Task force backs ambulatory payment adjustments for hospitals - Healthcare Financial Management Association Chairman's Task Force on Ambulatory Care

Healthcare Financial Management, June, 1990

Historically, ambulatory service payments have been based on the specific service provided, often called units of service. A unit of service is a procedure, test, modality, prescription, visit, and so on.

OBRA 86 requires consideration of the "bundling" of outpatient services in the development of a new ambulatory payment system.

Bundling would group a set of procedures normally performed together under one payment rate.

Bundling is consistent with HCFA's inpatient diagnosis related group (DRG) method. However, the task force determined that while payments for bundles of services would somewhat simplify payment by creating fewer individual procedure payments, the main motivation behind bundling of services is to constrain costs and to control utilization through the payment system.

The payment system should not be designed with utilization control as its primary purpose. Payment for a bundle of services should only be considered if the bundle of services reasonably relates to resources consumed and are within the direct control of the provider being paid, the task force recommended.

Wide, medically-justifiable variations in the array of services provided and the resultant cost of a bundle can place the provider at significant financial risk and, potentially, negatively affect the accessibility and quality of outpatient treatment.

There are 13 systems in various stages of development that group or bundle services. Many of these systems are not fully developed, and ambulatory services that may potentially be involved have not been fully identified.

In addition, other significant issues that must be evaluated before bundled rates are accepted have not been addressed, according to the task force. These issues include: , Applicability of the rate to all

possible delivery settings; b- Development of a process for

modification of bundles or payments

for changes in practice patterns

and technology; h Inclusion of physician services;

and le Division of payments among providers.

Additionally, with the exception of ambulatory surgery, none of the potential grouping systems have been adequately tested to determine the extent to which the systems appropriately reflect resource consumption or recognize essential differences in actual costs among providers, the task force said.

The blending of freestanding ASC rates, which may themselves be inadequate, with hospital ambulatory surgery costs may yield inadequate rates for hospital outpatient departments, the task force concluded. El