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In practice, Medicare PPS involves some cost-sharing rules that allow hospitals treating costly patients to be paid more (see McClellan, 1997).
The idea of explicitly adjusting all Medicare PPS payments to account for MFP growth has long been debated and has recently gained greater visibility.
The Medicare Prospective Payment System The Medicare PPS system provides payment rates to facilities that are adjusted for resident severity or case mix.
The Medicare PPS approach shifts the financial risk of treating Medicare patients to hospitals and gives them an incentive to provide care more efficiently.
Specifically, it is alleged that defendants reported revenue and earnings growth that were, in large part, based on material increases in Medicare revenues and admissions in the Company's Home Health segment, but that defendants failed to disclose that Gentiva improperly increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under the Medicare PPS.
Similar to the Medicare PPS for nursing homes, home care agencies are paid a set amount based on an acuity rating called the HHRG (Home Health Resource Group), not on the number of visits.
With a full year of operations under Medicare PPS reported, we believe that investors can better understand our financial performance and value our shares accordingly.
TECHNICAL NOTE Medicare's PPS The Medicare PPS undergoes refinement annually with results published in each year's Federal Register.