The big squeeze. Insurers point to slower growth in premiums in past few years to show progress, but providers say they're paying the price.

While insurers last week were trumpeting the third straight year of slower growth in premiums, providers weren't exactly celebrating. That's because of huge mergers, which give insurers far more leverage and have led to reimbursements being cut back even more. "What's worrying us is that there's a growing segment (of insurers) that aren't going to budge an inch, no matter what," says Russ Weaver, left.

Understanding diagnostic related groups (DRGs) and inpatient hospital reimbursement.

Knowing insurance plan regulations and complying precisely with requirements is critical for hospital reimbursement of care provided. Diagnostic related groups provide guidelines widely used in the United States to determine hospital reimbursement by Medicare, Medicaid, and many insurance providers. Because hospitals are the largest employers of nurses, nurses have a responsibility and interest in contributing to the stability of their hospital's financial status to protect incomes and job security. This article provides an overview of diagnostic related groups and demonstrates how nurses can contribute to more accurate documentation outcomes that determine hospital reimbursement.

Components of Medicare reimbursement.

The history of the Medicare reimbursement system, how it works, and issues related to fraud and abuse are discussed. The statutory charge of Medicare is to ensure adequate reimbursement through a Prospective Payment System (PPS) to cover the costs for providing a given service to Medicare beneficiaries. The PPS was introduced as a way to change hospital behavior through financial incentives that encourage cost-efficient management of resources. The system utilizes a rate of payment in which a hospital is paid a fixed amount that is expected to cover the costs of care while treating a typical patient in a particular diagnosis-related group (DRG). The PPS uses DRGs as payment categories and Major Diagnostic Categories (MDCs) for classifying the DRGs into similar groupings. One of the first steps in DRG assignment is identification of the principal diagnosis represented by an International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM) code. The secondary diagnoses (referred to as complications or comorbidities), presence or absence of surgery, age of the patient, and discharge status are the other pieces of information making up assignment of a specific DRG to a patient. A basic knowledge of the Medicare program will help in the understanding of how hospitals will be reimbursed for patient care, as well as how changes in Medicare payment may affect reimbursement. Medicare is one of the largest health insurance providers in the United States. A basic understanding of the Medicare system will provide valuable insights into Medicare reimbursement and the influence it has on a hospital's bottom line.

Hospital tiers in health insurance: balancing consumer choice with financial incentives.

Variations in efficiency and market power are generating wide variations in the prices charged by hospitals to health insurance plans. Insurers are developing new network structures that expose the consumer to some of the cost differences, to encourage but not mandate differential use of the more economical facilities. The three leading designs include hospital "tiers" within a single broad network, multiple-network products, and the replacement of copayments by coinsurance in HMO as well as PPO products. This paper describes the new network designs and evaluates the challenges they face in influencing consumers' behavior, incorporating information on clinical quality, and supporting medical education and uncompensated care.

Tiered hospital networks.

As a result of rising health care costs, health plans are experimenting with insurance products that shift greater financial responsibility for medical care to consumers and create incentives for consumers to consider cost differences when choosing among providers. Based on an October 2002 roundtable discussion, this paper discusses insurance product trends, particularly tiered hospital networks. Issues addressed include these product features' potential to reduce system costs, the effect on the hospital-health plan relationship, consumers' ability to consider cost and quality in decision making, and financial barriers to care for the chronically ill.

Hospital tiering: how will it play in Peoria?

Cost-sharing strategies such as hospital tiering will require consumers to make cost-benefit decisions where they have little experience. This responsibility may be further challenged by prevailing consumer perspectives: that health insurance is an open-ended service benefit; that medical treatment decisions should not be influenced by costs; and that consumers are not responsible for the current cost crisis. Although there are steps providers can take to prepare consumers for their new role in cost sharing, health care leaders need to begin moving from a consumer-driven to a citizen-driven approach.

The erosion of health insurance: the unintended consequences of tiered products by health plans.

When properly structured, consumer-driven health care may provide gains to both patients and the delivery system. However, the current approach by health plans could result in real harm to patients and to an already fragile health care delivery system. While health plans are presenting tiered products as a necessary mechanism to control rising hospital expenditures, this paper explores the real drivers of the rising cost of health care, including utilization, increased demand for advanced medication, and new technology. Left unchecked, such benefit designs could have dangerous public policy implications and consequences, including the further erosion of the basic tenets of health insurance.

The effect of increased private health insurance coverage on Victorian public hospitals.

It was anticipated that the recent reforms to private health insurance arrangements would reduce the demand pressures on Australian public hospitals. However, this has not been demonstrated by trends in elective surgery waiting lists in Victorian public hospitals. Moreover, it appears that the increased caseload assumed by Victorian private hospitals since the reforms took effect mainly reflects an increase in low cost same day episodes.

Changes in the status of hospitalized stroke patients since inception of the prospective payment system in 1983.

OBJECTIVE: To describe epidemiologically the changes in acute-care delivery services for stroke victims since the inception of the 1983 prospective payment system (PPS). DESIGN: A cross-sectional comparison of 2 acute-care hospitalized samples of stroke patients before and after implementation of PPS. SETTING: Fifteen acute-care hospitals. PARTICIPANTS: A total of 1992 stroke patients discharged from 15 acute care hospitals in 1995-1996 were compared with 1665 patients studied in the same geographic area in 1981-1982. INTERVENTIONS: Not applicable. MAIN OUTCOME MEASURES: Incidence rates, length of stay (LOS), discharge destinations, in-hospital transfers, and mortality. RESULTS: Incidence rates between the 2 time periods remained similar (1.13-1.14/1000). Major changes between 1981-1982 and 1995-1996 included reengineering of hospitals to establish subacute units with an increased use of rehabilitation units, a 63% decrease in acute hospital LOS, a 44% increase in discharges to long-term care facilities, a 39% decrease in mortality, and a 5% decrease in discharge to home. Age (avg, 71y), gender, and living arrangements confounded discharge destinations. Significantly more men in 1995-1996 had strokes at younger ages, but overall 53% were women. CONCLUSIONS: Institution of the PPS has dramatically influenced hospital LOS, location of treatment, and discharge destinations with no improvement in home discharges.

Slow pay and claims denials: welcome to the world of managed care.

In markets heavily penetrated by managed care, case managers are facing a disturbing trend: Health plans are denying claims at an alarming rate for what many consider to be medically necessary care. Slow payment and increased scrutiny of hospital utilization review also have been reported. In Maryland alone, the state's largest insurer, Blue Cross and Blue Shield, denied $29 million in hospital claims and 13% of all inpatient days in 1997, leading the state hospital association to file a grievance alleging that BCBS and other insurers are denying claims simply to cut costs. Experts argue that the trend toward claims denials and slow payment is likely to increase the administrative burden of case managers who perform utilization review, and could negatively affect patient care.