Traditional fee-for-service costs
Under a fee-for-service payment system, the hospital is paid $47,500 for Ron’s bypass procedure. In addition, all professional services for performing the procedure and providing care, including surgeon fees, cost $15,000. The complications caused by Ron’s uncontrolled diabetes result in an extra $12,000 paid to the hospital and an extra $2,000 to physicians. The costs of readmitting Ron for his wound infection total $25,000. Factoring in all these complications, the cost of treating Ron for this episode totals $101,500.
PROMETHEUS Payment budget
Under the PROMETHEUS model, the treatment budget is calculated as a patient- specific “Evidence-informed Case Rate” (ECR®). An ECR includes all covered services related to the care of a single illness or condition, bundled across all providers. The ECR is also risk-adjusted to account for the severity and complexity of the patient’s condition, and includes an allowance for potentially avoidable complications (PACs). If complications occur, this portion of the budget offsets the costs of corrective treatment. But if providers can reduce or eliminate PACs, they keep the allowance as a bonus.