Discussion 2: Medicare Payments In a 200 words,Describe how Medicare reimburses the major types of providers, and discuss the implications of these methods for an organization's resource management

Question
Describe how Medicare reimburses the major types of providers, and discuss the
implications of these methods for an organization's resource management
Answer
Medicare reimburses various types of providers like Hospital Inpatient, Outpatients, skilled
nursing facilities and home health agencies
1. Hospital Inpatients
Medicare reimburses different hospitals on account of inpatient healthcare taking bundled
service unit as the basis which is also sometimes called as Prospective Payment System. It is
pertinent to mention here that apart from hospitals ba
ed by law, various hospitals which are
members of the Medicare scheme have to enrol in prospective payment system. The
prospective payment system incorporates payment towards non physician related expenses in
the hospital that are given to inpatients. It also includes the services that are given by outside
service providers like clinical laboratories and various radiology and X-Ray labs. Medicare
issues a single complete payment to the hospital for hospital inpatients, and the hospital then
takes on the onus of releasing payments to outside service providers for non-physician related
services as described above. The criteria for all prospective payments is the DRG system.
The said system uses ICD–9–CM that categorises diseases into 25 main categories based on
organ systems that is further
oken down into 559 groupings or DRGs. The complete
payment to a hospital as per Medicare rules is composed of the following elements.
A. Prospective payments
1. DRG operating payment
2. DRG capital payment
B. Reasonable cost payments
The DRG operating payment can be obtained by multiplying the hospital dollar rate with
DRG specific case weight. The dollar rate has a labor and non-labor part. The labor part is
generally adjusted for the living cost. All the US hospitals have been assigned a wage index
value which when multiplied with the labor part of Medicare standardized payment gives the
DRG operating payment. The DRG operating payment may be augmented by adjustments
towards Indirect medical education, disproportionate share and some outlier payments. These
extra payments adjust additional costs towards treatment of patients. Disproportionate share
payment adjusts costs towards treatment of patients eligible for Medicaid and Medicaid
facilities. Outlier payments include payments for patients using extremely large resources.
Another portion of total Medicare payment goes towards meeting reasonable costs in direct
medical education, cost of acquiring kidneys, and unrecoverable debts...