Medicare: Alternatives for Paying Hospital Capital Costs
HRD-86-93
Published: Aug 11, 1986. Publicly Released: Aug 11, 1986.
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Highlights
In response to a congressional request, GAO reported on the Department of Health and Human Services' (HHS) methods for including capital costs related to inpatient services in Medicare's Prospective Payment System or for modifying the current cost-reimbursement system, specifically: (1) the general principles involved with prospective payment of capital costs; (2) the effects of various types of proposals on hospitals; and (3) alternatives that might lessen any potential adverse effects.
Recommendations
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| To lessen the immediate effects of prospective capital payment on hospitals, the House Ways and Means Committee's Health Subcommittee may wish to consider alternatives to the HHS proposal, including: (1) using a long transition period to full prospective capital payment to lessen the immediate effect on individual hospitals, identify emerging problems, and make adjustments if necessary; (2) initially covering only movable equipment under a prospective capital payment system, which also would lessen the effect on individual hospitals, permit HHS to gain experience with prospective capital payments, and provide information to be used in deciding whether to move to a total prospective payment system for capital costs; and (3) making changes to the current cost-reimbursement system to give hospitals greater incentives for efficiency similar to those of prospective capital payment. These changes could be targeted at perceived capital payment problems and therefore affect fewer hospitals. | Congress directed HHS to make prospective payments for capital costs beginning in fiscal year (FY) 1992. The most recent HHS proposal incorporated the first two alternatives in this recommendation. |
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Topics
Administrative costsHealth care cost controlHospital administrationPatient care servicesMedicareHospitalsDepreciationDiagnosis related groupsPatient careProspective payments