Understanding Washington: a nephrologist's perspective from inside the Beltway.

The major principles that drive U.S. federal health policy-making are: (1) fixed or reduced costs, (2) ensured outcomes (or no evidence of undertreatment), (3) streamlined administration, and (4) political viability. A corollary is that providers are uniquely sensitive to financial incentives. Understanding these principles is vital to understanding federal health policy. Critically, these principles are nonpartisan and have been supported and used by all administrations since President Reagan. This article examines the end-stage renal disease (ESRD) prospective payment system, colloquially called "The Bundle," in the context of these major principles. Successful health policy, successful legislation, and successful regulation building all require executive leadership, mutual trust, and compromise. This is demonstrated by the events surrounding the passage of the Medicare inpatient prospective payment system, which governs hospital reimbursement for Medicare beneficiaries, including those not covered in the ESRD program. Given that the ESRD benefit consumes 6.3% of the Medicare budget for approximately 2% of Medicare beneficiaries, if nephrology is to experience future success, we must change how both policymakers and the wider field of medicine perceive our specialty. Understanding the major principles behind health care policy may facilitate this goal.

State health care financing strategies for children with intellectual and developmental disabilities.

We provide the first descriptive summary of selected programs developed to help expand the scope of coverage, mitigate family financial hardship, and provide health and support services that children with intellectual and developmental disabilities need to maximize their functional status and quality of life. State financing initiatives were identified through interviews with family advocacy, Title V, and Medicaid organizational representatives. Results showed that states use myriad strategies to pay for care and maximize supports, including benefits counseling, consumer- and family-directed care, flexible funding, mandated benefits, Medicaid buy-in programs, and Tax Equity and Fiscal Responsibility Act of 1982 funding. Although health reform may reduce variation among states, its impact on families of children with intellectual and developmental disabilities is not yet clear. As health reform is implemented, state strategies to ameliorate financial hardship among families of children with intellectual and developmental disabilities show promise for immediate use. However, further analysis and evaluation are required to understand their impact on family and child well-being.

The effect of Medicare's payment system for rehabilitation hospitals on length of stay, charges, and total payments.

BACKGROUND: Medicare's system for the payment of rehabilitation hospitals is based on limits derived from a hospital's average allowable charges per patient discharged during a base year. Thereafter, payments are capped but hospitals receive incentive payments if charges per patient are reduced in succeeding years. We hypothesized that per-patient charges would increase during the base year and then decrease in subsequent years. Hospitals would thus have higher reimbursement limits and receive incentive payments for reducing their charges. METHODS: We analyzed Medicare claims data for 190,921 discharges from 69 rehabilitation hospitals from 1987 through 1994. We compared total charges, length of stay, and interim payments before, during, and after each hospital's base year. RESULTS: After we controlled for inflation and temporal and seasonal trends, mean charges per patient discharged increased from $25,131 for patients discharged before the base year to $32,167 for patients discharged in the base year (a 28 percent increase, P<0.001) and the mean length of stay increased from 22.1 to 26.7 days (a 21 percent increase, P<0.001). After the base year, mean charges decreased to $29,307 (a 9 percent decrease) and the mean length of stay decreased to 24.0 days (a 10 percent decrease) (P<0.001 for both comparisons). Analysis of data on patients according to diagnosis -- for example, spinal cord injury, brain injury, stroke, amputations and deformities, hip fracture, and arthritis and joint disorders -- showed similar findings for each, with increases in charges and length of stay in the base year, followed by smaller reductions thereafter. For-profit hospitals had greater increases than nonprofit hospitals in their per-patient charges (mean increase, $7,434 vs. $2,929; P<0.001) and length of stay (mean increase, 4.6 vs. 2.3 days, P<0.001) during the base year. CONCLUSIONS: Although Medicare's reimbursement system for rehabilitation hospitals put an upper limit on total payments, its design was associated with substantial extra costs, including significantly increased payments to hospitals and doctors and increased numbers of hospital days for the average patient.