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HRD-82-73 1 (1982-05-10)

handle is hein.gao/gaobabdji0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING. OFFICE WASHINGTON, D.C. 20648 HUMAN RESOURCES DIVISION B-2730 tf fl i~iiiIflMAY 10, 1982 The Honorable Bob Packwood 118661 United States Senate Dear Senator Packwood: Subject: Information on Prospective Reimbursement Systems (GAO/HRD-82-73) Your January 6, 1982, letter posed three questions relative to the use of a prospective reimbursement system under Medicare. Specifically: What savings could be achieved? Which Government procurement policies would be appropriate under such a system? And how do various procurement policies handle payments for pro- fit and property-related costs? Briefly stated, our responses to these questions are: --Prospective reimbursement is more a concept than a system. A particular set of rules to pay providers prospectively could be designed to achieve almost any level of program savings desired. Of course, there is a point when a re- duction in reimbursement could adversely affect access to care and/or quality of care. Also, if the prospective reimbursement does not apply to all payers, a facility can have an incentive to shift costs to non-covered payers. --Currently, Medicare reimbursements are based on princi- ples very similar to those used by the Government to negotiate the purchase of other goods and services. Medicare would need to continue using these or similar principles under a prospective reimbursement system if such a system were to have any assurance that reason- able payments are made. --In general, Government procurement policies recognize property-related costs as part of the cost of doing business and recognize it through depreciation pay- ments. Whether or not profit is specifically addressed normally depends on the type of contract. Firm fixed price contracts resulting from advertised procurement actions normally would not specifically address profits while negotiated cost-plus-a-fixed-fee contracts would. (106227)

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