Health Care Fancg Note Use and cost of hospital outpatient services under Medicare, 1985 by Charles Helbg and Viola B. Latta Presented this article are program data on the use and cost of hospital outpatient (HOP) services rendered to aged and disabled Medicare beneficiaries durg calendar year 1985. Trend data are also presented for calendar years 1974-85. The data shown this article focus on charges, reimbursements, and reimbursements per enrollee as a means of measurg the cost of HOP services. The data provide formation to help identify trends and patterns of care for monitorg the Medicare HOP benefit and for evaluatg the impact of the patient hospital prospective payment system (PPS) on the use and cost of HOP services. Introduction Among the health care services covered by Medicare, reimbursements for HOP services have shown the largest rate of growth sce the ception of the program. From 1974, the first full year of coverage for disabled Medicare enrollees, through 1983, HOP reimbursements rose from $0.3 billion to $2.7 billion, an average annual rate of crease of 26 percent. Similarly, durg the same period, all Medicare expenditures showed an average annual rate of growth of about 20 percent. With the advent of the Medicare PPS October 1983, HOP expenditures contued to grow at a rapid pace. From 1983 through 1985, HOP expenditures rose to $4.1 billion, an average annual rate of crease of 23 percent. Durg the same period, all Medicare expenditures showed an average annual growth rate of about 12 percent. PPS legislation restructured the payment system by which short-stay hospitals are reimbursed for patient services rendered to Medicare beneficiaries. The new system gives short-stay hospitals the centive to hold costs down because they earn a profit when their costs fall below the prospective payment or absorb a loss when their costs exceed the prospective payment. As a result, health care decisions beg made response to PPS are expected to have a profound impact on other providers of health care, especially hospital outpatient facilities. For example, the Physicians' Practice Costs and Income Survey (Health Care Fancg Admistration, 1983-85) dicates that physicians treatg Medicare patients are beg encouraged to shorten lengths of hospital stays, reduce ancillary services, and foster outpatient testg. Prelimary fdgs from studies on the impact of the PPS suggest these reasons for HOP services beg the fastest growg segment of the health care dustry: There are direct fancial centives for hospitals to shift care to ambulatory settgs when it is clically appropriate and cost efficient. Surgical and diagnostic technological novations have enabled hospitals to perform more procedures on an ambulatory basis. Utilization review policies have fluenced the Medicare patient case mix hospitals. For example, preadmission review for medical necessity, appropriateness, and quality of care encourage treatment the safest and most cost-effective settg. The addition of ambulatory surgical benefits under Medicare and the repeal of the Part B deductible for home health agency services have encouraged the use of outpatient services (Omnibus Budget Reconciliation Act, 1980, Public Law 96-499). The shift of patient care to an outpatient settg has reduced the risk of nosocomial fections. Selected data highlights Trends the number of supplementary medical surance enrollees and the amounts of covered charges and reimbursements for the years 1974 through 1985 are shown Table 1. From 1974 to 1983, reimbursements for HOP services to Medicare beneficiaries creased from $0.3 billion to $2.7 billion (Figure 1), an average annual rate of growth (AARG) of about 26 percent. For all Medicare reimbursements durg this period, the AARG was 20 percent. From 1983 through 1985, reflectg the first 2 full years of the Medicare prospective payment system, HOP reimbursements rose from $2.7 billion to $4.1 billion, an AARG of about 23 percent. For all Medicare expenditures, the AARG slowed to an estimated 12 percent. The average HOP reimbursement per enrollee grew from $14 1974 to $92 1983, and then rose to $136 1985. The AARG was about 23 percent for both periods. The use of hospital outpatient services under Medicare is shown Table 2 for 1985, displayg covered charges, percent distribution, and average charge per enrollee, by type of service, sex, race, and type of enrollment. Health Care Fancg Review/Summer 1988/Volume 9, Number 4 113
Table 1 Hospital outpatient charges and reimbursements under Medicare, by type of enrollment and year service was curred: 1974-85 Type of enrollment and year service curred All beneficiaries 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Average annual rate of growth Number of SMI 1 enrollees 23,166,570 23,904,551 24,614,402 25,363,468 26,074,085 26,757,329 27,399,658 27,941,227 28,412,282 28,974,535 29,415,397 29,988,763 2.4 Covered charges $535,296 747,518 974,708 1,175,878 1,384,067 1,660,363 2,076,396 2,521,191 3,164,530 3,813,118 5,129,210 6,480,777 25.4 Amount $323,383 469,875 630,323 773,490 923,658 1,132,202 1,441,986 1,777,255 2,203,260 2,661,394 3,387,146 4,082,303 25.9 Reimbursements enrollee $13.96 19.66 25.61 30.50 35.42 42.31 51.75 63.61 77.55 91.85 115.15 136.13 23.0 As percent of charges 60.4 63.0 64.7 65.8 66.7 68.2 69.4 70.4 69.6 69.8 66.0 63.0 Aged 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Average annual rate of growth 21,421,545 21,945,301 22,445,911 22,990,826 23,530,893 24,098,491 24,680,432 25,181,731 25,706,792 26,292,124 26,764,150 27,310,894 2.2 394,680 546,095 704,569 855,412 1,005,467 1,203,048 1,517,183 1,874,136 2,402,462 2,995,784 4,122,859 5,210,762 26.5 220,742 323,563 432,971 540,040 648,249 797,442 1,030,896 1,300,040 1,645,064 2,066,207 2,679,571 3,211,744 27.6 10.30 14.74 19.29 23.49 27.55 33.09 41.77 51.63 63.99 78.59 100.12 117.60 24.8 55.9 59.3 61.5 63.1 64.5 66.2 69.9 69.3 68.5 69.0 65.0 61.6 Disabled 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1,745,019 1,959,248 2,168,467 2,372,594 2,543,162 2,658,838 2,719,226 2,759,496 2,705,490 2,682,411 2,651,247 2,677,869 140,617 201,423 270,139 320,466 378,600 457,315 559,213 647,054 762,068 817,335 1,006,351 1,270,015 102,641 146,312 197,352 233,450 275,409 334,760 411,090 477,215 558,195 595,187 707,575 870,560 57.07 74.69 91.03 98.38 108.29 125.90 151.55 172.94 206.32 221.89 266.88 325.09 Average annual rate of growth 4.0 22.1 21.3 17.1 1 Supplementary medical surance. SOURCE: Health Care Fancg Admistration, Bureau of Data Management and Strategy: Data from the Medicare Statistical System. 70.8 72.6 73.1 72.8 72.7 73.2 73.5 73.7 73.2 72.8 70.3 68.5 Nearly one-half of all Medicare HOP charges ($6.5 billion) were for three servicesradiology ($1.4 billion or 22.2 percent), end stage renal disease (ESRD) ($0.9 billion or 13.2 percent), and laboratory ($0.8 billion or 12.9 percent) (Figure 2). HOP charges for operatg room services ($0.4 billion) accounted for about 7 percent of all HOP charges for Medicare beneficiaries, reflectg the creasg number and variety of surgical procedures performed an outpatient settg. There were substantial differences by race and type of entitlement the charge per enrollee for HOP 114 services. The total charge per enrollee for persons of races other than white ($338) was 66 percent higher than that for persons of the white race ($203). The total charge per disabled enrollee ($474) was 149 percent higher than that for the aged ($191). This difference was reflected, for the most part, the use of ESRD services that accounted for 44 percent of all HOP charges among the disabled, but only 6 percent among the aged. Charges for ESRD services represented 34 percent of all charges for persons of races other than white compared with 9 percent for white persons. Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Figure 1 Medicare reimbusements for hospital outpatient services used by aged and disabled beneficiaries: 1974-85 4.5 All beneficiaries 4- Aged beneficiaries Disabled beneficiaries Reimbursements billions 3-2- 1-0 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 Calendar year SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. Hospital outpatient clic and emergency room visits and charges for 1985 under Medicare (Table 3), are shown by sex, race, and type of enrollment. Users of HOP services 1985 made 5.7 million visits to clics and almost 7.0 million visits to emergency rooms. Although data are not shown the tables, the rate of use of clic services by Medicare beneficiaries decled about 7 percent from 1983 (204 visits per 1,000 enrollees) to 1985 (190 visits per 1,000 enrollees). This fdg is contrary to the expected shift hospital services from the patient to the outpatient settg. The rate of emergency room services, however, showed a moderate crease of about 13 percent from 1983 (206 visits per 1,000 enrollees) to 1985 (232 visits per 1,000 enrollees). The average charge per visit 1985 was slightly higher for emergency room services ($43) than for clic services ($41). Substantial differences exist the rate of use (visits per 1,000 enrollees) of clic and emergency room services by race and type of entitlement. sons of races other than white used clic and emergency room services 4.6 times and 1.5 times more, respectively, than did white persons. Disabled beneficiaries used clic and emergency room services 2.6 times and 2.2 times more, respectively, than did aged beneficiaries. For aged Medicare beneficiaries (Table 4), hospital outpatient covered charges and reimbursements are shown for 1985, by area of residence. The average HOP reimbursement per aged enrollee the United States was $118. By region, the average HOP reimbursement per enrollee was highest the Northeast ($131) and lowest the South ($102), a difference of 28 percent. Health Care Fancg Review/Summer 1988/Volume 9, Number 4 115
Table 2 Covered charges, percent distribution, and average charge per enrollee for hospital outpatient services under Medicare, by type of service, sex, race, and type of enrollment: 1985 Sex, race, and type of enrollment Total Clic I Emergency room Laboratory Radiology Pharmacy Covered changes Physical Operatg therapy Ambulance room End stage renal disease 1 Other 2 Total $6,480,777 $231,427 $300,599! 6837,768 $1,439,819 $302,280 $194,612 $63,217 $443,281 $853,624 $1,856,015 Sex Male Female 2,853,571 3,627,205 90,075 141,352 133,776 166,823 352,557 485,211 625,039 814,779 135,562 166,717 70,956 123,655 28,960 34,256 178,046 265,235 449,905 403,719 810,234 1,045,780 Race White All other Unknown 5,315,580 984,968 180,228 141,936 83,731 5,760 246,970 46,191 7,438 705,424 109,685 22,658 1,267,277 131,939 40,602 262,953 31,357 7,969 170,811 18,203 5,597 55,115 6,285 1,817 400,730 30,479 12,072 495,502 330,691 27,430 1,598,539 207,642 49,833 Type of enrollment Aged Disabled 5,210,761 1,270,015 181,576 49,851 247,373 53,226 705,850 131,918 1,308,441 131,378 264,629 37,651 170,223 24,388 56,629 6,588 417,872 25,408 300,367 553,257 1,588,107 267,907 Total cent distribution 3.6 4.6 12.9 22.2 4.7 3.0 1.0 6.8 13.2 28.6 Sex Male Female 3.2 3.9 4.7 4.6 12.4 13.4 21.9 22.5 4.8 4.6 2.5 3.4 1.0 0.9 6.2 7.3 15.8 11.1 28.4 28.8 Race White All other Unknown 2.7 8.5 3.2 4.6 4.7 4.1 13.3 11.1 12.6 23.8 13.4 22.5 4.9 3.2 4.4 3.2 1.8 3.1 1.0 0.6 1.0 7.5 3.1 6.7 9.3 33.6 15.2 30.1 21.1 27.7 Type of enrollment Aged Disabled 3.5 3.9 4.7 4.2 13.5 10.4 25.1 10.3 5.1 3.0 3.3 1.9 1.1 0.5 8.0 2.0 5.8 43.6 30.5 21.1 Total Charges per enrollee $216.11 $7.72 $10.02 $27.94 $48.01 $10.08 $6.49 $2.11 $14.78 $28.47 $61.89 Sex Male Female Race White All other Unknown 227.65 207.82 202.82 337.66 208.60 7.19 8.10 5.42 28.70 6.67 10.67 9.56 9.42 15.84 8.61 28.13 27.80 26.92 37.60 26.23 49.86 46.68 48.35 45.23 46.99 10.81 9.55 10.03 10.75 9.22 5.66 7.08 6.52 6.24 6.48 2.31 1.96 2.10 2.15 2.10 14.20 15.20 15.29 10.45 13.97 35.89 23.13 18.91 113.37 31.75 64.64 59.92 60.99 71.18 57.68 Type of enrollment Aged Disabled 190.79 474.24 6.65 18.62 9.06 19.88 25.84 49.26 47.91 49.06 9.69 14.06 1 Services to end stage renal disease patients consist primarily of renal dialysis. Includes charges for computerized axial tomography, durable medical equipment, blood, etc. 6.23 9.11 2.07 2.46 15.30 9.49 11.00 206.59 SOURCES: Health Care Fancg Admistration, Bureau of Data Management and Strategy: Data from the Medicare Statistical System; Office of Research and Demonstrations: Data from the Division of Program Studies. 58.15 4 116 Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Figure 2 cent distribution of hospital outpatient charges under Medicare, by type of service: 1985 Radiology 22.2% Other 28.6% Physical therapy 3.0%' Operatg room 6.8% Clic 3.6% Ambulance 1.0% Emergency room 4.6% Pharmacy 4.7 Renal dialysis 13.2% Laboratory 12.9% Total charges = $6.5 billion SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. Sex, race, and type of enrollment Total Table 3 Hospital outpatient clic and emergency room visits and charges under Medicare, by sex, race, and type of enrollment: 1985 Number 5,705 Visits 1,000 enrollees 190 Clic Amount $231,427 Charges visit $40.57 Number 6,959 Visits Emergency room 1,000 enrollees 232 Amount $300,599 Charges visit $43.20 Sex Male Female 2,254 3,451 180 198 90,075 141,352 39.96 40.96 3,065 3,895 245 223 133,776 166,823 43.65 42.83 Race White All other Unknown 3,667 1,882 156 140 645 181 141,936 83,731 5,760 38.71 44.49 36.93 5,829 959 171 222 329 198 246,970 46,191 7,438 42.37 48.17 43.50 Type of enrollment Aged Disabled 4,546 1,159 166 433 181,576 49,851 39.94 43.01 5,715 1,244 209 465 247,373 53,226 43.28 42.79 SOURCES: Health Care Fancg Admistration, Bureau of Data Management and Stratetgy: Data from the Medicare Statistical System; Office of Research and Demonstrations: Data from the Division of Program Studies. Health Care Fancg Review/Summer 1988/Volume9,Number 4 117
By State, Massachusetts had the highest average reimbursement per enrollee ($217) and South Dakota the lowest ($66), a difference of 229 percent (Figure 3). Presented Table 5 are hospital outpatient covered charges and reimbursements for disabled Medicare beneficiaries, excludg those for end stage renal disease. The average Medicare HOP reimbursement per disabled enrollee the United States, excludg enrollees with ESRD, was $132. This figure was 12 percent higher than the average for aged enrollees ($118). By region, the average reimbursement per disabled enrollee was highest the Northeast ($165) and lowest the South ($105), a difference of 57 percent. By State, the average reimbursement per enrollee ranged from $288 the District of Columbia to $73 Alabama, a difference of 295 percent (Figure 4). For Medicare beneficiaries receivg hospital outpatient services 1985, the 10 leadg (most frequently reported) prcipal diagnoses are displayed Table 6. Data clude the number of bills, covered charges, reimbursements, and average charges and reimbursements per bill. Among all Medicare beneficiaries usg HOP services, the 10 leadg prcipal diagnoses accounted for 8.9 million bills or 27 percent of all HOP bills (33.6 million). Similarly, the 10 leadg prcipal diagnoses accounted for 26 percent ($1.1 billion) of all Medicare HOP reimbursements ($4.1 billion). Diabetes was the most frequently reported diagnosis, comprisg 18 percent (1.6 million) of all bills for HOP services (Figure 5). Cataract was the most costly leadg prcipal diagnosis, accountg for 14 percent ($0.6 billion) of all HOP reimbursements. The average reimbursement per bill for cataract was $728, or six times higher than the average HOP bill ($121). For 1985, Table 7 presents the leadg (most frequently reported) surgical procedures performed on Medicare beneficiaries hospital outpatient departments. Utilization is measured by the number of bills, covered charges, and average charges and reimbursements per bill. Among all aged and disabled beneficiaries, the 10 leadg HOP surgical procedures accounted for 43 percent (1.3 million) of all HOP surgical procedures (2.9 million). The 10 leadg HOP surgical procedures accounted for about two-thirds ($0.6 billion) of all Medicare reimbursements for HOP surgery ($0.9 billion). The average reimbursement per bill for the 10 leadg surgical procedures ($489) was 53 percent higher than the average reimbursement for all bills for surgical procedures ($317). 118 The most frequent surgical procedure was operation on lens (0.45 million), which accounted for 15 percent of all HOP surgical procedures (2.9 million). The highest average charge per bill ($1,521) was for operations on lens (Figure 6). The average HOP reimbursement per bill was highest for operations on lens ($966), more than three times higher than the average for all surgical procedures ($317). The next highest average reimbursement per procedure was for operations on the breast ($437). Defition of terms Disabled Medicare enrolleesdisabled enrollees are separated to two groups. In the first group are persons entitled to cash disability benefits for at least 24 months; some of these enrollees have end stage renal disease (ESRD). The second group of disabled persons has not been entitled to cash disability benefits for 24 months. These enrollees are entitled to Medicare because they have ESRD and meet certa social security sured status requirements. Eligibility for Medicare coverage begs with the third month after the begng of a course of renal dialysis. Hospital outpatient servicesmajor hospital outpatient services covered by supplementary medical surance clude services an emergency room or outpatient clic, laboratory tests billed by the hospital, X-rays and other radiology services billed by the hospital, medical supplies such as splts and casts, drugs and biologicals that cannot be self-admistered, and blood transfusions. Surgical and anesthesiology services are also covered. Physical therapy services must be furnished under a plan set up and reviewed periodically by a physician. For outpatient speech pathology services, a speech pathologist can establish the plan of treatment. Source and limitations of data The hospital outpatient data are derived from a 5-percent sample of bills for services performed hospital outpatient departments durg 1985. The bills were tabulated by the Health Care Fancg Admistration's central records as of December 1986. It is estimated that these bills represent about 98 percent of the eventual reimbursements for hospital outpatient services 1985. Data for the years 1974-85 are based on bills recorded 12 months followg the year of service. Sample counts are multiplied by a factor of 20 to estimate population totals. Therefore, the data are subject to samplg variability. Payments for hospital outpatient services are based on terim rates that may be adjusted after the end of the hospital's accountg year, calculated on reasonable costs of operation. The hospital outpatient figures this report reflect bills for covered services whether or not a reimbursement was made by the Medicare program. Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Table 4 Covered charges and reimbursements for hospital outpatient services used by aged Medicare beneficiaries, by area of residence: 1985 Area of residence All areas United States 2 Covered charges $5,210,762 5,192,232 Amount $3,211,744 3,199,736 Total reimbursements enrollee 1 $117.60 118.32 As percent of charges 61.6 61.6 Northeast North Central South West 1,364,572 1,342,588 1,502,151 982,920 826,081 864,455 918,221 590,979 130.98 122.95 102.41 124.70 60.5 64.4 61.1 60.1 New England Connecticut Mae Massachusetts New Hampshire Rhode Island Vermont 397,114 75,810 41,357 223,094 21,788 24,641 10,423 280,456 53,893 24,392 160,682 16,646 16,893 7,950 175.74 135.37 161.60 217.10 148.16 127.41 128.66 70.6 71.1 59.0 72.0 76.4 68.6 76.3 Middle Atlantic New Jersey New York Pennsylvania 967,459 136,361 370,560 460,538 545,625 98,175 203,389 244,061 115.82 106.25 94.39 148.41 56.4 72.0 54.9 53.0 East North Central Illois Indiana Michigan Ohio Wiscons 954,680 252,996 110,524 281,372 196,106 113,682 623,931 173,749 79,128 174,630 119,788 76,636 130.95 133.67 127.71 175.43 96.10 127.03 65.4 68.7 71.6 62.1 61.1 67.4 West North Central Iowa Kansas Mnesota Missouri Nebraska North Dakota South Dakota South Atlantic Delaware District of Columbia Florida Georgia Maryland North Carola South Carola Virgia West Virgia 387,908 72,397 62,132 85,278 113,355 29,138 14,440 11,169 856,773 15,188 17,416 324,362 108,859 83,002 114,975 48,357 98,092 46,521 240,523 45,812 43,186 52,721 64,739 19,707 8,067 6,290 535,991 8,281 12,387 217,334 61,225 54,991 61,816 27,720 68,230 24,007 106.13 114.39 137.21 104.32 98.71 93.99 94.49 66.36 113.44 122.42 186.18 118.80 110.36 129.69 92.25 86.53 124.58 98.21 62.0 63.3 69.5 61.8 57.1 67.6 55.9 56.3 62.6 54.5 71.1 67.0 56.2 66.3 53.8 57.3 69.6 51.6 East South Central Alabama Kentucky Mississippi Tennessee 248,027 73,415 52,926 43,552 78,133 141,709 40,128 32,732 25,786 43,063 82.79 87.80 77.74 88.95 79.19 57.1 54.7 61.8 59.2 55.1 West South Central Arkansas Louisiana Oklahoma Texas 397,352 47,173 68,150 54,755 227,274 240,521 33,713 41,396 34,497 130,916 95.10 106.03 104.20 91.80 91.03 60.5 71.5 60.7 63.0 57.6 Mounta Arizona Colorado Idaho Montana Nevada New Mexico Utah Wyomg See footnotes at end of table. 223,505 57,423 61,840 20,648 13,807 17,658 26,269 19,496 6,364 149,107 40,681 36,833 15,246 10,489 10,102 16,441 14,755 4,559 122.71 112.44 135.99 143.90 110.88 115.10 125.76 120.45 111.62 66.7 70.8 59.6 73.8 76.0 57.2 62.6 75.7 71.6 Health Care Fancg Review/Summer 1988/Volume 9, Number 4 119
Table 4Contued Covered charges and reimbursements for hospital outpatient services used by aged Medicare beneficiaries, by area of residence: 1985 Area of residence Pacific Alaska California Hawaii Oregon Washgton Covered charges 759,415 3 773 599 776 16,758 60,532 78,576 Outlyg areas 3 18,530 1 Based on supplementary medical surance enrollment as of July 1 198 2 Consists of 50 States and the District of Columbia 3 Consists of Puerto Rico, Virg Islands, Guam, other areas, and residence unknown Amount 441 873 2366 49,771 12,007 Total reimbursements enrollee 1 162.63 128.48 116.95 132.77 103.84 4591 As percent of charges sources:healthcarefancgadmistration,bureauofdatamanagementandstrategy: Data from the MedicareStatisticaalSystem; Office ofresearchanddemons 58.2 62.7 55.8 63.6 73.7 63 3 64.9 Figure 3 Average hospital outpatient reimbursement per aged Medicare enrollee, by State of residence: 1985 Reimbursement per enrollee Under $85 $85-104 $105-124 $125-144 $145 and over SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. 120 Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Table 5 Covered charges and reimbursements for hospital outpatient services used by disabled Medicare beneficiaries, excludg those with end stage renal disease (ESRD) 1, by area of residence: 1985 Area of residence All areas United States 3 Northeast North Central South West New England Connecticut Mae Massachusetts New Hampshire Rhode Island Vermont Middle Atlantic New Jersey New York Pennsylvania East North Central Illois Indiana Michigan Ohio Wiscons West North Central Iowa Kansas Mnesota Missouri Nebraska North Dakota South Dakota South Atlantic Delaware District of Columbia Florida Georgia Maryland North Carola South Carola Virgia West Virgia East South Central Alabama Kentucky Mississippi Tennessee West South Central Arkansas Louisiana Oklahoma Texas Mounta Arizona Colorado Idaho Montana Nevada New Mexico Utah Wyomg See footnotes at end of table. Covered charges $552,287 549,878 151,523 125,801 167,951 104,602 38,630 8,267 3,900 21,486 1,874 2,311 792 112,893 14,291 56,926 41,676 94,078 21,454 11,260 30,414 20,049 10,902 31,723 5,509 4,139 6,112 12,276 1,715 1,136 838 95,977 1,330 2,365 22,169 17,551 11,148 14,402 7,463 13,017 6,533 34,826 8,339 7,737 5,675 13,075 37,148 4,918 7,897 5,135 19,198 19,794 5,212 5,320 1,396 1,319 1,842 3,076 1,218 412 Amount $333,859 332,355 89,175 79,598 100,634 62,947 26,940 5,635 2,329 15,424 1,385 1,572 596 62,235 10,002 30,900 21,333 60,163 14,379 7,927 18,381 12,176 7,300 19,435 3,630 2,789 3,814 7,028 1,089 623 462 58,133 678 1,653 14,526 9,604 7,773 8,010 3,831 8,809 3,248 19,917 4,334 4,812 3,368 7,402 22,584 3,373 4,806 3,284 11,121 13,051 3,579 3,296 1,000 1,038 1,014 1,896 940 288 Total reimbursements enrollee 2 $129.54 131.63 164.73 132.14 104.62 150.13 220.99 211.60 159.89 282.93 164.57 131.98 101.44 148.37 126.89 155.76 149.98 136.97 141.31 134.65 169.31 99.40 153.54 119.14 135.55 139.93 121.73 114.90 87.90 116.81 74.46 118.38 100.92 287.71 111.14 120.93 209.37 96.25 81.28 139.95 85.33 86.40 72.98 81.19 78.68 107.21 93.98 86.30 89.00 104.44 96.04 127.07 112.53 147.08 126.37 127.53 121.75 138.88 118.61 112.05 As percent of charges Health Care Fancg Review/Summer 1988/Volume 9, Number 4 121 60.5 60.4 58.9 63.3 59.9 60.2 69.7 68.2 59.7 71.8 73.9 68.0 75.2 55.1 70.0 54.3 51.2 64.0 67.0 70.4 60.4 60.7 67.0 61.3 65.9 67.4 62.4 57.3 63.5 54.9 55.1 60.6 51.0 69.9 65.5 54.7 69.7 55.6 51.3 67.7 49.7 57.2 52.0 62.2 59.4 56.6 60.8 68.6 60.9 64.0 57.9 65.9 68.7 61.9 71.6 78.7 55.1 61.6 77.2 69.9
Table 5Contued Covered charges and reimbursements for hospital outpatient services used by disabled Medicare beneficiaries, excludg those with end stage renal disease (ESRD) 1, by area of residence: 1985 Area of residence Covered charges Amount Total reimbursements enrollee 2 As percent of charges Pacific Alaska California Hawaii Oregon Washgton Outlyg areas 4 84,808 381 70,694 1,074 6,490 6,169 2,409 49,896 255 40,446 610 4,655 3,930 1,504 157.61 145.72 166.49 91.20 173.68 102.34 1 Excludes ESRD data because larger reimbursements for a relatively few disabled ESRD-only enrollees would significantly distort the State reimbursement per enrollee. 2 Based on supplementary medical surance enrollment as of July 1, 1985. 3 Consists of 50 States and the District of Columbia. 4 Consists of Puerto Rico, Virg Islands, Guam, other areas, and residence unknown. SOURCES: Health Care Fancg Admistration, Bureau of Data Management and Strategy: Data from the Medicare Statistical System; Office of Research and Demonstrations: Data from the Division of Program Studies. 29.26 58.8 67.1 57.2 56.8 71.7 63.7 62.4 Figure 4 Average Medicare reimbursement for hospital outpatient services per disabled enrollee, by State of residence: 1985 Reimbursement per enrollee Under $85 $85-109 $110-134 $135-159 $160-184 $185 and over SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. 122 Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Table 6 Number of hospital outpatient bills, covered charges, and reimbursements under Medicare, by prcipal diagnosis: 1985 Prcipal diagnosis Total, all diagnoses Leadg diagnoses Diabetes mellitus Special vestigations and examations Essential hypertension Symptoms volvg respiratory system and other chest symptoms General symptoms Cataract Other symptoms volvg abdomen and pelvis Other disorders of urethra and urary tract Other forms of chronic ischemic heart disease Acute, but ill-defed, cerebrovascular disease All other diaanoses ICD-9-CM code 1 250 V72 401 786 780 366 789 599 414 436 _ Number of bills 33,621,380 8,926,740 1,578,520 1,285,640 1,263,600 957,100 825,780 780,080 709,560 643,100 532,760 350,600 24,694.640 Covered charges $6,480,777 1,746,799 82,646 97,501 92,702 140,046 118,330 902,726 119,896 70,275 57,343 65,336 4,733,978 Reimbursements $4,082,303 1,059,961 48,163 58,422 52,533 79,906 68,716 567,814 70,411 39,405 34,147 40,445 3,022,342 1 Prcipal diagnosis from the International Classification of Diseases, 9th Revision, Clical Modification, Volume 1. Average charge per bill $192.76 195.68 52.36 75.84 73.36 146.32 143.29 1,157.22 168.97 109.27 107.63 186.35 191.70 Average reimbursement per bill SOURCES: Health Care Fancg Admistration, Bureau of Data Management and Strategy: Data from the Medicare Statistical System; Office of Research and Demonstrations: Data from the Division of Program Studies. $121.42 118.74 30.51 45.44 41.57 83.49 83.21 727.89 99.23 61.27 64.10 115.36 122.39 Figure 5 Number of bills and average charges for hospital outpatient services under Medicare, by leadg prcipal diagnosis: 1985 Number of bills millions 2.0 1.5 1.0 0.5 0.0 Prcipal diagnosis Average charge per bill $0 $200 $400 $600 $800 $1,000$1 200 1.6 Diabetes mellitus $52 1.3 Special vestigations and examations $76 1.3 1.0 0.8 0.8 Essential hypertension Symptoms volvg respiratory system and other chest symptoms General symptoms Cataract $73 $146 $143 $1,157 0.71 Other symptoms volvg abdomen and pelvis $169 0.6 Other disorders of urethra and urary tract $109 0.51 Other forms of chronic ischemic heart disease $108 0.41 Acute, but ill-defed, cerebrovascular disease $186 SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. Health Care Fancg Review/Summer 1988/Volume 9, Number 4 123
Table 7 Number of hospital outpatient bills, covered charges, and reimbursements under Medicare, by prcipal surgical procedure: 1985 Prcipal surgical procedure Total, all procedures Leadg procedures Operations on lens Incision, excision, and anastomosis of teste Operations on sk and subcutaneous tissue Operations on urary bladder Other operations on stomach Operations on the breast Operations on reta, choroid, vitreous and posterior chamber Operations on esophagus Operations on cranial and peripheral nerves Operations on eyelids All other procedures ICD-9-CM code 1 13 45 86 57 44 85 14 42 04 08 Number of bills 2,935,920 1,271,200 454,240 251,480 200,220 142,960 46,540 40,640 36,000 33,020 33,180 32,920 1,664,720 Covered charges $1,476,699 979,296 690,688 76,642 51,507 63,105 14,288 27,271 11,831 8,328 18,730 16,905 497,404 Reimbursements $931,999 621,667 438,875 48,384 31,614 40,672 9,098 17,748 7,283 5,286 12,128 10,580 310,333 1 Prcipal surgical procedure from the International Classification of Diseases, 9th Revision, Clical Modification, Volume 3. Average charge per bill $502.98 770.37 1,520.53 304.76 257.25 441.42 307.00 671.04 328.64 252.21 564.49 513.53 298.79 Average reimbursement per bill SOURCES: Health Care Fancg Admistration, Bureau of Data Management and Strategy: Data from the Medicare Statistical System; Office of Research and Demonstrations: Data from the Division of Program Studies. $317.45 489.04 966.17 192.40 157.90 284.50 195.49 436.70 202.30 160.09 365.51 321.37 186.42 Figure 6 Number of bills and average charge for hospital outpatient services under Medicare, by leadg surgical procedure: 1985 Number of bills millions 0.5 0.4 0.3 0.2 0.1 0.0 Surgical procedure Average charge per bill $0 $500 $1,000 $1,500 $2,000 0.45 0.25 0.20 0.14 0.05 0.04 0.04 0.03 0.03 0.03 Operations on lens Incision, excision, and anastomosis of teste Operations on sk and subcutaneous tissue Operations on urary bladder Other operations on stomach Operations on breast Operations on reta, choroid, vitreous, and posterior chamber Operations on esophagus Operations on cranial peripheral nerves Operations on eyelids $305 $257 $441 $307 $671 $329 $252 $564 $514 $1,521 SOURCE: Health Care Fancg Admistration, Office of Research and Demonstrations: Data from the Division of Program Studies. 124 Health Care Fancg Review/Summer 1988/Volume 9, Number 4
Acknowledgments Mart Ruther of the Division of Program Studies made significant contributions to this article. A substantial portion of the background material presented the first section of this article was based on formation contaed chapter 6 of the Secretary's Report to Congress: The Impact of the Medicare Hospital Prospective Payment System, 1985 Annual Report. Chapter 6 of the mandated report was written by Sherry Terrell, Chief, Non-Institutional Studies Branch, Judith Sangl, Terrence Kay, and John Petrie, all with the Division of Reimbursement and Economic Studies. References Department of Health and Human Services, Health Care Fancg Admistration, Office of Research and Demonstrations, Report to Congress: 1985 Annual Impact Report of the Medicare Prospective Payment System, Washgton, D.C., Aug. 1987. Health Care Fancg Admistration: Data from the National Physicians' Practice Costs and Income Survey, 1983-85. Health Care Fancg Review/Summer 1988/Volume9, Number 4 125