MHA550 CASE MOD 4 Medicare Payments Management Essay

Medicare Payments
Student’s Name:
Institution Affiliation:
Operating Base Payments
The IPPS covers operating and capital expenses per discharge rates. Notably, the rates usually cover that care providers usually use or need in order to offer high quality care. The Medicare payments are usually obtained through the use of various adjustments on the operating base and capital compensation rates. The compensation rates are usually updated annually in order to reflect the state of the market, including the various aspects that are known to influence the cost of healthcare.
DRG weight signifies the average resource-level for a patient, relative to the average resource for all patients. The weights are aimed at accounting for cost variations between different kinds of treatments. The base payment is divided into non-labor and labor-related share. The labor share is attuned by the wage index in the geographical area of the hospital.
Operating payments are attached to the costs of labor and supply, while the factors determining capital payments include depreciation costs, taxes, insurance for properties, rent, and interest. The wage index reflects the unexpected differences in labor costs. It measures the differences in the rates of hospital wages among labor markets (Boccuti & Casillas, 2015). The index is revised annually depending on the wage data reports by IPP hospitals. The current labor share of 68% is applicable for hospitals with a wage index above 1.0. A cost of living adjustment factor adjusts the non-labor share.
The operating base rate for the fiscal year is $5,797. In this case, Mrs. Jones was treated in a large urban hospital in Philadelphia. Operating labor share of approximately 68.3 percent is applied to hospitals with a wage index above 1.0.
Operating base rate attuned for geographical factors
68/100* $5,797 = $ 3,941.96
Operating base rate attuned for case mix
The base payment rate attuned for geographical factors is multiplied by the DRG relative weight. DRG relative weight for ischemic stroke is 2.0150
$ 3,941.96 * 2.0150 =$7,943.0495
The operating payment to be paid to the hospital is $7,943.0495
Capital payment
The capital rate is $462.
The base capital rate attuned for geographical factors
68/100*$462 = $314.16
The base capital rate attuned for geographical factors is multiplied by the DRG relative weight. DRG relative weight for ischemic stroke is 2.0150
$314.16 * 2.0150 = $633.0324
The capital payment to be paid to the healthcare facility is $633.0324.
There are certain cases that tend to be unusually costly, producing extremely costs that may be too high for healthcare facilities to offset. In such cases, Medicare increases the IPPS payment. The additional payment, also known as outlier payment is meant to protect the hospital from making large financial losses owing to the unusually ex...