The financial impact of Medicare diagnosis-related groups. Effect upon hospitals receiving cardiac patients referred for tertiary care

Abstract

To evaluate the financial effects of diagnosis-related groups, we compared 128 Medicare and 183 non-Medicare cardiac patients aeromedically evacuated to a major referral center for critical care. A significant difference (p less than 0.05) was found between Medicare patients vs non-Medicare patients for age (71 +/- 7 vs 51 +/- 9 years) and mortality (13 percent vs 6 percent). No significant difference was found for admissions to the intensive care unit (95 percent vs 95 percent), mean length of stay in intensive care (4.7 +/- 5.3 vs 3.9 +/- 5.4 days), mean length of hospitalization (9.6 +/- 7.5 vs 7.9 +/- 7.0 days), mean number of International Classification Diagnoses (ICD-9) surgical operations (0.8 +/- 1.3 vs 0.6 +/- 1.2), and mean number of ICD procedures (3.0 +/- 2.3 vs 3.3 +/- 2.1). The average cost of care ($13,427 +/- $12,700 per patient) for Medicare patients was higher but not statistically different from non-Medicare patients ($10,474 +/- $10,114 per patient). Prior cost-based Medicare payments ($10,594 +/- $9,861 per patient) have been significantly (p less than 0.01) reduced by 24 percent under the Medicare diagnosis-related group (DRG) prospective payment system ($8,024 +/- $4,824). The DRG payments are significantly less than (p less than 0.001) and provide only 60 percent of the true hospital cost required to care for Medicare cardiac patients referred for tertiary care ($13,427 +/- $12,700 per patient). A Medicare DRG system adopted by third-party payers would reduce present hospital revenues from $9,524 +/- $8,422 per patient to $7,968 +/- $4,800 per patient and would provide only 68 percent of the cost required in the care of all cardiac patients referred for tertiary care ($11,690 +/- $11,344). The results of this study indicate that hospitals that receive large numbers of seriously ill cardiac patients, especially Medicare patients, referred for critical care are at a significant financial disadvantage under the Medicare DRG system. Future economic pressures may prohibit critical care treatment centers from accepting large numbers of cardiac patients referred for intensive care and reimbursed under the current Medicare DRG payment policy.