The Effect of the Medicare Prospective Payment System on the Adoption of New Technology

To the Editor: Kane and Manoukian (Nov. 16 issue)* raise interesting questions about the reimbursement of cost-increasing forms of technology. They propose the establishment of temporary diagnosis-related groups (DRGs) so that the costs of new forms of technology can be passed along during the period immediately following their introduction. This approach is characterized as "payment neutral"; Kane and Manoukian claim it would provide "no artificial incentives for profit or loss affecting the adoption of the technique." This characterization is incorrect. Reimbursement offering Tull recovery of costs, as was the case before the institution of the DRG system, is likely to . . .