub-Saharan countries have adopted cost-reduction policies to facilitate access to health care. However, several studies underline the reimbursement delays experienced by health facilities, which lead to deficient implementation of these policies. In April 2016, for its free care policy, Burkina Faso shifted from fee-for-service (FFS) paid retrospectively to FFS paid prospectively. This study tested the hypothesis that this new method of payment would be associated with an increase in direct medical expenditures (expenses covered by the policies) associated with deliveries. This paired pre-post study used data from two cross-sectional national surveys. Observations were paired according to the health facility and the type of delivery. We used a combined approach (state and household perspectives) to capture all direct medical expenses (delivery fees, drugs and supplies costs, paraclinical exam costs and hospitalization fees). A Wilcoxon signed-rank test was used to test the hypothesis that the 2016 distribution of direct medical expenditures was greater than that for 2014. A total of 279 pairs of normal deliveries, 66 dystocia deliveries and 48 caesareans were analysed. The direct medical expenditure medians were USD 4.97 [interquartile range (IQR): 4.30-6.02], 22.10 [IQR: 15.59-29.32] and 103.58 [IQR: 85.13-113.88] in 2014 vs USD 5.55 [IQR: 4.55-6.88], 23.90 [IQR: 17.55-48.81] and 141.54 [IQR: 104.10-172.02] in 2016 for normal, dystocia and caesarean deliveries, respectively. Except for dystocia (P = 0.128) and medical centres (P = 0.240), the 2016 direct medical expenditures were higher than the 2014 expenses, regardless of the type of delivery and level of care. The 2016 expenditures were higher than the 2014 expenditures, regardless of the components considered. In the context of cost-reduction policies in sub-Saharan countries, greater attention must be paid to the provider payment method and cost-control measures because these elements may generate an increase in medical expenditures, which threatens the sustainability of these policies.

Optimal hospital payment rules under rationing by waiting.

We derive optimal rules for paying hospitals for non-emergency care when providers choose quality and capacity, and patient demand is rationed by waiting time. Waiting for treatment is costly for patients, so that hospital payment rules should take account of their effect on waiting time as well as on quality. Since deterministic waiting time models imply that profit maximising hospitals will never choose to have both positive quality and positive waiting time, we develop a stochastic model of rationing by waiting in which both quality and expected waiting are positive in equilibrium. We use it to show that, although a prospective output price gives hospitals an incentive to attract patients by raising quality and reducing waiting times, it must be supplemented by a price attached to hospital decisions on quality or capacity or to a performance indicator which depends on those decisions (such as average waiting time, or average length of stay). A prospective output price by itself can support the optimal quality and waiting time distribution only if the welfare function respects patient preferences over quality and waiting time, if patients' marginal rates of substitution between quality and waiting time are independent of income, and if waiting for treatment does not reduce the productivity of patients. If these conditions do not hold, supplementing the output price with a reward linked to the hospital's cost can increase welfare, though it is possible that costs should be taxed rather than subsidised.

Are cost differences between specialist and general hospitals compensated by the prospective payment system?

Prospective payment systems fund hospitals based on a fixed-price regime that does not directly distinguish between specialist and general hospitals. We investigate whether current prospective payments in England compensate for differences in costs between specialist orthopaedic hospitals and trauma and orthopaedics departments in general hospitals. We employ reference cost data for a sample of hospitals providing services in the trauma and orthopaedics specialty. Our regression results suggest that specialist orthopaedic hospitals have on average 13% lower profit margins. Under the assumption of break-even for the average trauma and orthopaedics department, two of the three specialist orthopaedic hospitals appear to make a loss on their activity. The same holds true for 33% of departments in our sample. Patient age and severity are the main drivers of such differences.

Trends and regional variation in rates of orthopaedic surgery in Germany: the impact of competition.

Competition in hospital services has been fostered in an increasing number of OECD countries with the goal that hospitals improve quality and/or efficiency. With the same intention competition has been promoted in Germany when introducing a system of prospective payments based on diagnosis-related groups (DRGs) in 2003. Beyond its intended effects, however, the reform led to a substantial increase in hospital activity, particularly for orthopaedic surgery. To shed more light on these developments, this paper analyses the relationship between the rates of certain orthopaedic surgical procedures and hospital competition across and within each of Germany's 402 districts. We measured competition with the Herfindahl-Hirschman Index (HHI) based on market shares for hip replacements, knee replacements and spine surgeries. Using spatial panel regression, which allows for spatial dependency and unobserved individual heterogeneity, we found that the rate of hip and knee replacements rose as market concentration increased. A potential explanation might be that hospitals specialize in these particular procedures.

Hospital responses to price shocks under the prospective payment system.

Under the prospective payment system (PPS), hospitals receive a bundled payment for an entire episode of treatment based on diagnosis-related groups (DRG). Although there is ample evidence regarding the impact of the introduction of the PPS, there is little research on the effects of the ensuing changes in payment levels under the PPS. In 2005, the Medicare PPS changed its definition of payment areas from the Metropolitan Statistical Areas to the Core-Based Statistical Areas, generating substantial area-specific price shocks. Using these exogenous price variations, this study examines hospital responses to price changes under the PPS. The results demonstrate that, while the average payment amount significantly increases in the affected areas, no parallel trend is observed in admission volume, treatment intensity, and quality of services. Conversely, hospitals facing a price increase are more liable to the perverse incentives that the PPS is known to encourage, namely, selecting or shifting patients into higher-paying DRGs. These results suggest that paying a higher price for a given service may not induce hospitals to offer services of better quality, but can rather prompt even higher payments through other behavioral responses.

Propensity score-matching analyses on the effectiveness of integrated prospective payment program for patients with prolonged mechanical ventilation.

OBJECTIVES: An integrated delivery system with a prospective payment program (IPP) for prolonged mechanical ventilation (PMV) was launched by Taiwan's National Health Insurance (NHI) due to the costly and limited ICU resources. This study aimed to analyze the effectiveness of IPP and evaluate the factors associated with successful weaning and survival among patients with PMV. METHODS: Taiwan's NHI Research Database was searched to obtain the data of patients aged ≥17 years who had PMV from 2006 to 2010 (N=50,570). A 1:1 propensity score matching approach was used to compare patients with and without IPP (N=30,576). Cox proportional hazards modeling was used to examine the factors related to successful weaning and survival. RESULTS: The related factors of lower weaning rate in IPP participants (hazard ratio [HR]=0.84), were older age, higher income, catastrophic illness (HR=0.87), and higher comorbidity. The effectiveness of IPP intervention for the PMV patients showed longer days of hospitalization, longer ventilation days, higher survival rate, and higher medical costs (in respiratory care center, respiratory care ward). The 6-month mortality rate was lower (34.0% vs. 32.9%). The death risk of IPP patients compared to those non-IPP patients was lower (HR=0.91, P<0.001). CONCLUSIONS: The policy of IPP for PMV patients showed higher survival rate although it was costly and related to lower weaning rate.

Association Between a Centrally Reimbursed Fee Schedule Policy and Access to Cataract Surgery in the Universal Coverage Scheme in Thailand.

Importance: Uptake of cataract surgery in developing countries is much lower than that in developed countries. Cataract unawareness and financial barriers have been cited as the main causes. Under the Universal Coverage Scheme (UCS), Thailand introduced a central reimbursement (CR) system for cataract surgery. It is unknown if this financial arrangement could incentivize service provision (private or public) in areas that are hard to reach. Objective: To examine the association between the CR policy and access to cataract surgery in Thailand. Design, Setting, and Participants: Using time series analysis, hospitalization data during 2005 to 2015 for UCS members were analyzed for time trends and subnational variations in the cataract surgery rate (CSR) before and after the CR implementation. Main Outcomes and Measures: The annual growth in access was estimated using segmented regression. The CSR gap across regions was determined by the slope index of inequality (SII). Unequal access across districts was represented by the gap between the top and bottom quintiles. Results: During 2005 to 2015, a total of 0.98 million UCS members (mean [SD] age, 67.4 [11.2] years; 58.7% female) received cataract surgery. The number of cases increased from 77 897 in 2005 to 192 290 in 2015. At the national level, the CSR per 100 000 population increased from 352.0 to 378.7 cases in 2005 to 2008, to 716.3 cases in 2013, and then to 765.3 cases in 2015. With the use of mobile services through an exclusive CR, 3 private hospitals took the lead in service growth, sharing 79.2% of cases in the private sector in 2009. From 2010, the number of cases in public hospitals grew yearly by 12.6% to 13.6% until 2012, rose 21.7% in 2013, and then the rate of increase declined to that of 8.2% to 8.3% in 2014-2015. During the periods of an increase in overall access, the CSR gap across regions widened as indicated by the SII of 755.4 cases per 100 000 population in 2010 because of rapid uptake in areas with mobile services. When the national CSR became adequately large and mobile services were discouraged in 2013, the gap in 2014-2015 narrowed. Conclusions and Relevance: This study found that the appropriate payment and service designs helped reduce the cataract surgery backlog. With an adequately high CSR, Thailand is on track to reach the VISION 2020 goal, aiming for blindness elimination by the year 2020, which has been achieved by most developed countries.

Payment Reform and Health Disparities: Changes in Dialysis Modality under the New Medicare Dialysis Payment System.

OBJECTIVE: To evaluate the effect of the Medicare dialysis payment reform on potential disparities in the selection of peritoneal dialysis (PD) for the treatment of end-stage renal disease (ESRD). DATA SOURCES: Centers for Medicare & Medicaid Services (CMS) ESRD Medical Evidence Form, Medicare claims, and other CMS data for 2008-2013. STUDY DESIGN: We examined the association of patient age, race/ethnicity, urban/rural location, pre-ESRD care, comorbidities, insurance, and other factors with the selection of PD as initial dialysis modality across prereform (2008-2009), interim (2010), and postreform (2011-2013) time periods. PRINCIPAL FINDINGS: Selection of PD increased among diverse patient subgroups following the payment reform. However, the lower PD selection observed with older age, black race, Hispanic ethnicity, less pre-ESRD care, and Medicaid insurance before the reform largely remained in the initial postreform years. CONCLUSIONS: Despite recent growth in PD, there may be ongoing disparities in access to PD that have largely not been mitigated by the payment reform. There is potential for modifying provider financial incentives to achieve policy goals related to cost and quality of care. However, even with a substantial shift in financial incentives, separate initiatives to reduce existing disparities in care may be needed.

Comparison of Primary Care Physician Reimbursement Rates in the United States.

With a growing shortage of physicians, particularly primary care physicians, the issue of adequate pay in Hawai'i is increasingly important. Anecdotal reports of low pay in Hawai'i have rarely been substantiated. Data from FAIR Health, a company that tracks private insurance reimbursement rates, is compared across the United States (US) for the CPT code 99213. In addition, FAIR Health and Medicare rates are compared for cities with both similar and disparate cost of living to Hawai'i. Hawai'i is in the second lowest quintile for payment in the US for private insurances, and providers are reimbursed significantly lower than in cities with similar cost of living by both Medicare and private insurances. Methods for increasing payment to physicians in Hawai'i are essential to recruiting the necessary workforce. Revising payment methodologies that increase pay for services in areas of unmet need, revising Medicare Geographic Price Cost Indices to better balance pay in areas of need, and making use of the 10% Medicare Bonus Program for physicians working in Health Professions Shortage Areas are first steps to creating a sustainable plan for physician payment in the future.

Surgical Patient Safety Outcomes in Critical Access Hospitals: How Do They Compare?

PURPOSE: The aim of the study was to examine whether Critical Access Hospitals (CAHs), the predominant type of hospital in small and isolated rural areas, perform better than, the same as, or worse than Prospective Payment System (PPS) hospitals on measures of quality. METHODS: The Healthcare Cost and Utilization Project State Inpatient Databases and American Hospital Association annual survey data were used for analyses. A total of 35,674 discharges from 136 nonfederal general hospitals with fewer than 50 beds were included in the analyses: 14,296 from 100 CAHs and 21,378 from 36 PPS hospitals. Outcome measures included 6 bivariate indicators of adverse events (including complications) of surgical care developed from the Agency for Healthcare Research and Quality's Patient Safety Indicators. Multiple logistic regression models were developed to examine the relationship between hospital adverse events and CAH status. FINDINGS: Compared with PPS hospitals, CAHs are significantly less likely to have any observed (unadjusted) adverse event on 4 of the 6 indicators. After adjusting for patient mix and hospital characteristics, CAHs perform better on 3 of the 6 indicators. Accounting for the number of discharges eliminated the differences between CAHs and PPS hospitals in the likelihood of adverse events across all indicators except one. CONCLUSIONS: The study suggests there are no differences in surgical patient safety outcomes between CAHs and PPS hospitals of comparable size. This reinforces the central role of CAHs in providing quality surgical care to populations in rural and isolated areas, and underscores the importance of strategies to sustain rural surgery infrastructure.

Variation in Payment Rates under Medicare's Inpatient Prospective Payment System.

OBJECTIVE: To measure variation in payment rates under Medicare's Inpatient Prospective Payment System (IPPS) and identify the main payment adjustments that drive variation. DATA SOURCES/STUDY SETTING: Medicare cost reports for all Medicare-certified hospitals, 1987-2013, and Dartmouth Atlas geographic files. STUDY DESIGN: We measure the Medicare payment rate as a hospital's total acute inpatient Medicare Part A payment, divided by the standard IPPS payment for its geographic area. We assess variation using several measures, both within local markets and nationally. We perform a factor decomposition to identify the share of variation attributable to specific adjustments. We also describe the characteristics of hospitals receiving different payment rates and evaluate changes in the magnitude of the main adjustments over time. DATA COLLECTION/EXTRACTION METHODS: Data downloaded from the Centers for Medicare and Medicaid Services, the National Bureau of Economic Research, and the Dartmouth Atlas. PRINCIPAL FINDINGS: In 2013, Medicare paid for acute inpatient discharges at a rate 31 percent above the IPPS base. For the top 10 percent of discharges, the mean rate was double the IPPS base. Variations were driven by adjustments for medical education and care to low-income populations. The magnitude of variation has increased over time. CONCLUSIONS: Adjustments are a large and growing share of Medicare hospital payments, and they create significant variation in payment rates.

Risk Adjusting Survival Outcomes in Hospitals That Treat Patients With Cancer Without Information on Cancer Stage.

IMPORTANCE: Instituting widespread measurement of outcomes for cancer hospitals using administrative data is difficult owing to lack of cancer-specific information such as disease stage. OBJECTIVE: To evaluate the performance of hospitals that treat patients with cancer using Medicare data for outcome ascertainment and risk adjustment and to assess whether hospital rankings based on these measures are altered by the addition of cancer-specific information. DESIGN, SETTING, AND PARTICIPANTS: Risk-adjusted cumulative mortality rates of patients with cancer were captured in Medicare claims data from 2005 through 2009 nationally and assessed at the hospital level. Similar analyses were conducted using Surveillance, Epidemiology, and End Results (SEER)-Medicare data for the subset of the United States covered by the SEER program to determine whether the inclusion of cancer-specific information (only available in cancer registries) in risk adjustment altered measured hospital performance. Data were from 729 279 fee-for-service Medicare beneficiaries treated for cancer in 2006 at hospitals treating 10 or more patients with each of the following cancers, according to Medicare claims: lung, prostate, breast, colon, and other. An additional sample of 18 677 similar patients were included from the SEER-Medicare administrative data. MAIN OUTCOMES AND MEASURES: Risk-adjusted mortality overall and by cancer category, stratified by type of hospital; measures of correlation and agreement between hospital-level outcomes risk adjusted using Medicare data alone and Medicare data with SEER data. RESULTS: There were large survival differences between different types of hospitals that treat Medicare patients with cancer. At 1 year, mortality for patients treated by hospitals exempt from the Medicare prospective payment system was 10% lower than at community hospitals (18% vs 28%) across all cancers, and the pattern persisted through 5 years of follow-up and within specific cancer categories. Performance ranking of hospitals was consistent with or without SEER-Medicare disease stage information (weighted κ ≥ 0.81). CONCLUSIONS AND RELEVANCE: Potentially important outcome differences exist between different types of hospitals that treat patients with cancer after risk adjustment using information in Medicare administrative data. This type of risk adjustment may be adequate for evaluating hospital performance, since the additional adjustment for data available only in cancer registries does not seem to appreciably alter measures of performance.

Predictors of High Profit and High Deficit Outliers under SwissDRG of a Tertiary Care Center.

PRINCIPLES: Case weights of Diagnosis Related Groups (DRGs) are determined by the average cost of cases from a previous billing period. However, a significant amount of cases are largely over- or underfunded. We therefore decided to analyze earning outliers of our hospital as to search for predictors enabling a better grouping under SwissDRG. METHODS: 28,893 inpatient cases without additional private insurance discharged from our hospital in 2012 were included in our analysis. Outliers were defined by the interquartile range method. Predictors for deficit and profit outliers were determined with logistic regressions. Predictors were shortlisted with the LASSO regularized logistic regression method and compared to results of Random forest analysis. 10 of these parameters were selected for quantile regression analysis as to quantify their impact on earnings. RESULTS: Psychiatric diagnosis and admission as an emergency case were significant predictors for higher deficit with negative regression coefficients for all analyzed quantiles (p<0.001). Admission from an external health care provider was a significant predictor for a higher deficit in all but the 90% quantile (p<0.001 for Q10, Q20, Q50, Q80 and p = 0.0017 for Q90). Burns predicted higher earnings for cases which were favorably remunerated (p<0.001 for the 90% quantile). Osteoporosis predicted a higher deficit in the most underfunded cases, but did not predict differences in earnings for balanced or profitable cases (Q10 and Q20: p<0.00, Q50: p = 0.10, Q80: p = 0.88 and Q90: p = 0.52). ICU stay, mechanical and patient clinical complexity level score (PCCL) predicted higher losses at the 10% quantile but also higher profits at the 90% quantile (p<0.001). CONCLUSION: We suggest considering psychiatric diagnosis, admission as an emergency case and admission from an external health care provider as DRG split criteria as they predict large, consistent and significant losses.

Practice patterns among entrants and incumbents in the home health market after the prospective payment system was implemented.

Home health care expenditures were the fastest growing part of Medicare from 2001-2009, despite the implementation of prospective payment. Prior research has shown that home health agencies adopted two specific strategies to take advantage of Medicare policies: provide at least 10 therapy visits to get an enormous marginal payment and recertify patients for additional episodes. We study whether there is heterogeneity in the adoption of those strategic behaviors between home health agency entrants and incumbents and find that entrants were more likely to adopt strategic practice patterns than were incumbents. We also find that for-profit incumbents mimicked one of the practice patterns following entrants in the same market. Our findings suggest that it is important to understand the heterogeneity in providers' behavior and how firms interact with each other in the same market. These findings help explain the rapid rise in expenditures in the home health care market.

A work time study analysing differences in resource use between psychiatric inpatients.

PURPOSE: Judgement about the adequacy of reimbursement schemes requires an understanding of differences in resource use between patient groups. The aim of this study was to analyse staff time allocation of psychiatrists, psychologists and nurses in inpatient mental health care and to use these data to analyse differences in per diem resource use between patient groups. METHODS: A self-reporting work-sampling study was carried out at a psychiatric teaching hospital. All of 36 psychiatrists, 23 psychologists and 106 nurses involved in clinical care during the study period participated in a two-week measurement of their work time. RESULTS: A total of 20,380 observations were collected, representing about 10,190 h of work or 6.2 full-time-equivalent years. The average resource use in minutes of staff time per patient day was 227 min, representing 138 of staff costs. The most resource intensive care was provided at the Psychiatric Intensive Care Unit and for geriatric patients with 334 and 266 min per patient day (192 and 162 ), respectively. The least resource intensive care was provided for patients with substance-related disorders (197 min, 116 ). Substantial shares of clinical work time were dedicated to tasks without patient contact (58 %). Nursing time was the main driver of total resource use, representing 70 % of staff time and 60 % of costs. CONCLUSION: Presented differences in per diem resource use should inform discussions about the adequacy of reimbursement schemes. Tasks in the absence of the patient, such as documentation and administration, should be reduced to free resources for direct patient care.

Do diagnosis-related group-based payments incentivise hospitals to adjust output mix?

This study investigates whether the diagnosis-related group (DRG)-based payment method motivates hospitals to adjust output mix in order to maximise profits. The hypothesis is that when there is an increase in profitability of a DRG, hospitals will increase the proportion of that DRG (own-price effects) and decrease those of other DRGs (cross-price effects), except in cases where there are scope economies in producing two different DRGs. This conjecture is tested in the context of the case payment scheme (CPS) under Taiwan's National Health Insurance programme over the period of July 1999 to December 2004. To tackle endogeneity of DRG profitability and treatment policy, a fixed-effects three-stage least squares method is applied. The results support the hypothesised own-price and cross-price effects, showing that DRGs which share similar resources appear to be complements rather substitutes. For-profit hospitals do not appear to be more responsive to DRG profitability, possibly because of their institutional characteristics and bonds with local communities. The key conclusion is that DRG-based payments will encourage a type of 'product-range' specialisation, which may improve hospital efficiency in the long run. However, further research is needed on how changes in output mix impact patient access and pay-outs of health insurance.