NYPHRMNew York Prospective Hospital Reimbursement Methodology
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As the following section shows, the original design of NYPHRM was intended to address all three goals.
NYPHRM I, approved in 1982 and enacted in 1983, was an all payer system of State-regulated per diem rates, including eight important features:
* Payments were prospectively determined, on a per diem basis - Under the new system, NYPHRM paid all hospitals on a prospectively determined per diem basis, with lower rates for Medicaid and Blue Cross.
Participants interviewed cite the continued presence of Lombardi, Tallon, and others involved in the Council as a critical factor in the continuity of NYPHRM through a decade of challenges.
NYPHRM represented a compromise involving several actors - the State health department, Blue Cross, commercial payers, local governments, and hospitals - and the support of all of these was critical to successful adoption of the approach.
NYPHRM created separate regional charity care/bad debt pools and a separate public hospital pool in order to allay hospital (and legislator) concern that the program would shift funds from upstate to New York City or from private to public facilities (Thorpe, 1987).
Another factor important to legislative success was the fact that NYPHRM was congruent with New York's political culture and played to important values in the State, in particular: * Perception of regulation as a legitimate State activity - In some States, the use of State powers to promote health or other social values is seen at best as a necessary evil.
During most of the period covered under NYPHRM, the majority of New York hospitals have had a favorable Medicare margin, in part because of favorable payment levels for teaching hospitals.
In contrast to Maryland, where authority over ratesetting was lodged in an independent commission, decisions about the structure and details of successive iterations of NYPHRM were made by the DOH and the legislature.
As shown in Table 1, NYPHRM has evolved with each iteration in response to changing needs and political dynamics both within the State and at the Federal level.
The need to control costs was a driving force behind NYPHRM I, but cost containment was clearly only a secondary concern with NYPHRM II (1986-87).
NYPHRM III (1988-90) brought another major change in the reimbursement methodology, moving all payers to a case-based system.(2) This time, however, the change in methodology also brought with it a concerted State effort to constrain reimbursement increases.