37
PRESERVING AND FINANCING AMBULATORY HEALTH SERVICES* BEATRICE G. KRESKY, M.D., M.P.H. Chairman, Department of Ambulatory Care Jamaica Hospital Jamaica, N.Y. President, New York Association for Ambulatory Care, Inc.
GARY EIDSVOLD, M.D., M.P.H. Bronx Director City of New York Department of Health New York, N.Y.
H OSPITAL-BASED ambulatory-care programs in New York City have a high unit cost. This may be attributable to several factors: the stepdown formula allocating a disproportionate amount of the hospital's general operating costs to ambulatory care, the inclusion of teaching and research programs in calculation of ambulatory-care costs, the large number of specialty and subspecialty clinics, and the excessive utilization of laboratory procedures. A number of measures can improve the financing of ambulatory care: 1) In order to compute more accurately cost factors for teaching, research, and direct patient care, costs must be identified separately. This is not to say that we should diminish our commitments to the principle of student education in primary care in an ambulatory-care setting. Allocation of the costs of education to ambulatory-care programs should be made if health professionals are taught to provide comprehensive primary care. 2) Hospital-based ambulatory-care units should be separate fiscal entities; they should not be incorporated into either the capital or operating budget of the hospital. The ambulatory-care organization then can contract for clinical, laboratory, and other services from the hospital. This will reflect more accurately the true costs of the ambulatory-care operation and in almost all cases it will be decreased. 3) Medicaid-reimbursement rates for patient visits to an organized *Presented in a panel, Management and Financial Problems, as part of the 1976 Annual Health Conference of the New York Academy of Medicine, Issues in Primary Care, held April 22 and 23, 1976.
Vol. 53, No. 1, January-February 1977
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B.G. KRESKY AND G. EIDSVOLD
ambulatory-care facility should not be all-inclusive, but should be broken down into units of service provided. The denominator should be the specific type of service rendered rather than the visit. Reimbursement to hospital-based and freestanding ambulatory-care facilities through a capitation mechanism must be encouraged in order to prevent unnecessary utilization by the providers. 4) Medicaid, Medicare, and Blue Cross should reimburse for care provided in organized ambulatory-care settings by allied health professionals and physician extenders. 5) The care of patients in day-treatment or miniature surgical centers should be increased as an alternative to inpatient care, and reimbursement should be provided by third-party carriers. 6) Shared health facilities (Medicaid mills) must be incorporated within the Article 28 regulations of the New York State Health Code. 7) Reimbursement for services provided by solo and group private physicians should be increased once the Medicaid mills are brought into compliance with the New York State Health Code. 8) The delivery of home health services should be encouraged as an alternative to institutional care. Maintenance of individuals at home rather than in a nursing home can take place only if all services needed by individuals become reimbursable. The successful implementation and operation of these proposals depends upon the coordination of four major functions: planning, rate-setting and regulation, and reimbursement. At present, disparate public voluntary agencies assume these functions without coordination or communication among each other. We recommend that a single governmental agency assume responsibility for the coordination of these four functions in order that adherence to standards for the adequate quality of care and appropriate utilization be directly tied to reimbursement. The planning agency must assume responsibility for the curtailment and elimination of programs and facilities in addition to the expansion of programs. The rate-setting agency, a new state-level agency, should negotiate prospectively with health-care institutions and those who set the Medicaid, Medicare, and Blue Cross rates for inpatient and ambulatory care. The rate-setting agency should have the authority to review and approve capital expenditures and increases in operating costs and income, with final approval of a capital budget and the dollar amounts of gross operating revenues. This concept of revenue control requires hospitals to Bull. N.Y. Acad. Med.
AMBULATORY HEALTH SERVICES
39
estimate changes in both their price and volume changes on a prospective basis. The regulatory agency should set standards, monitor, and evaluate in order to insure that institutional and noninstitutional providers are delivering quality health care efficiently. All health-care regulatory functions should be consolidated within a single governmental agency. The reimbursement agency should be a conglomerate of payers for health care: Medicaid, Medicare, Blue Cross and Blue Shield, and commercial and other third-party insurance carriers. The agencies should be organizationally distinct but interact mutually, not only among themselves but also with the providers and consumers of health services. The agencies must continually share information with each other. The primary tool for enforcement of regulations is the threat of a curtailment of reimbursements.
Vol. 53, No. 1, January-February 1977
PRESERVING AND FINANCING AMBULATORY HEALTH SERVICES* BEATRICE G. KRESKY, M.D., M.P.H. Chairman, Department of Ambulatory Care Jamaica Hospital Jamaica, N.Y. President, New York Association for Ambulatory Care, Inc.
GARY EIDSVOLD, M.D., M.P.H. Bronx Director City of New York Department of Health New York, N.Y.
H OSPITAL-BASED ambulatory-care programs in New York City have a high unit cost. This may be attributable to several factors: the stepdown formula allocating a disproportionate amount of the hospital's general operating costs to ambulatory care, the inclusion of teaching and research programs in calculation of ambulatory-care costs, the large number of specialty and subspecialty clinics, and the excessive utilization of laboratory procedures. A number of measures can improve the financing of ambulatory care: 1) In order to compute more accurately cost factors for teaching, research, and direct patient care, costs must be identified separately. This is not to say that we should diminish our commitments to the principle of student education in primary care in an ambulatory-care setting. Allocation of the costs of education to ambulatory-care programs should be made if health professionals are taught to provide comprehensive primary care. 2) Hospital-based ambulatory-care units should be separate fiscal entities; they should not be incorporated into either the capital or operating budget of the hospital. The ambulatory-care organization then can contract for clinical, laboratory, and other services from the hospital. This will reflect more accurately the true costs of the ambulatory-care operation and in almost all cases it will be decreased. 3) Medicaid-reimbursement rates for patient visits to an organized *Presented in a panel, Management and Financial Problems, as part of the 1976 Annual Health Conference of the New York Academy of Medicine, Issues in Primary Care, held April 22 and 23, 1976.
Vol. 53, No. 1, January-February 1977
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B.G. KRESKY AND G. EIDSVOLD
ambulatory-care facility should not be all-inclusive, but should be broken down into units of service provided. The denominator should be the specific type of service rendered rather than the visit. Reimbursement to hospital-based and freestanding ambulatory-care facilities through a capitation mechanism must be encouraged in order to prevent unnecessary utilization by the providers. 4) Medicaid, Medicare, and Blue Cross should reimburse for care provided in organized ambulatory-care settings by allied health professionals and physician extenders. 5) The care of patients in day-treatment or miniature surgical centers should be increased as an alternative to inpatient care, and reimbursement should be provided by third-party carriers. 6) Shared health facilities (Medicaid mills) must be incorporated within the Article 28 regulations of the New York State Health Code. 7) Reimbursement for services provided by solo and group private physicians should be increased once the Medicaid mills are brought into compliance with the New York State Health Code. 8) The delivery of home health services should be encouraged as an alternative to institutional care. Maintenance of individuals at home rather than in a nursing home can take place only if all services needed by individuals become reimbursable. The successful implementation and operation of these proposals depends upon the coordination of four major functions: planning, rate-setting and regulation, and reimbursement. At present, disparate public voluntary agencies assume these functions without coordination or communication among each other. We recommend that a single governmental agency assume responsibility for the coordination of these four functions in order that adherence to standards for the adequate quality of care and appropriate utilization be directly tied to reimbursement. The planning agency must assume responsibility for the curtailment and elimination of programs and facilities in addition to the expansion of programs. The rate-setting agency, a new state-level agency, should negotiate prospectively with health-care institutions and those who set the Medicaid, Medicare, and Blue Cross rates for inpatient and ambulatory care. The rate-setting agency should have the authority to review and approve capital expenditures and increases in operating costs and income, with final approval of a capital budget and the dollar amounts of gross operating revenues. This concept of revenue control requires hospitals to Bull. N.Y. Acad. Med.
AMBULATORY HEALTH SERVICES
39
estimate changes in both their price and volume changes on a prospective basis. The regulatory agency should set standards, monitor, and evaluate in order to insure that institutional and noninstitutional providers are delivering quality health care efficiently. All health-care regulatory functions should be consolidated within a single governmental agency. The reimbursement agency should be a conglomerate of payers for health care: Medicaid, Medicare, Blue Cross and Blue Shield, and commercial and other third-party insurance carriers. The agencies should be organizationally distinct but interact mutually, not only among themselves but also with the providers and consumers of health services. The agencies must continually share information with each other. The primary tool for enforcement of regulations is the threat of a curtailment of reimbursements.
Vol. 53, No. 1, January-February 1977
