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The Inpatient Prospective Payment System

Medicare payments for health care organizations have a complex set of rules. Medicare has paid skilled nursing facilities on a prospective basis since July 1, 1998. The rate is a per diem rate that is calculated to include the costs of all services, including routine, ancillary, and capital. Per diem payments for each admission are case mix adjusted using a resident classification system known as resource utilization groups.

Medicare uses the inpatient prospective payment system. A prospective payment system is one in which the healthcare organization receives a certain payment for each episode of care provided to a patient, regardless of the actual amount of care used. The amount of the payment is based on the value of a certain diagnosis as determined by Centers for Medicare & Medicaid Services in the form of diagnosis-related groups. Please further explain this system.

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In Medicare payment is made based on resource utilization groups. These are mutually exclusive categories that show levels of resource required in long term care settings to help make Medicare payments. These are assigned to individuals based on data elements derived from LTC minimum data set. There is hierarchy and each resource utilization group is associated with relative weighing factors. Fundamentally there are three basic sets of resource utilization groups. These are numbers 34, 44, and 53. Number 34 is meant for Medicaid payments. Number 44 is meant for Medicare prospective payments. It has seven major categories of care. These are 14 rehabilitation resource utilization groups, 3 extensive service groups, 3 special service care, 6 clinically complex groups, 4 impaired cognition groups, 4 behavioral only, and 10 reduced physical functioning groups. Number 53 is meant for Medicare prospective payments since January 2006. It has eight major categories which are 9 rehabilitation & extensive service groups, 9 rehabilitation only groups, 3 extensive service groups, 3 special care groups, 6 clinically ...

Solution Summary

This solution explains how the inpatient prospective payment system works The sources used are also included in the solution.