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How to Establish a Palliative Care Program

Financing Academic Hospitals

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Medicare
Medicaid
Commercial Insurers
Managed Care
Government (Veterans Affairs, Active Duty Military)

Academic Hospitals are those hospitals that have education programs for training physicians. They receive reimbursement from the same sources as other hospitals, with some exceptions.

Medicare
Under Medicare, academic hospitals receive additional reimbursement for their direct and indirect costs of education.

Direct costs. A hospital receives a sum of money for each resident being trained in a program approved by the Accreditation Council for Graduate Medical Education (ACGME). That sum includes the salary and benefits for the resident, as well as the physician faculty that must be supported to educate that resident. Recent adjustments to the federal fee schedule have rewarded hospitals for training primary care physicians. Payments for specialty training have been discounted.

Indirect costs. This is designed to offset the additional costs to a hospital from having physician trainees such as additional diagnostic tests, therapeutic procedures, and hospital days that characterize physician training. The actual amount an individual hospital receives is determined under a complex formula. That formula includes both the reported costs of education as well as historical precedent.

The amount of money an academic hospital receives can also be adjusted for the severity of illness and indigency of its patient populations.
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Medicaid
There is no difference in the reimbursement to academic hospitals from that of community hospitals under Medicaid.
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Commercial Insurers
There is no difference in the reimbursement to academic hospitals from that of community hospitals under commercial indemnity insurance plans. Academic centers frequently charge higher fees than community hospitals, and are similarly rewarded.
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Managed Care
There is no fundamental difference in how academic hospitals are reimbursed from community hospitals. However, a few notes are pertinent.

Overall costs are higher at academic hospitals than at community hospitals. When managed care companies are negotiating contracts with hospitals, they are comparing academic hospitals with community hospitals on two criteria: cost per case and "quality". In addition, they are not paying for graduate medical education of resident physicians.

Cost per case is calculated by dividing the total costs of the hospital by the total number of hospitalized patients. This number is generally available. For example, in Chicago in 1998, the average cost per case for an academic hospital was in the range of $10,000-$12,000. The average for community hospitals was in the range of $6,000 to $8,000.

Quality is determined in a number of ways. It is a matter of intense argument as to which measure, if any, is valid. On most measures, academic hospitals would argue that their scores are inaccurate because their case mix is different from community hospitals. They would say they care for more complex cases. Therefore, measures of mortality or morbidity are likely to be inaccurate.

In order to avoid this quagmire, quality is also measured by patient satisfaction. There are national surveys that hospitals use to measure patient satisfaction. These scores are generally available and permit managed care companies to compare hospitals.
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Government (Veterans Affairs, Active Duty Military)
Active Duty and Department of Veterans Affairs hospitals are frequently academic facilities. The active duty military has their own medical school and postgraduate training programs. These are funded under global budgets. Similarly, the education programs of the veterans affairs hospitals are also funded under global budgets.

Next, consider the financing of subacute or skilled care.

CAPC Resources:
Additional resources on "Financing US Healthcare"

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Help develop CAPCManual. Send your comments, questions, suggestions to: fferris@sdhospice.org
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CAPCManual Attribution:  von Gunten CF, Ferris FD, Portenoy RK, Glajchen M, eds. CAPCManual: How to Establish A Palliative Care Program. New York, NY: Center to Advance Palliative Care, 2001.   © Center for Palliative Studies, San Diego Hospice & Palliative Care, San Diego, CA and
The Department of Pain Medicine and Palliative Care, Beth Israel Medical Center, New York, NY, 2001

Permission to reproduce for non-commercial educational purposes with display of attribution and copyright is granted.
Last updated: February 20, 2002

Elements
Select section:
Basis, Context, Components, Case Examples

•  Basis of Palliative Care Practice
      Palliative Care Definitions
         Historical Definitions
            WHO
            Oxford Textbook
            ABHPM
            NHPCO
         Palliative Care
         Applicability
         Application to Patients at Risk
         Differences–Hospice & Palliative Care
      Values, Ethical Principles
         Values
         Ethical Principles
      Conceptual Framework
         Square of Care
         Square of Organization
         Square of Care & Organization
      Norms / Standards of Practice
      Guidelines
      Policies, Procedures
         What are They?
         Developing, Implementing, Evaluating
      Measures
      Definitions of Common Terms
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•  Context
      Tensions
         In Therapeutic Relationships
         Within Host Organizations
         Within Healthcare System, Community
      Who's the Customer
      US Healthcare
         Acute Care Hospitals
         Long-term Care Facilities
         Home
         Hospice Care
      Financing US Healthcare
         Expenditures for EOL Care
         Overview by Settings, Revenue Sources
            Medicare
            Medicaid
            Commercial Insurers
            Managed Care
            Government (VA, Military)
         Financing
            Community Hospitals
            Academic Hospitals
            Subacute, Skilled Care
            Custodial Care
            Ambulatory Care
            Home Care
            Hospice Care
                  Eligibility
                  Covered Services
                  Reimbursement Rates
                  Unintended Consequences
         Financing Physicians
            Coding
               Procedure / Service Codes
                  Coding Based on Time
                     Frequently Used E/M Codes
                        Example
                  Addition of Procedure Codes
            Diagnosis Codes
               ICD-9 Codes for Palliative Care
               Avoiding Concurrent Billing Problems
                  Example
            Documentation
               Example
            Physician Reimbursement
               Medicare
                  Medicare Hospice Benefit
                     Non-hospice Physicians
                     Associated with a Hospice
               Medicaid
               Commercial Insurers
               Managed Care
               Government (VA, Military)
         Financing Non-physician Providers
      Hospital–Hospice Relationships
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•  Program Components
      1º, 2º, 3º Model of Palliative Care Delivery
      Interdisciplinary Care
         Members of Interdisciplinary Team
            Core Competencies
               Physician
               Nurse
               Social Worker
               Chaplain
               Volunteer
      Specialized Environments
      Types of Services
         Consultation Services
            Consultation Etiquette
            Consultation Documentation
               Sample Note
         Inpatient Units
            Developing an Inpatient Unit
               Staffing
               Acuity
               Nursing Model
               Unit Size
                  General Ward vs. Palliative Care Unit
            Roles
            Decisions
            Case Example
               Nursing Staff
               Physician Staff
               Other Staff
               Advice
         Home Care
            Eligibility, Medicare Home Health Benefit
               Covered Services
               Usually Not Covered
         Hospice Care at Home
         Ambulatory Outpatient Care
         Respite Care
      Financing Palliative Care Programs
         Acute Hospital
         Skilled Care Nursing Home
         Hospice
         Home Health
         Ambulatory Outpatient
         Managed Care
      Financing Physicians in Palliative Care
      Financing Non-physicians in Palliative Care
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•  Case Examples
      CAPCManual Case Examples
      Pioneer Program Case Examples
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