Medicare Ambulatory Paymant System Essay Example

Medicare Ambulatory Paymant System Essay Example Medicare Ambulatory Paymant System Paper Medicare Ambulatory Paymant System Paper Ambulatory payment system commonly referred to as the Ambulatory Payment Category (APC) was adopted by the United States government in order to facilitate easy, faster and convenient outpatient services for the Medicare program. The federal government through it budget act of 1997, it established a new program under the major medical cover that takes care of the old people to create what is called Outpatient Prospective payment system abbreviated as OPPS. This method is only applicable to hospitals and that physicians could get their payment through other means like the current procedural terminology. The Ambulatory payment category usually come to use when a patient is discharged from the hospital’s emergency department or clinic or get a transfer to another health facility which is not allied to the hospital of origin where the patient was initially treated as an outpatient. Basically the ambulatory payment system begun as a federal government’s initiative and have gained popularity in that the state programs like Medicaid is also considering adoption of the same method. If these programs keep on succeeding, definitely the third part insurance companies in the healthcare system may also adopt it. Establishment The balanced budget act of the year 1997 (BBA) section 4523 gives authority and allows CMS to execute the prospective payment system which operated under the Medicare program and servicing the outpatients. This act was modified in 1999 and all the services that are paid under this prospective payment system are categorized into various groups which are termed as ambulatory payment classifications (APC’s). Generally all the services in the ambulatory payment system have comparable resource requirement and are identical or clinically similar. Services in each APC are reimbursed according to the services provided by the hospital and the hospitals could be paid for more than one APC for a single encounter (Medicare 1998). The modification of the section 4523 of balanced budget led to changes in the method of determining the beneficiary coinsurance for the services provided under the prospective payment system. In essence a coinsurance amount is calculated for every APC depending on the 20% of the national median payment for services in the APC. The coinsurance amount remains constant with any changes until the time when the amount becomes 20% of the total APC reimbursement. The act also provides that not amount of coinsurance would be greater than the yearly deductibles of the hospital inpatient. The two amounts, that is APC payment and coinsurance will be adjusted to indicate the geographic salary variation by use of the hospital age index and the assumption that the part of the payment or coinsurance that is attributed to labor is 60% (Hyman 2005). The proposed changes in the medical program of the United States targets to the Medicaid and Medicare programs since they major bodies that are concerned with healthcare coverage for the old who generally cannot afford a health insurance (third party coverage) US Division of the Federal Register. (2005). The federal operates the Medicare program and it’s the main source of the transformation initiative. Under this, the payment rates in following sections of Medicare will be transformed; payment rates for 2009, ambulatory surgical center 2009, hospital conditions of participation etc. The Previous Medicare Payment System There are three basic methods by which the citizens of the United States take care of their medical bill and they are; Medicare program, Medicaid program and the third party cover by insurance companies. It is estimated that the hospitals in the US receive over thirty percent of their revenue from the Medicare program. Most of the payments made directly to the hospitals by the program come from the inpatient cases and this is approximated to be about 88% while the rest covers the outpatients (Medicare 1998). The method used by the Medicare to cover expenses by the inpatient is as follows, there several disease conditions which are categorized as the diagnosis related groups (DRGs) there are about 600 cases in the groups and the Medicare only pays flat rates for a single hospital session. Each DRG is assigned certain weight and to compute the actual fee to be paid in each of the DRGs for a specific year, the DRGs relative payment weight is multiplied by the monetary exchange factor of that particular year is dollars. The value obtained is further adjusted in accordance to the variations in the labor cost of that region and of other facility inputs and for the local factors that could result in variations in the price of providing care(Hyman 2005). In order to take care of the complicated cases whose resources use significantly excesses that foreseen in the closest DRG, the system gives the outlier imbursement that in principle are meant to imply the estimates by the hospital for providing the extra supplies and services employed. The DRG weight that are being used were initially (since early 1980s) based on the relative average expenses of cases in the DRG’s. Some changes have been made to the calculation including average standardized, paid expenses for all cases that fall into each DRG in the recent Medicare records. The DRGs have since then been adjusted based on the standard, paid expenses of for all the cases that are covered under each of the DRGs in the current Medicare documents (Cleverley Cameron 2006). The outpatients initially compensated the hospital in a retrospective manner for the allowable, costs incurred for which the owners of the Medicare were supposed to make co-payments. These payments increased considerably since the early 1980s and by 1997 they were about 50% of the whole amount of healthcare expenses for the outpatient services. This called for some intervention and in 1997; a balanced budget act was established to drive the Medicare into controlling the apparently inflationary, full cost compensation system with a new one that would adopt a prospective cost schedule, and that the basic unit for the payment would be a specific service or procedure (Hyman 2005). This schedule was meant to be effected in the new millennium. In its efforts to develop new fee calendar, Medicare had to package as much as reasonable the whole set of supplies and services linked with main procedure into one large group. The groups were to contain the main processes that are clinically comparable and used equivalent amount of resources. These groupings were done according to the ambulatory payment categorization (APC) that was designed by researchers in the health services study and investigation undertakings. These APC’s are still developing and expanding as the Medicare program attains greater heights of knowledge and experience as well as with the advent of new technologies (Medicare 1998). Similar to the DRG system that is used in the inpatient system to pay hospital bills, APC dollar amount is also derived by multiplication of the relative cost weight of the specific APC (founded on the median of the particular APC) by a monetary exchange factor. Additional adjustments are made by considering aspects like cost of facilities, salaries and other factors that contribute to the cost of outpatient medication. The Medicare system is very complicated, partly because of the government’s involvement to regulate the operations of the system and ensuring fairness, responsibility, and meeting the social objectives. Most of the critics of the program overlook the fact that these obligations are a driving force to the public medical service and a challenge to the privatized medical care services (Hyman 2005). Nonetheless, the myriad of distinct imbursement schemes for the United States private insurance companies are complicated as well, by the global standards and mostly still founded on paper claims. The Transformations Last year there were announcements by the Medicare program about the new rule to increase the reimbursement rate for hospital outpatient sections and the ambulatory surgical departments by 3% throughout 2009 however those that do not comply with the new quality reporting regulation will see that pay rate increase only by one percent. It’s generally the first time that the services provided by the Medicare program are correlated to the quality of the services. The Medicare intends to entrench a culture of cautious purchasing of medical services from hospitals not based on the quantity alone but also quality and this would be in effect by the strict observance of the rule builds on transforming the program. Researches in the medical sector trends have indicated that more people prefer the outpatient settings as opposed to the inpatient service. For this reason, the center for Medicare administrator (CMS), Kerry Weems last year declared that Medicare would commit itself to work in conjunction with the hospital so as to make sure that their clients (people with Medicare) get the best quality of healthcare and in proper settings(Medicare 1998). The proposed changes for the year 2009 are meant to allow the hospital more fluidity in their operations so that management of the resources is improved and also give them the incentive to enhance the effectiveness where both beneficiaries and citizens (taxpayers) get the best worth for their healthcare expenses. The proposed rule to start operation in 2009 will ensure that there are up to date rates of payment in both the outpatient prospective payment system and ambulance surgery center prospective system (ASC-PPS) which would operational in the second year would seek to put in the same category the ASC rates and ambulatory payment classification groups that are currently used for reimbursement of the outpatient hospital department. The new rule will also address the 3% update on inflation rate per year to Medicare payment rates for most services that would be paid by the outpatient prospective payment system to an excess of over 4,000 hospitals and community mental healthcare centers in Calendar Year 2009. There are more changes in the in the new proposed changes to take care of the outpatient services provided by general acute care hospitals, community mental care facility, inpatient psychotherapy amenities, long-term acute care hospitals, pediatric hospital and cancer hospitals(Medicare 1998). The centre for Medicare and Medicaid projected that hospitals in the United States would receive about $28. 7 billion in Calendar Year 2009 for services provide to people who have Medicare coverage. In addition to that, center for Medicare and Medicaid will pay about $ 3. 9 billion in the year 2009 to over five thousand people who operate ambulatory surgery center program with Medicare. This is a major improvement in the health care sector since in the past years; the payment of the outpatient services was not in accordance with the quality of healthcare provided (Cleverley Cameron 2006). In the new preview, the proposed changes will demand that the outpatient prospective payment system updates be cut down by at least 2% for hospitals which do not comply with the quality reporting demands. For the reports to be fully informative and up to date, for the services provided in the year 2009, the hospitals will be required by the new law to give reports of the year 2008 on seven quality dimension of emergency department and pre-operative surgical procedures. Initially the seven dimensions were not strictly considered because of laxity but the new CMS has introduced four new dimensions of imaging effectiveness to the seven presented value measures for reason that it would useful for 2010 updates. CMS also intends to introduce public comment on other quality measures in sectors like the testing for the probable risk of cancer. Center for Medicare and Medicaid services seeks to improve and reinforce the program and enhance association between the value of care and Medicare imbursement, by obtaining public comment on the various options and contemplations for transforming payment methods for offering treatment to the conditions that are basically preventable if the practitioner follows the established guidelines. Currently, the center for Medicare and Medicaid is working on a policy implementation strategy to offer a similar change to the inpatient services as provided for by the Deficit Reduction Act of 2005. Under such regulations, the CMS will not make high payment rates to the hospitals for the giving treatment to various disease conditions which are predetermined to be realistically preventable as provided in the guidelines when they are attained during the patient’s stay in the hospital. For this, the hospitals will have an incentive to provide quality healthcare by following the guidelines already in place to cut down the number of cases that get infected by preventable conditions that occur as a consequence of the treatment (Medicare 1998). When these changes are fully followed and strictly observed, then the healthcare will have attained that status that one can comfortably say that it is reliable and of good quality services. Proposed Changes for Imaging Services There are instances when several imaging services are provided in one session, the CMS is also seeking to promote greater effectiveness by changing its way of making such payments for the multiple services in one sitting. This means that CMS will only make single imbursement for the multiple imaging services of a specific type for instance several ultrasound processes done in one session in the healthcare facility. Apart from the ultrasound processes, CMS will also include other services like the magnetic resonance Imaging (MRI) and Computer Tomography scans (CT-scans). The proposal also covers the changes that have to be used to enhance the accuracy of healthcare cost estimates which are used to set up prices for drugs and biologically active substances, United States Division of the Federal Register. (2005). Medical Cost Decrease According the statement by the management of Medicare program, the amount of expenses that the Medicare beneficiary would pay for the outpatient will decrease depending on the strategy put in place by the Medicare regulation which will translate to gradual changeover to 20% coinsurance. Before the implementation of the changes in outpatient prospective payment system (OPPS) for the year 2000, those serviced by Medicare used to take care of about 20% of the hospitals expenses instead of the 20% of the Medicare charges for services given to outpatients(Hyman 2005). Since the medical cost in hospital rose at a faster rate compared to the Medicare coverage for the same services, the Medicare beneficiaries share usually got beyond 50% of the whole amount paid to the hospital for the services. In the estimates made by the CMS analysts, about 25% of all the services that would be provided to the outpatients will be subjected to 20% coinsurance in the year 2009 cutting down from the 23% that was being used in 2008. The Benefits The anticipated transformation in the handling of the outpatient under the Medicare program is expected to bring about some uneasy feelings and also different reactions for different people. However most will agree that it will provide a very effective tool for the management to ensure that the management is efficient and also initiate responsibility and as a result, the profitability of the facilities will increase (Medicare 1998). The introduction of the Diagnosis Related Grouper (DRGs) for the compensation of the inpatients in 1983 was also faced with so much resistance with many critics insinuating that it would be a flop and the prospective payment would result in more problems. Contrary to the prediction of the critics, there were so many improvements in the superseding years in the overall operating margins for the inpatient services in most of the hospitals according to data from American Hospital Association. A similar improvement is anticipated in the year 2009 onwards in the outpatient services which will give the owners a lot of convenience and great assistance. The managers in particular will have a succinct data structure of management which will translate to efficiency because this is a very important tool for addressing product line concerns (Cleverley Cameron 2006). The information obtained will be used for the evaluation of the outpatient services, to practice expense regulation and to precisely bargain managed healthcare contracts. Most of the benefits will be enjoyed by mangers and those serviced by the Medicare program which means the plan is cost effective and that none of the parties involved will be exploited. The major benefits include the following; managers will have a means of spotting and correcting problems in the practice for instance inaccurate coding, unfinished documentation process and unwarranted supplementary services (Hyman 2005); the APC system will provide a method of facilitating cost reduction, comparison of expenses, alleviate instances of payment delays and carry out financial evaluations like the profit and loss calculation and analyses; the financial manger will be in comfortable position when making measurement of there competitiveness, making comparisons of the services with other local or even the national standards; outpatient hospital financial administrator can be able to develop case mix or make other measurements of resources utilization based on the number of people serviced, such kind of information can de very beneficial in the evaluation of the managed healthcare contracts; and finally the execution of the proposed changes in the OPPS section of Medicare w ill enable easy and accurate predictability of the imbursement which means that the manager can authenticate the accurateness of the compensation received (Cleverley Cameron 2006). Conclusion The transition in the needs of the US citizens and the globalization process has led to the increased need to improve healthcare. It such efforts, the health care practitioners and providers can work together to provide services to the clients. The development of the Ambulatory payment system (APC’s) was intended to provide quality healthcare on fee for service terms because of the development of the information sector and free market situation. Furthermore APC’s are also aimed at transferring some of the monetary risk for the services offered to the outpatient from the federal government to specific hospitals that provide the services and in this way, it is cost effective to operate the program. This is considered an inducement to better performance which is economical, efficient and profitable References Cleverley W. O Cameron (2006). Essentials of Health Care Finance. Jones Bartlett Publishers. Hyman D (2005). Improving Healthcare. A Dose of Competition. A Report by the Federal Trade Commission and the Department of Justice (July, 2004), with Various Supplementary Materials. Birkhauser. Medicare (1998). Prospective Payment System for Hospital Outpatient Services. Proposed Rules. Federal Register. Retrieved on 17th February 2009 from acess. opo. gov/su. docs/aces/aces140html United States Division of the Federal Register. (2005). Code of Federal Regulations. United States Federal Register Division. Office of the Federal Register, National Archives and Records Administration