SERVICE MIX IN THE HOSPITAL OUTPATIENT DEPARTMENT - IMPLICATIONS FOR MEDICARE PAYMENT REFORM

Objective. To determine if implementation of a PPS for Medicare hospit al outpatient department (HOPD) services will have distributional cons equences across hospital types and regions, this analysis assesses var iation in service mix and the provision of high-technology services in the HOPD. Data. HCFA's 1990 claims file for a 5 percent random sample of Medicare beneficiaries using the HOPD was merged, by hospital prov ider number, with various HCFA hospital characteristic files. Study De sign. Hospital characteristics examined are urban/rural location, teac hing status, disproportionate-share status, and bed size. Two analyses of HOPD services are presented: mix of services provided and the prov ision of high-technology services. The mix of services is measured by the percentage of services in each of 14 type-of-service categories (e .g., medical visits, advanced imaging services, diagnostic testing ser vices). Technology provision is measured by the percentage of hospital s providing selected high-technology services. Findings/Conclusions. T he findings suggest that the role hospital types play in providing HOP D services warrants consideration in establishing a PPS. HOPDs in majo r teaching hospitals and hospitals serving a disproportionate share of the poor play an important role in providing routine visits. HOPDs in both major and minor teaching hospitals are important providers of hi gh-technology services. Other findings have implications for the struc ture of an HOPD PPS as well. First, over half of the services provided in the HOPD are laboratory tests and HOPDs may have limited control o ver these services since they are often for patients referred from loc al physician offices. Second, service mix and technology provision var y markedly among regions, suggesting the need for a transition to pros pective payment. Third, the organization of service supply in a region may affect service provision in the HOPD suggesting that an HOPD PPS needs to be coordinated with payment policies in competing sites of ca re (e.g., ambulatory surgical centers).