- 22 - Petitioners' system of billing, typical of most hospitals, has evolved over time in conformity with the reimbursement practices and procedures of private insurance companies as well as Medicare and Medicaid, and in conformity with State laws and regulations. During the beginning of the 20th century, hospitals typically charged for their services on a per-case or per diem basis. Subsequently, with the advent of the private health insurance industry, particularly Blue Cross/Blue Shield organizations, pressure was placed on hospitals to develop a charging structure which would enable the insurer to measure the degree of service furnished to each patient so that the insurer company could assure itself that it was not subsidizing the cost of care furnished to other patients. Consequently, insurance companies required hospitals to detail charges and to bill for services on a departmental basis. Until 1983, Medicare and Medicaid paid hospitals based on the cost of services as computed under a formula using the detailed charges listed by the hospitals. Effective with Medicare cost reporting periods beginning on and after October 1, 1983, however, Medicare began to phase in, over a 3-year transition period, its system of paying hospitals for inpatient services on the basis of diagnostic related groups (DRG’s). Under that system, hospitals are paid a flat amount for a particular procedure, such as a gall bladder operation, regardless of the precise course of treatment administered to thePage: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
Last modified: May 25, 2011