Medicare Hospital Payments: Refinements Needed to Better Account for Geographic Differences in Wages

PDF Version Also Available for Download.

Description

A letter report issued by the General Accounting Office with an abstract that begins "The Medicare program's prospective payment system (PPS) for inpatient hospital services provides incentives for hospitals to operate efficiently by paying them a predetermined, fixed amount for each inpatient hospital stay regardless of the actual costs incurred in providing the care. Although the fixed amount is based on national average costs, actual per stay payments vary widely across hospitals, primarily because of two payment adjustments in the PPS. One adjustment accounts for cost differences across patients due to their care needs and the other accounts for the ... continued below

Creation Information

United States. General Accounting Office. September 30, 2002.

Context

This report is part of the collection entitled: Government Accountability Office Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. More information about this report can be viewed below.

Who

People and organizations associated with either the creation of this report or its content.

Publisher

Provided By

UNT Libraries Government Documents Department

Serving as both a federal and a state depository library, the UNT Libraries Government Documents Department maintains millions of items in a variety of formats. The department is a member of the FDLP Content Partnerships Program and an Affiliated Archive of the National Archives.

Contact Us

What

Descriptive information to help identify this report. Follow the links below to find similar items on the Digital Library.

Description

A letter report issued by the General Accounting Office with an abstract that begins "The Medicare program's prospective payment system (PPS) for inpatient hospital services provides incentives for hospitals to operate efficiently by paying them a predetermined, fixed amount for each inpatient hospital stay regardless of the actual costs incurred in providing the care. Although the fixed amount is based on national average costs, actual per stay payments vary widely across hospitals, primarily because of two payment adjustments in the PPS. One adjustment accounts for cost differences across patients due to their care needs and the other accounts for the substantial variation in labor costs across the country. The Medicare program's labor cost adjustment may not adequately account for geographic differences in hospital wages because of problems with the definition of labor markets. The geographic areas used by Medicare to approximate hospital labor markets often encompass large areas in which hospitals in different parts of an area or different types of communities pay widely varying wages. Geographic reclassification does not systematically address inadequacies in the way the Medicare program defines geographic areas, although it allows some, but not all, hospitals that may be in distinct labor market and pay wages above the average in their area to receive a higher labor cost adjustment. Geographic reclassification reduces payments to hospitals that do not reclassify because of the budget neutrality requirement, and the amount of this reduction would vary across hospitals under a state-specific budget neutrality approach depending on their location. In 2002, payments to metropolitan hospitals that were not reclassified were 1 percent lower and payments to nonmetropolitan hospitals that were not reclassified were 0.6 percent lower because of geographic reclassification. If the budget neutrality provision were calculated and applied within individual states instead of nationally, the adjustment would be smaller in those states in which hospitals did not benefit much from reclassification and higher in states where a higher proportion of hospitals reclassified."

Language

Item Type

Identifier

Unique identifying numbers for this report in the Digital Library or other systems.

Collections

This report is part of the following collection of related materials.

Government Accountability Office Reports

The U.S. Government Accountability Office (GAO) is an independent, nonpartisan agency that works for the U.S. Congress investigating how the federal government spends taxpayers' money. Its goal is to increase accountability and improve the performance of the federal government. The Government Accountability Office Reports Collection consists of over 13,000 documents on a variety of topics ranging from fiscal issues to international affairs.

What responsibilities do I have when using this report?

When

Dates and time periods associated with this report.

Creation Date

  • September 30, 2002

Added to The UNT Digital Library

  • June 11, 2014, 5:03 a.m.

Usage Statistics

When was this report last used?

Yesterday: 0
Past 30 days: 0
Total Uses: 2

Where

Geographical information about where this report originated or about its content.

Place Name

Publication Place

Map Information

  • map marker Automatically generated Place Name coordinates.
  • map marker Automatically generated Publication Place coordinates.
  • Repositioning map may be required for optimal printing.

Mapped Locations

Interact With This Report

Here are some suggestions for what to do next.

Start Reading

PDF Version Also Available for Download.

International Image Interoperability Framework

IIF Logo

We support the IIIF Presentation API

United States. General Accounting Office. Medicare Hospital Payments: Refinements Needed to Better Account for Geographic Differences in Wages, report, September 30, 2002; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc290628/: accessed September 22, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.