Effects Of Prospective Payment Research Articles

The effect of prospective payment on admission and treatment policy: Evidence from inpatient rehabilitation facilities

We examine provider responses to the Medicare inpatient rehabilitation facility (IRF) prospective payment system (PPS), which simultaneously reduced marginal reimbursement and increased average reimbursement. IRFs could respond to the PPS by changing the number of patients admitted, admitting different types of patients, or changing the intensity of care. We use Medicare claims data to separately estimate each type of provider response. We also examine changes in patient outcomes and spillover effects on other post-acute care providers. We find that costs of care initially fell following the PPS, which we attribute to changes in treatment decisions rather than the characteristics of patients admitted to IRFs within the diagnostic categories we examine. However, the probability of admission to IRFs increased after the PPS due to the expanded admission policies of providers. We find modest spillover effects in other post-acute settings and negative health impacts for only one of three diagnostic groups studied.

On the effect of prospective payment on local hospital competition in Germany

The introduction of prospective hospital reimbursement based on diagnosis related groups (DRG) in 2004 has been a conspicuous attempt to increase hospital efficiency in the German health sector. As a consequence of the reform a rise of competition for (low cost) patients could be expected. In this paper the competition between hospitals, quantified as spatial spillover estimates of hospital efficiency, is analyzed for periods before and after the reform. We implement a two-stage efficiency model that allows for spatial interdependence among hospitals. Hospital efficiency is determined by means of non-parametric and parametric econometric frontier models. We diagnose a significant increase of negative spatial spillovers characterizing hospital performance in Germany, and thus, confirm the expected rise of competition.

The effect of prospective payment on rehabilitative care

Dobrez DG, Lo Sasso AT, Heinemann AW. The effect of prospective payment on rehabilitative care. Objectives To estimate the difference between cost and prospective payment system (PPS) reimbursements for rehabilitation care and to simulate potential consequences of cost-reducing strategies. Design A retrospective study to estimate costs and functional status at discharge from care. Setting An academic, urban, rehabilitation hospital. Participants Stroke patients on their first admission to a rehabilitation hospital between 1994 and 1998. Interventions Not applicable. Main outcome measures Cost was estimated from billing databases. Function was measured using the motor and cognitive components of the FIM instrument. Results PPS reimbursements were $10,825 (37%) lower than costs. No matter how much therapy was reduced, the costs were still greater than the mean PPS reimbursement. A reduction in length of stay by 9.6 days was required to bring costs in line with the PPS reimbursement, reducing discharge cognitive function by 1.1 points ( P<.01). Use of group therapy brought costs close to PPS reimbursement amount and improved discharge cognitive function by 0.5 points ( P<.10). Conclusions Our study shows the large difference between costs and expected PPS reimbursements that would have been observed before the PPS. Institutions have many options that reduce costs, with little effect on function at discharge. Future studies should determine the impact of evolving reimbursement rules on facilities’ financial status, and on patient outcomes.

Institutional and economic influences on quality of nursing documentation

This study evaluates the quality of nursing documentation within the hospital record for a particularly vulnerable group of patients, the depressed aged. Specifically, the effects of prospective payment, unit type, hospital type, and nurse staffing levels on nursing documentation within hospital charts were assessed.

The Effect of Prospective Payment on Medicaid Payment Rates for Nursing Home Care

Medicaid has become an important source of payment for long term care over the last twenty years. Of the $40.6 billion spent on nursing home care in 1987, Medicaid payments accounted for $17.8 billion-about 42 percent of the total [24]. The aging of the population, along with advances in health care technology that increase life expectancy, are likely to further increase the demand for nursing home services and inflate Medicaid expenditures. From 1987 to the year 2000, the U.S. population age 65 and above is projected to increase by 18 percent, and the population age 85 or more years is projected to increase by 53 percent, compared to an overall population increase of 10 percent [24]. Recent experience suggests that about 37% of those over 65 and about 60% of those over 85 at the time of their deaths had used nursing homes [16]. Due in part to this projected rapid growth in the population most likely to use nursing home services, by the year 2000 total expenditures on nursing home care are expected to be $130 billion, with Medicaid expenditures approaching $45 billion [9]. In response to actual and anticipated growth in Medicaid expenditures, state governments have experimented with a variety of cost control measures. Most of these control expenditures by reducing access to care, such as tightening eligibility criteria. Over the past decade, however, many states also adopted prospective payment for nursing homes-a method of reimbursement designed to increase efficiency and control costs. The hope was that adoption of prospective payment would hold down Medicaid expenditures without substantially reducing the availability or quality of care.

Growth of a field in policy research: The economics of mental health

This article is an overview of the growth of the field of mental health economics during the past decade. Research in this field has contributed to an understanding of such issues as the economic effects of state regulation on mental health insurance, comparative costs of treatment alternatives, and the effect of prospective payment on the supply of care. The National Institute of Mental Health has played an important role in promoting the growth of mental health economics by supporting research and education in this field, the results of which are shaping mental health policy.

The Effect of Prospective Payment on Medicare Expenditures

Medicare's prospective payment system was introduced in 1983 to slow the growth of expenditures for hospital care, which from the bulk of Medicare costs. Instead of reimbursing hospitals for the actual costs of patient care, the system pays them at fixed rates for each admission. In this study, we estimated the savings to Medicare from the use of prospective payment. We analyzed the expenditure projections published in 10 successive annual reports (1979 to 1988) by the trustees of the federal Hospital Insurance Trust Fund, which pays hospital bills for Medicare beneficiaries. To show the effect of prospective payment, these projections were adjusted to correct for the different assumptions about inflation and admissions made in each report. We also examined trends in expenditures from the Supplementary Medical Insurance Trust Fund, which pays for outpatient services, to see whether the savings in hospital expenses were offset by higher spending for out-of-hospital services. We found that prospective payment has reduced Medicare's hospital costs substantially. Expenditures from the Hospital Insurance Trust Fund for 1990 are expected to be +12 billion less in 1980 dollars, and +18 billion in 1990 dollars, than was expected shortly before prospective payment went into effect--the equivalent of a savings of approximately 20 percent. By contrast, the effect of prospective payment on the supplementary fund has not been great. We conclude that the prospective payment system is having a major impact on Medicare's hospital expenditures and that the savings is not offset by an increase in outpatient expenditures.