The effect of the Medicare prospective payment system on the adoption of new technology: the case of cochlear implants

Article Abstract:

Medicare reimbursements are related to a prospective payment system based on the coding of patients' illnesses by diagnosis-related groups or DRGs. The process of adding new DRGs that adequately compensate hospitals and physicians for the use of new technologies has been slow and often distorted by what appears to be incomprehensible bureaucratic processing. As a result of such inadequate reimbursements, even established and accepted medical and surgical techniques are underutilized. The use of cochlear implantation, the implantation of an electrode system into the ears of deaf patients, has been adversely affected because of the inability of the DRG system to properly compensate for this effective procedure. The main manufacturer of the product has now discontinued production of the cochlear implant because of the poor utilization of its product. This represents a negative incentive to use the new technology.

Hospital utilization, Hospital stays, Cochlear implants, Prospective payment systems (Medical care), Diagnosis related groups

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Assessing the implementation of physician-payment reform

Article Abstract:

The Medicare fee schedule for repayment of physicians' services inequitably allocates funds, favoring invasive procedures over medical services. The Medicare fee schedule in use since 1992 is based on the resource-based relative-value scale which uses a monetary-conversion factor to translate relative-value units into dollars. Using the monetary-conversion factor and the Medicare fee schedule, the simulated net income for different medical specialties was determined. If all payments had been made according to the 1992 Medicare fee schedule, pediatricians would have earned $35,000, family physicians would have earned $40,000 and thoracic surgeons would have earned $241,000. Furthermore, medical specialists would have been shortchanged in the reimbursement of their actual practice costs by 25% to 40% while surgeons would have been over-compensated for their costs.

Relative value scale payment systems (Medical care)

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The Medicare-HMO revolving door - the healthy go in and the sick go out

Article Abstract:

The government may not be saving much money by enrolling Medicare patients in health maintenance organizations (HMOs). Researchers compared HMO enrollment and hospital billing records in South Florida to determine the use of medical services by Medicare beneficiaries in a fee-for-service system and those in an HMO. Before enrolling in an HMO, Medicare patients used 66% of the medical services used in the fee-for-service group. Those who dropped out of the HMO and re-entered a fee-for-service system used 180% of the services used in the fee-for-service group. Medicare patients are allowed to drop out of an HMO to obtain services not covered by the plan.

Medical care, Medical care utilization, Health maintenance organizations

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