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MedicareSelect:
Medicare is the federal health care insurance program for eligible people. People are usually eligible if they are over age 65, disabled, or have end-stage renal disease. It is funded by a federal tax on income that is paid partly by the employee, and partly by the employer. Medicare is divided into 2 parts: A and B. Part A covers hospitalization. Financing Community Hospitals The DRG payment is determined in the following way. After the patient is discharged, the patient's chart is abstracted for coding. The hospital determines the DRG code that best fits the chart. If a patient is in the hospital much longer than the usual range of days for that DRG, the hospital may code for an outlier status. Since the hospital receives a single amount of money for a given hospitalization, it should be obvious that a hospital is not financially rewarded for keeping patients for longer stays, or engendering higher costs. Hospitals report their charges and cost: charge ratios to HCFA on a regular basis. An individual hospital may receive adjustments to their DRG fee structure based on the overall number of Medicare patients they care for (disproportionate share adjustments). There is no DRG for palliative care. There is an ICD-9-CM diagnosis code for palliative care
that carries no reimbursement. The code was instituted as a research tool to help identify
services in hospitals which included palliative care. (Cassel CK, Vladeck BC. ICD-9 code for
palliative or terminal care. NEJM1996;335:1232-4. Unfortunately, because there was no
reimbursement associated with it, few hospitals used the code. Little useful information was
obtained.
Financing Academic Hospitals 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.
Financing Subacute and Skilled Care There is a cap of 100 days of skilled care following an acute care hospitalization. For skilled care in nursing homes, Medicare is phasing in a new prospective reimbursement system
that is similar to the DRG system for acute hospitalization. It is called the Resource
Utilization Group (RUG) system. The Minimum Data Set (MDS) will determine rates for each
patient by placing them in one of the 44 RUG-III groups. The higher payments are connected
to intensive rehabilitation services, such as physical therapy following orthopedic surgery.
Financing Custodial Care Financing Ambulatory Outpatient Care Medicare does have some special programs that fund outpatient care, eg, The Program for the All-inclusive Care of the Elderly (PACE). They typically serve specific populations, eg, the elderly and are limited in number.
Financing Home Care
Once these criteria are met, a range of services are available. That range of services can include home-making and nurses aide services, social work, physical and occupational therapists, medication administration and management, blood drawing for laboratory tests, blood transfusions and physical assessments and some durable medical equipment (subject to 20% copayment). Home health companies have been reimbursed under a fee-for-service system. However, in an effort to reduce payments, Medicare is making a transition to a prospective payment system for 60-day periods of home health care. At the current time, home health agencies are required to report on the health care assessments and needs of their patients, along with their associated costs. Based on this information, the final rules for the new system will be implemented. The focus of home health care under Medicare is increasingly on short-term interventions with a rehabilitative focus. Many would say it is increasingly difficult to use the system to pay for the costs of home care for the chronically ill with a poor prognosis.
Financing Hospice Care – Medicare Hospice Benefit Based in part on the experience of the National Hospice Study, the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA) established the Medicare Hospice Benefit (MHB). It became effective the following year. It was the first use of a prospective payment system by Medicare. Today, it continues to be the most comprehensive benefit for end-of-life care available. For eligible patients who elect to enroll in the Benefit, a Medicare-certified hospice program assumes responsibility for the complete plan of interdisciplinary care for the patient and family related to the patient's terminal illness. This includes a wide range of covered services. In return, the hospice program receives one of 4 fixed reimbursement rates per day (the Perdiem) according to level of care: routine home care, continuous care, general inpatient care and inpatient respite care. These rates cover all of the services that are covered under the Benefit. For conditions unrelated to the terminal illness, the patient use their regular Medicare coverage. The Medicare Hospice Benefit provides two benefit periods of 90 days each, followed by an unlimited number of 60 day periods. Resource: Next, consider Medicaid. CAPC Resources:
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