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Toward a Fairer Prospective Payment System
Susan M. Essock, PhD;
Grayson S. Norquist, MD
From the Office of the Commissioner, Connecticut Department of Mental Health, Hartford (Dr Essock); and the Department of Psychiatry and Biobehavioral Sciences, UCLA-Neuropsychiatric Institute, Los Angeles (Dr Norquist).
Arch Gen Psychiatry. 1988;45(11):1041-1044.
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| Since this article does not have an abstract, we have provided the first 150 words of the full text PDF and any section headings. |
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A fundamental assumption of categorical payment systems such as Medicare's diagnosis related groups (DRGs) is that one can identify characteristics of patients (eg, diagnosis) and of hospitals (eg, location) that predict costs, and, thereby, one can construct reasonable payment categories. However, the current DRGs for psychiatry are poor predictors of cost. If widely implemented, they would differentially jeopardize some hospitals and invite provider responses that would jeopardize needier patients. These dangers may be lessened by creative manipulation of the rules by which payments are determined and of the design of payment systems, which are configured so that the service providers themselves are motivated to provide adequate care.
PROSPECTIVE PAYMENT
In the early 1980s, Medicare's trust fund was going broke at an alarming rate. To avert bankruptcy, a radical shift in payment methodology was instituted. Since 1983, Medicare's Prospective Payment System (PPS) has reimbursed hospitals a fixed amount per hospital discharge
. . . [Full Text PDF of this Article]
Footnotes
Accepted for publication April 12, 1988.
Reprint requests to Director of Psychological Services, Connecticut Department of Mental Health, 90 Washington St, Hartford, CT 06106 (Dr Essock).
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