Prospective payment to encourage system wide quality improvement

McNair, Peter, Borovnicar, Daniel, Jackson, Terri and Gillett, Steve (2009) Prospective payment to encourage system wide quality improvement. Medical Care, 47 3: 272-278. doi:10.1097/MLR.0b013e31818b0825

Author McNair, Peter
Borovnicar, Daniel
Jackson, Terri
Gillett, Steve
Title Prospective payment to encourage system wide quality improvement
Journal name Medical Care   Check publisher's open access policy
ISSN 0025-7079
Publication date 2009-03
Sub-type Article (original research)
DOI 10.1097/MLR.0b013e31818b0825
Volume 47
Issue 3
Start page 272
End page 278
Total pages 7
Place of publication Philadelphia, PA, United States
Publisher Lippincott Williams & Wilkins
Language eng
Formatted abstract
Background: Casemix-based inpatient prospective payment systems allocate payments for acute care based on what is done within an episode of care without regard for the outcome. To date, they have provided little incentive to improve quality. The Centers for Medicare & Medicaid Services have recently excluded 8 avoidable complications from their payment system.
Objective: This study models an inpatient prospective payment system that comprehensively excludes not-present-on-admission and other complication diagnoses from the entire funding process, effectively adding a diagnosis-related group (DRG)-specific average complication payment across all discharges. Research
Design: Complication-averaged cost weights were estimated using the same patient level cost dataset used for estimating the relative resource weights for Victorian public hospitals in 2006-07. All codes with a "C" prefix (secondary diagnoses that are coded as having arisen after admission) and codes that define a condition that prima facie represent a specific complication of care were excluded from the code string. The episodes were then regrouped to DRGs and new complication-averaged cost weights were developed.
Results: When complication codes were excluded across 1.2 million discharges, 1.37% became ungroupable, 14.86% included at least one complication diagnosis code, and 1.56% grouped to another DRG. Modeled funding for individual metropolitan hospitals in Victoria, Australia, was redistributed by -2.5% to 1.8%.
Conclusions: The cost weights reflect the average cost of preventable and unpreventable complications and have the potential to drive improvements in clinical care. This study is in contrast to previous studies estimating the funding impact of preventing all complications.
Keyword Hospital reimbursement
Quality improvement
Hospital quality
Q-Index Code C1
Q-Index Status Provisional Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collection: School of Medicine Publications
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Citation counts: TR Web of Science Citation Count  Cited 13 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 15 times in Scopus Article | Citations
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Created: Thu, 03 Sep 2009, 08:35:20 EST by Mr Andrew Martlew on behalf of School of Medicine