Dr. D. Marcinko MBA [Publisher-in-Chief] Disruptive Innovator
Dr. David E. Marcinko MBA CMP™ is founding CEO of iMBA Inc, a leading national scope provider of medical practice management reports, books, dictionaries, white-papers, financial planning and advisory opinions, FMV appraisals and educational seminars. The firm serves physicians, nurses and medical societies; RIAs, BDs, wealth and hedge fund managers; accountants, insurance agents and financial services providers; emerging healthcare entities, hospitals, clinics and IPAs; the press and related e-media. iMBA Inc also offers an experienced yet innovative consulting approach that evaluates opportunities to redesign healthcare processes and provide solutions that can be put into action to affect organizational change. Previously, Dr. Marcinko was a financial analyst, professor of healthcare administration and economics, and co-founder of an Ambulatory Surgery Center sold to a public company. Today, as ME-P Publishing Editor, he is a popular futurist, speaker, virtual consultant, thought leader and best selling author integrating medical economics, finance and modern transformational healthcare 2.0 business strategies [Phone: 1-770.448.0769].
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Health Dictionary Series
Three-volume paperback set of more than 30,000 health administration definitions, terms, modern abbreviations and non-clinical acronyms.
Hospitals & Healthcare Organizations
This book addresses the ubiquitous struggle of healthcare organizations and hospitals with decreasing revenues, increasing costs, and high consumer expectations in a competitive market.
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e-Podiatry Consent Forms™
Innovative software programs that solve informed consent problems and enhance the education, discussion and documentation of the IC process for physicians performing foot and ankle surgery.
Podiatry Boards Preparation
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Sharkey, Howes & Javer
You deserve to live the life you want and we can help create it. Our business is about you, understanding your unique financial goals and planning your path to financial success.
Joshua Goldman MD MBA
A resident physician at UCLA pursuing post-graduate training in Family Medicine who attended graduate school at USC, completed his MD at the Keck School of Medicine concurrent with an MBA at the Marshall School of Business.
Leila M. Hover; MLS, DMH
Dr. Hover is a member of the IRB of Atlantic Health System in New Jersey and the Bioethics Committee of Overlook Hospital in Summit, New Jersey. She is also a principal for Information Developers, a literature research and document retrieval organization.
Neil H. Baum MD
A urologist who speaks to hospitals, pharmaceutical and medical manufacturing companies on improving communications between physicians and patients, practice management, marketing, promotion and motivation.
Peter Benedek PhD CFA
My mission is to create an independent network for retirement finance education and advocacy.
Richard A. Berning; MD
PrivatePractice.MD is a common venue for medical providers to share their insights and tips about how to best manage their private practice and their non-clinical professional lives.
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Health Capital Consultants LLC specializes in valuation, merger & acquisition, litigation support & expert testimony, financial analysis, & industry research services for the healthcare industry.
Shahid N. Shah; MS
An internationally recognized HIT thought-leader across the Internet, and consultant to various federal agencies on technology matters and winner of Federal Computer Week’s coveted “Fed 100″ Award, in 2009.
Somnath Basu; PhD, MBA
Dr. Basu is a Professor of Finance at California Lutheran University and the Director of its California Institute of Finance.
The Medicare Prospective Payment System (PPS) was introduced by the federal government in October, 1 1983, as a way to change hospital behavior through financial incentives that encourage more cost-efficient management of medical care. Under PPS, hospitals are paid a pre-determined rate for each Medicare admission. Each patient was classified into a diagnosis-related group (DRG) on the basis of clinical information. Except for certain patients with exceptionally high costs (“outliers”), the hospital is paid a flat rate for the DRG, regardless of the actual services provided.
Enter the DRGs
Each Medicare patient is classified into a DRG according to information from the medical record that appears on the bill:
principal diagnosis (why the patient was admitted);
complications and co-morbidities (other secondary diagnoses);
age and patient gender; and
discharge disposition (routine, transferred, or expired).
Medical Records Documentation
Diagnoses and procedures must be documented by the attending physician in the patient’s medical record. They are then coded by hospital personnel using ICD-9-CM nomenclature. This is a numerical coding scheme of over 13,000 diagnoses and more than 5,000 procedures. The coding process is extremely important since it essentially determines what DRG will be assigned for a patient. Coding an incorrect principal diagnosis or failing to code a significant secondary diagnosis can dramatically affect reimbursement.
Originally, there were more than 490 DRG categories defined by the Centers for Medicare and Medicaid Services (CMS, formerly known as the Health Care Financing Administration [HCFA]). Each category was designed to be “clinically coherent.” In other words, all patients assigned to a DRG are deemed to have a similar clinical condition. The PPS is based on paying the average cost for treating patients in the same DRG. Each year CMS makes technical adjustments to the DRG classification system that incorporates new technologies (e.g., laparoscopic procedures) and refines its use as a payment methodology. CMS also initiates changes to the ICD-9-CM coding scheme. The DRG assignment process is computerized in a program called the “grouper” that is used by hospitals and fiscal intermediaries. It was last significantly updated by CMS in 2006.
Each year CMS also assigns a relative weight to each DRG. These weights indicate the relative costs for treating patients during the prior year. The national average charge for each DRG is compared to the overall average. This ratio is published annually in the Federal Register for each DRG. A DRG with a weight of 2.0000, for example, means that charges were historically twice the average; a DRG with a weight of 0.5000 was half the average; and so on.
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Did you know that prospective payment systems like APCs and MS-DRGs are not used by CAHs. Any thoughts?
And now … on the Outpatient Prospective Payment System
Medicare payments for outpatient services are based on a PPS. Originally, hospitals were paid for outpatient services based on the allowable incurred costs. Section 4523 of the BBA allowed CMS, then known as the Health Care Financing Administration (HCFA), to implement a PPS under Medicare for hospital outpatient services in August 2000.
Payments are based on a set of relative weights, a conversion factor, and an adjustment for geographic differences in input prices.
The PPS includes an outlier adjustment for extraordinarily high cost services and “pass-through” payments for new technologies. CMS grouped outpatient procedures into approximately 750 APCs. The APCs group services and items that are clinically similar and use comparable resources. The APC is “bundled,” meaning it encompasses integral services and items with the primary service. The payment is intended to cover the hospital’s operating and capital costs.
The payment is determined by multiplying the relative weight for the APC by a conversion factor. The APC groups and their relative weights are reviewed annually. CMS updates the conversion factor for inflation using the hospital inpatient market basket index.
Services provided are assigned current procedural terminology (CPT) codes and classified into APCs, each being assigned a specific payment rate. Hospitals have the ability to bill for various services performed on an individual on a single day.
However, if there are multiple surgical procedures performed on a single day, the APC payment is subject to discounting.
More Emphasis on Quality While Reducing Costs if New CMS Head is Confirmed
Although no official announcement has been made, the White House press office has confirmed that Donald Berwick, MD, president of the Institute for Healthcare Improvement (IHI) and a Harvard Medical School professor, will be Obama’s pick to head the agency. Berwick, a pediatrician by training, served on an advisory commission for patients rights during the Clinton administration and on an Institute of Medicine panel focused on the reduction of medical errors and improved patient safety.
Boosting quality while reducing costs will be the next administrator’s top priority as the Medicare program is scaled back by more than $400 billion over the next decade, and enrollment in state-run Medicaid programs explodes as a result of the health reform law and double-digit unemployment rates. As a result, the agency’s strategic focus will need to shift to increased use of chronic care management and quality improvement. Industry observers interviewed by Health Plan Week say that makes Berwick an ideal candidate.
Source: Health Plan Week [4/5/10]
More on Inpatient Prospective Payment Systems
Did you know that late last week, the Centers for Medicare and Medicaid Services released the fiscal year (FY) 2011 final rule for the inpatient prospective payment systems (IPPS) for acute-care hospitals and long-term acute-care hospitals, and the American Hospital Association (AHA) wasn’t impressed.
AHA CEO Rich Umbdenstock stated that U.S. hospitals “strongly disagree” with the rule, largely because CMS did not heed industry studies, as well as bipartisan congressional support, that recommended doing away with or reducing a 2.9 percent coding offset to general acute-care hospital payments. Adding further insult to injury, CMS reiterated that the 2.9 percent adjustment represents only half of the 5.8 percent adjustment required to recoup industry overpayments.