The Medicare IPPS 40 Years Later: Lessons Learned and What to Do Next.

The 1983 implementation of the Medicare Inpatient Prospective Payment System (IPPS) was successful in controlling Medicare inpatient costs because it was designed as a clinically credible management tool that facilitated real behavior change and performance improvement. The next phase of IPPS should expand the inpatient payment bundle to a hospital episode-of-care performance bundle that explicitly links episode cost and quality. A uniform, comparable, and transparent episode performance bundle that highlights the tradeoffs between episode cost and quality can expand the incentives to control costs and provide hospitals the management information to improve performance.

Impact of Socioeconomic Status on Delivery System Effectiveness.

The socioeconomic status (SES) component of the Social Vulnerability Index ranks US counties based on the SES of county residents and was used to evaluate the impact of SES on the performance of the health care delivery system. Using Medicare fee-for-service data, the performance of the health care delivery system was evaluated based on population measures such as per capita hospital admissions, quality of care measures such as surgical mortality, postacute care measures such as readmissions, and service volume measures such as posthospitalization nursing home and rehabilitation admissions. Substantial differences in delivery system performance across SES populations were observed.

A Middle-Ground Proposal for Making Health Care Premiums More Affordable.

Passage of any health care reform that addresses the rising cost of health care in the United States will be a difficult political challenge unless a middle-ground compromise between government control of health care insurance and free market approaches can be found. On the basis of the competitive market for Medicare supplemental insurance, a Medicare Adherence Policy insurance option is proposed that would leverage Medicare's authority to set prices to create a practical middle-ground reform that can strike a balance between the role of government and the free market.

Will Hospital Peer Grouping by Patient Socioeconomic Status Fix the Medicare Hospital Readmission Reduction Program or Create New Problems?

Background: In 2016 the U.S. Congress directed the Centers for Medicare & Medicaid Services (CMS) to implement the 21st Century Cures Act to fix a flaw in the Hospital Readmissions Reduction Program (HRRP).

Quality Improvement Initiatives Need Rigorous Evaluation: The Case of Pressure Ulcers.

The Partnership for Patients (PfP) and the Agency for Healthcare Research and Quality (AHRQ) have reported a 23.5% decline in hospital-acquired pressure ulcers (HAPU) over 4 years resulting in a cumulative cost savings of more than $10 billion and 49 000 averted deaths, claiming that this significant decline may have been spurred in part by Medicare payment incentives associated with severe (stage 3 or 4) HAPUs. Hospitals with a high rate of severe HAPUs have a payment penalty imposed, creating a financial disincentive to report severe HAPUs, possibly contributing to the magnitude of the reported decline.

Is the CMS Hospital-Acquired Condition Reduction Program a Valid Measure of Hospital Performance?

In October 2014, the Centers for Medicare & Medicaid Services began reducing Medicare payments by 1% for the bottom performing quartile of hospitals under the Hospital-Acquired Condition Reduction Program (HACRP). A tight clustering of HACRP scores around the penalty threshold was observed resulting in 13.2% of hospitals being susceptible to a shift in penalty status related to single decile changes in the ranking of any one of the complication or infection measures used to compute the HACRP score.

Comparison of the Properties of Regression and Categorical Risk-Adjustment Models.

Clinical risk-adjustment, the ability to standardize the comparison of individuals with different health needs, is based upon 2 main alternative approaches: regression models and clinical categorical models. In this article, we examine the impact of the differences in the way these models are constructed on end user applications.

Rethinking Medicare Payment Adjustments for Quality.

Payment reforms aimed at linking payment and quality have largely been based on the adherence to process measures. As a result, the attempt to pay for value is getting lost in an overly complex attempt to measure value. The "Incentivizing Health Care Quality Outcomes Act of 2014" (HR 5823) proposes to replace the existing patchwork of process and outcomes quality measures with a uniform, coordinated, and comprehensive outcomes-based quality measurement system.

Distributing shared savings for population health management.

Lessons from outcomes-based fee-for-service payment models that can be applied to population health management models include the following: Focus on outcomes, not processes. Limit the number of outcomes measures used. Ensure that the amount distributed is substantial enough to motivate behavior change.

Postadmission sepsis as a screen for quality problems: a case-control study.

The present on admission (POA) indicator used with diagnosis codes listed in hospital discharge abstracts makes it possible to screen for possible in-hospital complications, which may in turn point to quality of care problems. A case-control study was performed among 382 patients from 30 New York State hospitals to see if lapses in quality were associated with the development of postadmission sepsis. Cases with hospital-acquired sepsis (labeled not POA) were compared with matched controls without sepsis.

Payment system reform: one state's journey.

In June 2011, Texas enacted Senate Bill 7, which mandates a Medicaid quality-based outcomes payment program on the basis of a common set of outcomes that apply to all types of provider systems including hospitals, managed care plans, medical homes, managed long-term care plans, and Accountable Care Organizations. The quality-based outcome measures focus on potentially preventable events (services) such as preventable admissions and readmissions that result in unnecessary expense, patient inconvenience, and risk of complications. The payment adjustments relate to a provider system's effectiveness in reducing the rate at which potentially preventable events occur.

Bundling post-acute care services into MS-DRG payments.

Objective: A bundled hospital payment system that encompasses both acute and post-acute care has been proposed as a means of creating financial incentives in the Medicare fee-for-service system to foster care coordination and to improve the current disorganized system of post care. The objective of this study was to evaluate the statistical stability of alternative designs of a hospital payment system that includes post-acute care services to determine the feasibility of using a combined hospital and post-acute care bundle as a unit of payment.

Methods: The Medicare Severity-Diagnosis Related Groups (MS-DRGs) were subdivided into clinical subclasses that measured a patient's chronic illness burden to test whether a patient's chronic illness burden had a substantial impact on post-acute care expenditures.

Adjusting Medicaid managed care payments for changes in health status.

Risk adjustment of managed care organization (MCO) payments is essential to avoid creating financial incentives for MCOs adopting enrollee selection strategies. However, all risk-adjustment methods have an inherent structural flaw that rewards preventable deterioration in enrollee health status and improved coding of disease burden. We propose a payment adjustment to offset this flaw.

There are critical reasons for not further delaying the implementation of the new ICD-10 coding system.

On April 17, 2012, the Department of Health and Human Services (HHS) published a rule proposing postponement of the implementation date for the International Classification of Diseases, 10th Edition diagnosis codes (ICD-10-CM) and procedure codes (ICD-10-PCS) by one year to October 1, 2014. An article in Health Affairs titled "There Are Important Reasons For Delaying the Implementation Of The New ICD-10 Coding System" asserts that the ICD-10-CM conversion will be "expensive, arduous, disruptive, and of limited direct clinical benefit." Contrary to the conclusions in this article, implementation of the ICD-10-CM and ICD-10-PCS code sets will provide major advantages over the existing ICD-9-CM code set.

Impact of the transition to ICD-10 on Medicare inpatient hospital payments.

Objective: On October 1, 2013, the reporting of diagnoses and procedures in the U.S. will transition from the clinical modification of the ninth revision of the International Classification of Diseases (ICD-9-CM) to the tenth revision (ICD-10).

Inappropriate use of payment weights to risk adjust readmission rates.

In this article, the authors demonstrate that the use of relative weights, as incorporated within the National Quality Forum-endorsed PacifiCare readmission measure, is inappropriate for risk adjusting rates of hospital readmission.

A new approach to reducing payments made to hospitals with high complication rates.

This article proposes a redesign of the Medicare inpatient prospective payment system to reduce payments made to hospitals with high complication rates. We compute risk-adjusted, expected complication rates for hospitals and compare them to actual complication rates in order to determine the number of excess complications. Hospital payment reductions then are computed based on the number of excess complications in a hospital.

Paying for outcomes, not performance: lessons from the Medicare Inpatient Prospective Payment System.

Drawing on lessons learned from the implementation of the Medicare Inpatient Prospective Payment System (IPPS), the authors propose principles for the design and implementation of a hospital payment system based on paying for outcomes.

Achieving cost control, care coordination, and quality improvement through incremental payment system reform.

The healthcare reform goal of increasing eligibility and coverage cannot be realized without simultaneously achieving control over healthcare costs. The reform of existing payment systems can provide the financial incentive for providers to deliver care in a more coordinated and efficient manner with minimal changes to existing payer and provider infrastructure. Pay for performance, best practice pricing, price discounting, alignment of incentives, the medical home, payment by episodes, and provider performance reports are a set of payment reforms that can result in lower costs, better coordination of care, improved quality of care, and increased consumer involvement.

Estimating the costs of potentially preventable hospital acquired complications.

California and Maryland hospital data are used to estimate the incremental cost associated with 64 categories of hospital acquired complications. The reason for admission, severity of illness at admission and the presence of hospital acquired complications are used in a linear regression model to predict incremental per patient cost yielding an adjusted R2 of 0.58 for Maryland data and 0.