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Medicare Prospective Payment and the Shaping of U.S. Health Care

Rick Mayes, Ph.D., and Robert A. Berenson, M.D.

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This is the definitive work on Medicare’s prospective payment system (PPS), which had its origins in the 1972 Social Security Amendments, was first applied to hospitals in 1983, and came to fruition with the Balanced Budget Act of 1997. Here, Rick Mayes and Robert A. Berenson, M.D., explain how Medicare’s innovative payment system triggered shifts in power away from the providers (hospitals and doctors) to the payers (government insurers and employers) and how providers have responded to encroachments on their professional and financial autonomy. They conclude with a discussion of the problems...

This is the definitive work on Medicare’s prospective payment system (PPS), which had its origins in the 1972 Social Security Amendments, was first applied to hospitals in 1983, and came to fruition with the Balanced Budget Act of 1997. Here, Rick Mayes and Robert A. Berenson, M.D., explain how Medicare’s innovative payment system triggered shifts in power away from the providers (hospitals and doctors) to the payers (government insurers and employers) and how providers have responded to encroachments on their professional and financial autonomy. They conclude with a discussion of the problems with the Medicare Modernization Act of 2003 and offer prescriptions for how policy makers can use Medicare payment policy to drive improvements in the U.S. health care system.

Mayes and Berenson draw from interviews with more than sixty-five major policy makers—including former Treasury secretary Robert Rubin, U.S. Representatives Pete Stark and Henry Waxman, former White House chief of staff Leon Panetta, and former administrators of the Health Care Financing Administration Gail Wilensky, Bruce Vladeck, Nancy-Ann DeParle, and Tom Scully—to explore how this payment system worked and its significant effects on the U.S. medical landscape in the past twenty years. They argue that, although managed care was an important agent of change in the 1990s, the private sector has not been the major health care innovator in the United States; rather, Medicare’s transition to PPS both initiated and repeatedly intensified the economic restructuring of the U.S. health care system.

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Reviews

This slender volume offers value on several dimensions. First, it is an explication of recent history that connects the dots from prospective payment to Medicare-based deficit reduction to cost shifting to managed care. By the same token, the story here serves as a bracing corrective to the mythology of market-based reform and the assumption that government's role in health is inescapably a negative one.

Whether discussing the Social Security Amendments of 1972 or the Balanced Budget Act of 1997, Mayes and Berenson entertain readers with insider anecdotes about the ideological and practical battles government policymakers fought with powerful provider lobbies.

A highly readable book that traces the history of Medicare prospective payment systems from their enactment in 1983 until today.

This book provides an excellent primer for physician leaders on the recent history of Medicare and the politics of elected officials using it as a cash cow. The authors challenge practicing physicians to carefully consider what may work in society’s best interests to improve health outcomes, rather than primarily focusing on how Medicare benefits their net incomes.

Mayes and Berenson offer an admirable product in this book, one that we should use to improve our own studies of the state and the agents who help define it.

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Book Details

Publication Date
Status
Available
Trim Size
6
x
9
Pages
264
ISBN
9780801888557
Illustration Description
12 b&w illus.
Table of Contents

Acknowledgments
List of Acronyms
Introduction
1. Origins and Policy Gestation
2. Development, Growing Appeal, and Passage of Prospective Payment
3. The Phase-In Years and Beginning of "Rough Justice" for

Acknowledgments
List of Acronyms
Introduction
1. Origins and Policy Gestation
2. Development, Growing Appeal, and Passage of Prospective Payment
3. The Phase-In Years and Beginning of "Rough Justice" for Hospitals
4. Medicare Policy's Subordination to Budget Policy, Increased Hospital Cost Shifting, and the Rise of Managed Care
5. The Resource-Based Relative-Value Scale Reforms for Physician Payment
6. The Calm before the Storm
7. The Reckoning and Reversal
Conclusion: How Medicare Does and Should Shape U.S. Health Care
Appendix: Interviews
Notes
References
Index

Author Bios
Featured Contributor

Rick Mayes, Ph.D.

Rick Mayes, Ph.D., is an associate professor of public policy at the University of Richmond and a faculty research fellow at the Petris Center on Healthcare Markets and Consumer Welfare at the UC-Berkeley School of Public Health. He is the author of Universal Coverage: The Elusive Quest for National Health Insurance and the coauthor of Medicating Children: ADHD and Pediatric Mental Health.
Featured Contributor

Robert A. Berenson, M.D.

Robert A. Berenson, M.D., is a senior fellow at the Urban Institute and coauthor of The Managed Care Blues and How to Cure Them. From 1998 to 2000, he was in charge of Medicare payment policy and managed care contracting in the Health Care Financing Administration (now the Centers for Medicare and Medicaid Services).
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