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Finance and the Committee on Ways and Means of the
House of Representatives, proposals for legislation
which would provide that hospitals, skilled nursing
facilities, and, to the extent feasible, other
providers, would be reimbursed under title XVIII of
this [the Social Security] Act on a prospective basis.
The Secretary shall report such proposals to such
committees not later than December 31, 1982.
On April 20, 1983, Congress enacted the Social Security
Amendments of 1983 (SSA), Pub. L. 98-21, 97 Stat. 63, replacing
Medicare's reasonable cost basis payment system for hospital
inpatient services with the Diagnosis Related Group (DRG)
prospective pay system to be phased-in over a 4-year period with
reporting periods beginning after October 1, 1983. SSA, tit. VI,
97 Stat. 149. Under the DRG system, hospitals would receive
Medicare payments for inpatient services for each discharge at a
specific rate to be determined by the Secretary of Health and
Human Services based on DRG's. SSA at sec. 601(e), 97 Stat. 152;
see 48 Fed. Reg. 39752, 39754 (Sept. 1, 1983). Congress excluded
psychiatric hospitals and distinct psychiatric units from the DRG
system. SSA at sec. 601(e), 97 Stat. 152. As a result, hospital
care providers increased their interest in providing psychiatric
care.
Florida Patient's Compensation Fund
In 1975, the Florida legislature enacted the Medical
Malpractice Reform Act of 1975, which was designed to (1) limit
liability of medical providers and (2) fund valid claims. The
Medical Malpractice Reform Act established the Florida Patient's
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