Objectives: To make preliminary comparisons of Veterans Health Administration (VA) Decision Support System (DSS) patient-level cost information with Medicare allowable reimbursements.
Methods: For six VA facilities in the Evaluating VA Costs study for federal fiscal year 1999, DSS cost estimates for outpatient inguinal hernia and cataract operations and inpatient stays for chronic obstructive pulmonary disease, simple pneumonia, diabetes, and detoxification were compared with Medicare allowable reimbursement amounts for the same procedures and diagnosis-related groups. Medicare average base payments were adjusted for disproportionate share, capital, and indirect medical education costs. The amounts include Medicare's geographic adjustments for wages and capital. Medicare professional fees were a weighted average of site-specific fees paid for the indicated procedure.
Results: For the chosen types of care in fiscal year 1999, average DSS cost estimates were generally higher than estimated Medicare allowable reimbursement amounts, but included different amounts of professional services per discharge or outpatient procedure. The difference was greatest for inguinal hernia repair ($3253 US dollars compared with $1506 US dollars). Two diagnosis-related groups for detoxification (434 and 435) were least comparable between the systems because some VA discharges undoubtedly included both acute and nonacute portions of the hospitalizations, whereas the Medicare rates are for acute stays only.
Conclusions: Researchers and managers need DSS detail records to make any meaningful comparisons of the VA's DSS costs and non-VA reimbursement amounts such as those of Medicare. Non-VA reimbursement estimates should include an average of all professional services, including those of anesthesiologists and consultants. Separating acute and nonacute bedsections in DSS data would improve the VA's capability for comparison. Current information is insufficient for make or buy decisions.