In this issue's cover story on the 20th anniversary of DRGs, reporter Jeff Tieman left out (I'm sure inadvertently) two other key events from 1983: my wedding and my first full-time reporting job. Although both have worked out pretty well, I can attribute only one of those to Medicare's prospective payment system.
Twenty years ago, I was fresh out of graduate school looking for work. At that time, reporting jobs were even scarcer than they are today. I was hoping to find work in or around my native Chicago, but that goal quickly flew out the window with a tight job market. During a two-month period, September and October of 1983, I managed to line up only three job interviews. A daily newspaper in Columbia, S.C., rejected me. The second was with an organization I had never heard of: the American Medical Record Association (AMRA) in Chicago, which created a new staff writer position to cover some new payment system for old people. And the third was with a daily newspaper in North Platte, Neb.
The North Platte paper offered me a general assignment reporting position, which I was ready to accept. That is, until I checked my messages when I got back to Chicago. The offer came in from AMRA (now the American Health Information Management Association), and I gladly took the job, happy to stay close to friends and family. Soon I was writing articles on Medicare's controversial patient transfer policy under PPS in which one patient could count as two discharges if the patient was moved from an inpatient unit to a PPS-exempt unit and then sent home. If you need to read more about that, you can pick up a copy of my master's reporting project in the library in Ernie Pyle Hall at the Indiana University School of Journalism in Bloomington. I wonder how many times that baby has been checked out!
At the time, I had no idea of the significance of what I now know was the most important alteration in the Medicare program since it was born in 1965. It simply changed everything. All of the major payment, policy and business changes over the subsequent 20 years in healthcare were driven by PPS, which transformed an out-of-control, pay-as-you-go cottage industry into one that suddenly had to live within specific fiscal restraints and don the business persona of other industries.
Here's a short list of some of the consequences-intended or otherwise-of PPS: shorter lengths of stay; the importance of discharge planning; hospital diversification into ancillary services such as home care and durable medical equipment; acquisitions and divestitures of physician practices; hospital consolidation; fraud and antifraud activities; hospital corporate reorganizations; the development of long-term acute-care hospitals; integrated delivery networks; and clinical outcome reporting. And just think of all the businesses that have sprung up to service those changes, particularly in the financial, legal and information technology arenas.
PPS, which to us purists really stands for "prospective pricing system," also has been blamed for many of the healthcare industry's ills. PPS, it was alleged, was closing hospitals and killing patients who were discharged quicker and sicker. Neither was true. In fact, I would argue that the best thing that could have happened to the industry 20 years ago was the introduction of PPS. It did far more than instill a new fiscal responsibility on healthcare providers. It raised the veil on the entire industry, which for the previous 18 years simply passed on the costs of inefficiency and ineffectiveness to the federal government.
The system injected a much needed dose of competition to healthcare and demanded much more from its administrators and practitioners. It's those management and clinical skills honed over the past two decades that will see the industry through another 20 years of whatever federal regulators throw at the healthcare industry.
Last week, I heard that reporter John Morrissey was working on a piece about the financial impact on hospitals of switching to ICD-10-CM codes from the current ICD-9-CM codes. Now that's a story!