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Highlights

Under Medicare's prospective payment system (PPS), hospitals are paid on the basis of patient illness and receive predetermined rates for treating patients with the same diagnosis which are combined into diagnosis related groups (DRG). GAO evaluated hospitals' compliance with Medicare guidelines for inpatient treatment of alcohol abuse and examined the effects of PPS rates on the delivery and payment of alcoholism treatment services.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Health Care Financing Administration 1. The Administrator, HCFA, should refine the study of alcoholism treatment DRG by: (1) verifying, on a sample basis, the data submitted by hospitals; and (2) identifying and accounting for all types of treatments, including detoxification, rehabilitation, combination, and recap or reinforcement treatments.
Closed - Implemented
HCFA revised the alcoholism DRG in line with this recommendation in the September 3, 1985, modifications to PPS. The changes became effective for hospital cost reporting periods beginning on or after October 1, 1987.
Health Care Financing Administration 2. The Administrator, HCFA, should ensure that PRO intermediaries use alcoholism treatment review criteria that are consistent with and cover all aspects of Medicare guidelines for alcoholism treatments.
Closed - Implemented
HCFA informed GAO that any action taken in regard to this recommendation will occur during the next cycle of PRO contract awards. The scope of work statement for PRO contracts covering FY 1987 and 1988 specifically directs PRO to use HCFA coverage guidelines when reviewing alcoholism treatment.

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