TABLE 1

Definitions

Observation statusA billing designation applied prospectively or retrospectively to patients who do not meet predetermined criteria for inpatient-status reimbursement. Originally intended for stays no longer than 24 to 48 h, during which time a decision to admit or discharge was made.
Observation unitAn area designated for patients expected to require <24 h of evaluation and management to determine their need to be admitted as inpatients or their readiness for discharge from the hospital.
Carve-out reimbursementSpecific services (eg, high-cost drugs) that may be separated from per diem or case-based reimbursements due to the special circumstances of these services.
Per diem reimbursementPayer reimburses the hospital a fixed amount for each day a member patient is hospitalized.
Case-based reimbursementPayer reimburses the hospital for each discharged inpatient at rates prospectively established for groups of cases with similar clinical profile and resource requirements.
DRGsClassification scheme that provides a means of relating the type of patients a hospital treats; although all patients are unique, groups of patients have common clinical characteristics that determine their resource needs. DRG-based payments use DRGs as the basis for case-based reimbursement.
Percentage of charges (or discount off charges) reimbursementPayer reimburses the hospital a negotiated percentage of the total charges incurred in caring for the patient.
  • DRGs, diagnosis-related groups.