The measurement of physician work and alternative uses of the resource based relative value scale.

On January 1, 1992, the Medicare program implemented a new payment system for physician services based on the Resource Based Relative Value Scale (RBRVS). The RBRVS has been widely accepted as a rational and systematic approach to measuring the resource costs associated with physician services. In addition to deriving physician payment rates, the RBRVS provides a useful metric that allows the measurement and comparison of provider utilization rates and productivity across physicians performing a varied mix of services. In this study we describe the measurement of physician work, discuss alternative ways in which work values can be used to monitor physician service utilization (e.g., profiling physician practice patterns), measure physician productivity, and determine physician compensation.

Measuring public hospital costs: empirical evidence from the Dominican Republic.

Effective analysis of hospital performance requires the existence of accurate cost and output data. However, these are missing ingredients in most developing countries due to lack of information systems or other sources of data. Typically, expenditures are substituted for actual costs in analyzing hospital finance. This paper presents a methodology and analysis of the actual costs of inpatient, emergency, and outpatient services in a Dominican hospital. Through applying a set of survey instruments to a large sample of patients, the study measures and costs all hospital staff time, in-kind goods (drugs, medical supplies, reagents, etc.), overhead, and the depreciated value of plant and equipment related to the treatment of each patient. The results are striking. The budget is over 50% higher than the actual costs of services, reflecting the high cost of waste, down time, and low productivity. For example, high fixed costs translate into immunizations that on the average cost over 20% more than outpatient surgical interventions. The most disturbing finding is that although physicians represent the bulk of personnel spending, the surveys could account for only 12% of the contracted time of staff physicians, including time dedicated to treatment, supervision, administration, and teaching. As a proportion of the hospital total budget, personnel spending represents a high 84%. Yet staff costs for patient treatment never exceed 12%. These results suggest gross inefficiency, chaotic medical care organization, and poor hospital management.

Service mix in the hospital outpatient department: implications for Medicare payment reform.

OBJECTIVE: To determine if implementation of a PPS for Medicare hospital outpatient department (HOPD) services will have distributional consequences across hospital types and regions, this analysis assesses variation in service mix and the provision of high-technology services in the HOPD. DATA: HCFA's 1990 claims file for a 5 percent random sample of Medicare beneficiaries using the HOPD was merged, by hospital provider number, with various HCFA hospital characteristic files. STUDY DESIGN: Hospital characteristics examined are urban/rural location, teaching status, disproportionate-share status, and bed size. Two analyses of HOPD services are presented: mix of services provided and the provision of high-technology services. The mix of services is measured by the percentage of services in each of 14 type-of-service categories (e.g., medical visits, advanced imaging services, diagnostic testing services). Technology provision is measured by the percentage of hospitals providing selected high-technology services. FINDINGS/CONCLUSIONS: The findings suggest that the role hospital types play in providing HOPD services warrants consideration in establishing a PPS. HOPDs in major teaching hospitals and hospitals serving a disproportionate share of the poor play an important role in providing routine visits. HOPDs in both major and minor teaching hospitals are important providers of high-technology services. Other findings have implications for the structure of an HOPD PPS as well. First, over half of the services provided in the HOPD are laboratory tests and HOPDs may have limited control over these services since they are often for patients referred from local physician offices. Second, service mix and technology provision vary markedly among regions, suggesting the need for a transition to prospective payment. Third, the organization of service supply in a region may affect service provision in the HOPD suggesting that an HOPD PPS needs to be coordinated with payment policies in competing sites of care (e.g., ambulatory surgical centers).

Growth in Medicare's hospital outpatient care: implications for prospective payment.

Medicare hospital outpatient expenditures are growing rapidly. In response, Congress mandated implementation of a prospective payment system (PPS). The potential cost control effectiveness of a PPS is assessed in this paper by decomposing growth in charges into changes in beneficiaries, prices, case mix, encounters per beneficiary, services per encounter, and intensity per service. This paper examines aggregate growth rates and rates disaggregated by type of service, highlighting rapid growth in surgery and imaging services. Findings indicate that 69% of observed growth is attributable to factors that would be unaffected by an encounter-based PPS (i.e., beneficiaries, prices, case mix, and encounters per beneficiary). We conclude that effective cost containment may require implementation of direct volume controls in addition to a PPS.

Medicare hospital outpatient services and costs: implications for prospective payment.

Medicare expenditures of hospital outpatient department (HOPD) services are growing rapidly, prompting congressional interest in a prospective payment system. In this article, the authors identify frequently provided services and examine service volume and charges in the HOPD. Relatively few services drive Medicare HOPD spending, and volume is dominated by visits, imaging and laboratory tests, whereas surgery accounts for a large proportion of charges. Hospital-level variations in charges, costs, case mix, and outliers are also explored. There is substantial variation in charges and costs across hospital types. However, after case-mix adjustment, all hospital types have average costs within 6 percent of the national average.

Achieving cost control in the hospital outpatient department.

The rapid growth in outpatient expenditures and the congressional mandate for development of a prospective payment system (PPS) for these expenditures are discussed. Extension of diagnosis-related groups to outpatient care is shown to be infeasible. Alternative patient classification schemes and options for defining the unit of payment and establishing weights and rates are discussed. A PPS primarily controls price and can only address volume by defining a broad unit of payment, such as an episode of care. Therefore, adoption of a volume performance standard approach could be effective. Outpatient payment policies must be integrated with those of other ambulatory care providers.

Assessing Medicare reimbursement options for skilled nursing facility care.

In this article, a broad array of Medicare payment options for skilled nursing home care are examined, ranging from cost-based retrospective systems to various prospective arrangements. Each system contains different incentives to meet four policy goals: provide access for Medicare patients; increase access for patients requiring resource-intensive care; contain growth in program costs; and assure the delivery of high-quality care. The financial impacts of alternative policy options on nursing homes are presented through the use of a simulation model. Facility-specific payment systems are shown to most effectively incorporate incentives to contain costs and promote beneficiary access to care.

Cost and case-mix differences between hospital-based and freestanding nursing homes.

Cost differences between freestanding and hospital-based skilled nursing facilities (SNF's) are identified and examined in this article. Although hospital-based and freestanding SNF's have significant differences in terms of location, admissions per bed, percent of Medicare days, occupancy rates, staffing, provisions of rehabilitative services, and patient characteristics, these are insufficient to fully explain cost differences. Less than one-half of the existing cost differences can be explained after controlling for case mix, staffing, and other cost-contributing factors. A reimbursement system that differentiates solely by provider type without relating rates to patient characteristics may overcompensate some providers and undercompensate others.