Economic Changes - Influences on Health Care Delivery

ECONOMIC CHANGES

The philosophy that comprehensive, quality health care should be provided for all citizens prompted governmental concern about spiraling health care costs and wide variations in charges among providers. These concerns led to the Medicare prospective payment system (PPS) and the use of diagnosis-related groups (DRGs).

In 1983, the U.S. Congress passed the most significant health legislation since the Medicare program was enacted in 1965. The government was no longer able to afford to reimburse hospitals for patient care that was delivered without any defined limits or costs. Therefore, it approved a PPS for hospital inpatient services. This system of reimbursement, based on DRGs, set the rates for Medicare payments for hospital services. Hospitals receive pay-ment at a fixed rate for patients with diagnoses that fall into a spe-cific DRG. A fixed payment has been predetermined for more than 470 possible diagnostic categories, covering the majority of medical diagnoses of all patients admitted to the hospital. Hos-pitals receive the same payment for every patient with a given di-agnosis or DRG. If the cost of the patient’s care is lower than the payment, the hospital gains a profit; if the cost is higher, the hos-pital incurs a loss. As a result, hospitals now place greater em-phasis on reducing costs, utilization of services, and length of patient stay.

In addition, the Balanced Budget Act of 1997 added new rate requirements for ambulatory payment classifications (APCs) to hospitals and other providers of ambulatory care services. These providers must evaluate all services provided with greater efforts toward cost-effectiveness and reduction of costs.

To qualify for Medicare reimbursement, care providers and hospitals must contract with peer review organizations (PROs) to perform quality and utilization review. The PROs monitor admis-sion patterns, lengths of stay, transfers, and the quality of services and validate the DRG coding. The DRG system has provided hospitals with an incentive to cut costs and discharge patients as quickly as possible.

Nurses in hospitals now care for patients who are older and sicker and require more nursing services; nurses in the commu-nity are caring for patients who have been discharged earlier and need acute care services with high-technology and long-term care. The importance of an effective discharge planning program, along with utilization review and a quality improvement pro-gram, is unquestionable. Nurses in acute care settings must as-sume responsibility with other health care team members for maintaining quality care while facing pressures to discharge pa-tients and decrease staffing costs. These nurses must also work with nurses in community settings to ensure continuity of care.