National Council for Therapeutic Recreation Certification (NCTRC) Practice Exam

In 1983, a cost-cutting Medicare hospital payment system was initiated that included?

1. A retrospective payment system

2. Direct reimbursement for TR services

3. The Centers for Medicare and Medicaid Services (CMS)

4. Diagnostic-related groups (DRGs)

The correct answer is: Diagnostic-related groups (DRGs)

The initiation of a cost-cutting Medicare hospital payment system in 1983 included the implementation of Diagnostic-Related Groups (DRGs). DRGs were established to manage hospital payments by categorizing patients based on diagnosis, which allowed for fixed payments depending on the grouped diagnosis rather than the specific services provided. This approach incentivized hospitals to reduce costs and improve efficiency in their service delivery, as they would receive a predetermined amount for each patient based on their DRG classification regardless of the actual expenses incurred during treatment. The use of DRGs marked a significant shift from previous systems of payment that may have relied on more open-ended or retrospective analyses of costs and treatments. As a result, hospitals needed to optimize their care processes to remain financially viable, further influencing healthcare practices and the management of therapeutic services within hospitals, including those provided by recreational therapists.