Government Funded Health Care Services

One of the cost control techniques developed and implemented by the federal government was the diagnosis related groups (DRG) procedure. The DRG procedure is specifically applicable to pateints whose care is funded by the federal government, where care is delivered in nonfederal government health care facilities. Effectively, thus, the DRG procedure is applicable to Medicaid and Medicare patients.The Problem

Approximately 60 percent of the American population is covered by private health care insurance programs (Congressional Budget Office, 1989). Most of these programs the very great majorityare either fully or partly funded by employers, while the remainder are funded fully by the covered individuals and families. For the remaining 40 percent of the population, the delivery of health care services is either (1) funded by the federal government (for approximately 25 percent of the population, primarily through the Medicaid and Medicare programs), or by individuals and families in the financial position to pay for health care services at the time of delivery, or (2) deferred. When all is said and done, approxim

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d patients. This strategy may lead to average cost levels within a specific region, which could place the notforprofit hospitals in a position where (1) they are required to treat highrisk publiclyfunded patients, but where (2) their reimbursements for the services provided to such patients will be far below their costs of delivery for such services. One likely result of such a situation could be the fiscal failure of many notforprofit hospitals, with a consequent loss of access to health care services for many governmentallyfunded patients. While the proponents of the DRG procedure claim that the primary goal of its use is to improve the quality of health care services, while, at the same time, controlling costs, many health care analysts contend that cost containment is the sole aim of the implementation of the DRG procedure (Zaremski and Rehm, 1985). Some research findings investigating the application of the DRG procedure have confirmed the existence of a strong statistical relationship between case mix and cost, with an efficient DRG case mix leading to a lowering of total health care costs in the shortrun (Schelnker, 1986). Research has also confirmed the existence of a positive relationship between the cost
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Approximate Word count = 2182
Approximate Pages = 9 (250 words per page)

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