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Financial Impact of Outpatient Payment Reform on Rural Hospitals
The Balanced Budget Act of 1997 requires that Medicare hospital outpatient services be reimbursed on the basis of a prospective payment system. Impact analysis by HCFA has suggested that small rural hospitals may face greater payment declines under outpatient prospective payment systems than other hospitals; however, data quality issues raise the concern that there may be a systematic bias in HCFAs analyses. We examine the theory that small hospitals may have been more likely to have poor quality data and higher costs per service. Thus, not only would they be more likely to be omitted from HCFAs simulation, the median costs estimated for payment may be underestimated as a result. We examine 1998 Medicare outpatient claims for a sample of approximately 1100 urban and rural hospitals linked to other hospital-level files and compare the quality of claims filed by rural and urban hospitals. Quality is assessed by the availability of the necessary diagnosis and procedure codes to enable us to classify claims into payment groups. Average costs per service are estimated by using Medicare cost reports. Study findings should enable policymakers to better understand what role bill coding has on how outpatient PPS impacts rural - especially small rural - hospitals.
Publications
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Quality of Medicare Outpatient Claims Data and Its Implications for Rural Outpatient Payment Policy
Author(s): Penny E. Mohr
Date: 12 / 2001
Analyzes Medicare outpatient claims to see if relatively poor quality of small rural hospitals' claims data have amplified the negative effects of the new payment system on small hospitals. Compares three indicators of quality across urban, rural, and small rural hospitals: 1) proportion of claims with missing procedure codes, 2) proportion of claims with multiple procedures codes, and 3) proportion of "low-intensity" versus higher intensity evaluation and management or emergency room services. Finds no significant differences among urban, rural, and low-volume rural hospitals with respect to missing codes; urban hospitals were more likely to have multiple codes; and small rural hospitals were substantially more likely to submit low intensity claims. Study does not refute the possibility that undercoding played a role in CMS's forecasts of negative impact of the outpatient PPS for small rural hospitals. Report available on request.
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