Final regulations on Medicare prospective pricing.

The final regulations implementing the Medicare prospective pricing system, published by the Health Care Financing Administration in January 1984, are reviewed. The regulations differ from the proposal published in September 1983 in that payments for "outlier" cases and the regional standardized payment amounts were reduced. Also, hospitals were granted a bit more flexibility in billing Medicare beneficiaries under certain conditions. Five functions of peer review organizations that will monitor this system are also described: (1) admissions review, (2) outlier review, (3) procedure review, (4) DRG validation, and (5) quality review. Hospital pharmacy managers need to be aware of the financial incentives inherent in these recent hospital reimbursement changes.