What Does Medicare Pay For? Disentangling the Flow of Funds to Health Care Providers

Health Affairs

Volumn 17, Issue 4, 1998, Pages 184-197

  Welch, W Pete ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; ECONOMICS; HEALTH CARE COST; HUMAN; MEDICAL FEE; MEDICARE; STATISTICS; UNITED STATES;

FEE-FOR-SERVICE PLANS; HEALTH EXPENDITURES; HUMANS; MEDICARE; UNITED STATES;

EID: 0032109497     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.17.4.184     Document Type: Article

References (23)

1. U.S. Office of Management and Budget, Historical Exhibits, Budget of the United States Government, Fiscal Year 1998 (Washington: U.S. Government Printing Office, 1997) disaggregates benefit payments only by Parts A and B. Committee on Ways and Means, U.S. House of Representatives, 1996 Green Book (Washington: U.S. GPO, 1996) breaks down Medicare expenditures into payments for seven types of services.
2. U.S. Office of Management and Budget, Historical Exhibits, Budget of the United States Government, Fiscal Year 1998 (Washington: U.S. Government Printing Office, 1997) disaggregates benefit payments only by Parts A and B. Committee on Ways and Means, U.S. House of Representatives, 1996 Green Book (Washington: U.S. GPO, 1996) breaks down Medicare expenditures into payments for seven types of services.
3. The necessary data could be obtained by requiring HMOs to submit claims and paying them a percentage of what Medicare would pay fee-for-service providers. The capitation payment rate could be lowered to maintain budget-neutrality. See W.P. Welch and H.G. Welch, "Fee-for-Data: A Strategy to Open the HMO Black Box," Health Affairs (Winter 1995): 104-116.
4. Cost reports are publicly available only for hospitals, SNFs, and home health agencies. A few large hospitals (such as those of the Health and Hospital Corporation in New York City) are not represented in the cost report file, so the file cannot be used to calculate total hospital expenditures.
5. The figures in the IBPR and the claims are largely consistent for each of the large provider types: hospitals, SNFs, and home health agencies.
6. The Health Care Financing Administration pays HMOs directly.
7. Expenditures are usually reported according to when the expense was paid, not when the service was delivered. They are called "outlays" in the first case and "incurred obligations" in the second. I focus on outlays.
8. The residual calculation is necessary because a small proportion of FI expenditures (for example, cash recoveries from secondary payers) cannot be assigned to a provider type.
9. Author's calculations based on Medicare National Claims History Files, CY 1996; and Monthly Treasury Statement, FY 1996.
10. R. Berenson and J. Holahan, "Sources of the Growth in Medicare Physician Expenditures," Journal of the American Medical Association (5 February 1992): 687-691.
11. M.E. Miller, M.B. Sulvetta, and E. Englert, "Service Mix in the Hospital Outpatient Department: Implications for Medicare Payment Reform," Health Services Research (April 1995, Part I): 59-78.
12. Prospective Payment Assessment Commission, Medicare and the American Health Care System (Washington: ProPAC, June 1996), 93.
13. Expenditures on home health agencies are largely for beneficiaries who are not eligible for any Part A service. Rural health clinics and federally qualified health centers are similar provider types: Both are limited to areas designated as having a shortage of physicians, and both deliver physician services. Finally, community mental health centers deliver a range of mental health services.
14. When assisted-living arrangements are included, this figure increases to 87 percent of the recipients.
15. All three categories also are delivered in physicians' offices.
16. Fee schedules and prospective payment systems are similar in that under both the payment per unit is determined without regard to the provider's cost. The two methodologies differ in how broadly the unit of payment is defined; the broader the unit, the more likely the methodology is to be labeled a "PPS."
17. L.J. Kozak et al., "Ambulatory Surgery in the United States, 1994," Advance Data 283 (Hyattsville, Md.: National Center for Health Statistics, 1997); L.F. McCaig, "National Hospital Ambulatory Medical Care Survey: 1995 Outpatient Department Summary," Advance Data 284 (Hyattsville, Md.: NCHS, 1997); and American Hospital Association, Emerging Trends (Summer 1996).
18. L.J. Kozak et al., "Ambulatory Surgery in the United States, 1994," Advance Data 283 (Hyattsville, Md.: National Center for Health Statistics, 1997); L.F. McCaig, "National Hospital Ambulatory Medical Care Survey: 1995 Outpatient Department Summary," Advance Data 284 (Hyattsville, Md.: NCHS, 1997); and American Hospital Association, Emerging Trends (Summer 1996).
19. L.J. Kozak et al., "Ambulatory Surgery in the United States, 1994," Advance Data 283 (Hyattsville, Md.: National Center for Health Statistics, 1997); L.F. McCaig, "National Hospital Ambulatory Medical Care Survey: 1995 Outpatient Department Summary," Advance Data 284 (Hyattsville, Md.: NCHS, 1997); and American Hospital Association, Emerging Trends (Summer 1996).
20. H.D. Banta, T. Schersen, and E. Jonsson, "Implications of Minimally Invasive Therapy," Health Policy (January 1993): 167-178; and M. Burke, "New Surgical Technologies Reshape Hospital Strategies," Hospitals (5 May 1992): 30-42.
21. H.D. Banta, T. Schersen, and E. Jonsson, "Implications of Minimally Invasive Therapy," Health Policy (January 1993): 167-178; and M. Burke, "New Surgical Technologies Reshape Hospital Strategies," Hospitals (5 May 1992): 30-42.
22. D. Ermann and J. Gabel, "The Changing Face of American Health Care: Multihospital Systems, Emergency Centers, and Surgery Centers," Medical Care (May 1985): 401-420.
23. Of the expenditures for tests at other outpatient sites, about half were performed in independent laboratories and half in physicians' offices. Author's analysis of Medicare's physician file using the variable for provider type.