Prospective Payment Systems and Diagnosis-Related Groups - Research Paper Example

Though the system has gone through many phases, it is now running as the crux of health department functions. The paper is aimed at giving a closer look at its achievements as well as discussing its descendants and its impact on reimbursement.
Introduction
Human life is invaluable. Knowing the importance of human life is an important aspect of any government. With this aim as the motive, the US government started the Medicare program based on which people who are aged 65 and above can get their medical expenditure taken care of, by the government. As years passed by, the cost of reimbursement increased in exponential proportions. In order to maintain stability, the government under the influence of its health department introduced a new system that determines a fixed cost of reimbursement for the patient based on the criterion of the disease. This system is called the Prospective Payment System, with its working purely based on the grouping of diagnosis, which is called the Diagnosis–Related Groups (DRGs).
A brief description
Diagnosis-Related Groups
In order to standardize the advance payment that is subsidized for a distinctive set of medical cases, across all the hospitals in different states, a grouping of cases was introduced. According to which the medical patients are classified into a defined set of diagnosis-related groups and are assigned to that till the end of their hospitalization. This was actually introduced to prop up the Prospective Payment System which is described below. (Bielby, 2010)

Prospective Payment System (PPS)
A PPS classifies the patients into one fixed group of DRG based on their initial diagnosis by the hospital doctors. So, once they are allotted a DRG, the government allows a fixed amount of money for the respective DRG to the hospital. The money is equivalent to the expenditure of the case for a period of 100 days. If in case the patient gets discharged within a period of 40 days, then his/her 100 day period gets revived again for the next cycle. Additionally, if only fewer amounts of money get used up for the patient, then the rest of the money stays with the hospital. On the contrary, if the expenditure goes beyond the allotted amount, the hospital has to bear the expenses.
PPS Impact
The advent of PPS in health information systems has led to major changes in five of its important characteristics. These include the way the patients are treated in the hospital, the costs incurred for their care, technological advancements in managing patient data as well as progressing to new equipment and access to pertaining information. Analyzing technological advances and their impact on health information, the system has garnered both positive and negative reviews. Positive reviews are that the system has propelled hospitals in search of technologies that aid the reduction of servicing the patients periodically as well as economically.

This would help hospitals reduce their expenditures of serving a patient. On the other hand, it has depressed the technological advancements in diagnosis and cure due to the expenditure involved in buying the equipment. The reason can also be traced back to the health agencies which are determined at paying the fixed rate for each DRG irrespective of the technological advancements that the hospital has achieved. This is a big lapse on the part of the government. Apart from such disparate circumstances, the system has abled to achieve better hospitalization and a completely satisfying treatment for all people under the Medicare program. (Kane & Manoukian, 1989)

Future Advancements and their effects
With the looming success of the PPS system, the advancements in healthcare information technology are progressing at a never-before pace. Though this augurs well for the improvement in the treatment of the patients in hospitals, it also allures possibilities of subsidizing the reimbursement opportunities that are provided. But, on a positive note, it guarantees one important point that human lives are taken care with at most priority and care, ensuring all, that it is indeed a special gift to live. Read More