Good quality care increases hospital profits under prospective payment

Health Care Financing Review, Spring, 1992 by David C. Hsia, Cathaleen A. Ahern

Upon identification of a discharge with one or more irrefutable quality problems (e.g., non-workup of life-threatening and potentially reversible symptoms, non-delivery of essential medication), the physician reviewer dictated a narrative summary describing the nature of the deficiency and citing supporting evidence from the chart. The reviewers had extensive chart audit experience, board certification in pertinent clinical specialties, and recent patient-care responsibility. Appropriate specialists reviewed records presenting specialty care issues. Physician panels decided difficult cases. Reliability checks demonstrated no significant misclassifications (agreement = 0.994, Kappa = 0.963, Z = 20.8) (Cohen, 1960).

Physicians identified four types of poor quality:

* Omission of medically indicated services (skimping).

* Provision of unnecessary services.

* Complication to indicated services

(e.g., postoperative infection).

* Other.

Discharges classified as having only unnecessary services, complications, or "other" did not undergo further review because PPS provides no economic incentives promoting such behaviors. The physicians then classified the skimping discharges by type of service omitted:

* History and physical examination.

* Laboratory test (e.g., blood glucose).

* Radiology or non-invasive imaging

(e.g., ultrasound).

* Other diagnostic procedure (e.g., colonoscopy, biopsy, or other invasive procedure).

* Therapy (e.g., medication, surgery).

* Other.

Finally, they identified whether the omitted services could have caused a change in ICD-9-CM codes. They selected revised diagnosis and therapy codes without knowing how these changes would affect selection DRG classification and its payment consequences. The classifiers anecdotally observed that they had no difficulty choosing the revised codes. Reliability checks disclosed no significant disagreements about revised diagnoses (agreement = 0.973, Kappa = 0.941, Z = 19.0).

Medicare-approved grouper software processed the resulting ICD-9-CM codes to determine any new DRGs resulting from addition of revised diagnoses identified by reviewers, and to assign relative weights and corresponding dollar payment. Medicare data files supplied the average Part B payment for each omitted service. These estimates of procedure cost did not warrant adjustment for increased length of stay because the omitted services proved to be minor procedures not prolonging hospitalization. For this reason, the methodology also did not adjust for the probability of complications to the omitted services. Medline literature searches provided information about the probabilities of each diagnostic test's yielding a positive result. Spreadsheet software calculated the expectation, average change, and total change resulting from the independent variables.

A sensitivity analysis identified the variables that had the greatest influence on the final result (Stokey and Zeckhauser, 1978; Mason, 1987; Leamer, 1985). Note that despite a similar nomenclature, economic and public policy "sensitivity" bears no relationship to epidemiological "sensitivity," the percentage of positive tests among the populations of individuals with the disease (Budnick, 1987). Rather, where a projected result depended on accurate measurement of a sequence of related, independent variables, sensitivity analysis successively substituted probable high and low values for each variable for the usual point estimate (Poister, 1978). This technique produced a range (or interval) of probable results in place of the usual single result.