The Medicare IPPS 40 Years Later: Lessons Learned and What to Do Next.

The 1983 implementation of the Medicare Inpatient Prospective Payment System (IPPS) was successful in controlling Medicare inpatient costs because it was designed as a clinically credible management tool that facilitated real behavior change and performance improvement. The next phase of IPPS should expand the inpatient payment bundle to a hospital episode-of-care performance bundle that explicitly links episode cost and quality. A uniform, comparable, and transparent episode performance bundle that highlights the tradeoffs between episode cost and quality can expand the incentives to control costs and provide hospitals the management information to improve performance.

Impact of Socioeconomic Status on Delivery System Effectiveness.

The socioeconomic status (SES) component of the Social Vulnerability Index ranks US counties based on the SES of county residents and was used to evaluate the impact of SES on the performance of the health care delivery system. Using Medicare fee-for-service data, the performance of the health care delivery system was evaluated based on population measures such as per capita hospital admissions, quality of care measures such as surgical mortality, postacute care measures such as readmissions, and service volume measures such as posthospitalization nursing home and rehabilitation admissions. Substantial differences in delivery system performance across SES populations were observed.

Impact of the transition to ICD-10 on Medicare inpatient hospital payments.

OBJECTIVE: On October 1, 2013, the reporting of diagnoses and procedures in the U.S. will transition from the clinical modification of the ninth revision of the International Classification of Diseases (ICD-9-CM) to the tenth revision (ICD-10). We estimate the impact of conversion to ICD-10 on Medicare MS-DRG payments to hospitals using 2009 Medicare data. METHODS: Using the ICD-9-CM MS-DRG v27 (FY 2010), the converted ICD-10 MS-DRG v27, and the ICD-10 to ICD-9-CM Reimbursement Map for fiscal year 2010, we estimate the impact on aggregate payments to hospitals and the distribution of payments across hospitals. RESULTS: Although the transition from the ICD-9-CM to the ICD-10 version of MS-DRGs resulted in 1.68 percent of the patients being assigned to a different MS-DRG, payment increases and decreases due to the changes in MS-DRG assignment essentially netted out, resulting in a minimal impact on aggregate payments to hospitals (+0.05 percent) and on the distribution of payments across hospital types (-0.01 to +0.18 percent). Mapping ICD-10 data back to ICD-9-CM, and using the ICD-9-CM MS-DRGs, resulted in 3.66 percent of patients being assigned to a different MS-DRG, a modest decrease in aggregate payments to hospitals (-0.34 percent), and modest changes in the distribution of payments across hospital types (-0.14 to -0.46 percent). DISCUSSION: As demonstrated by MS-DRGs, a direct conversion of an application to ICD-10 can produce consistent results with the ICD-9-CM version of the application. However, the use of mappings between ICD-10 and ICD-9-CM will produce less consistent results, especially if the mapping is not tailored to the specific application.