Medicare's Prospective Payment System for Hospitals: New Evidence on Transitions Among Health Care Settings

Xufeng Qian (), Louise Russell (), Elmira Valiyeva () and Jane Miller ()
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Xufeng Qian: Moody's
Louise Russell: Rutgers/Economics and Institute for Health
Elmira Valiyeva: University of Toronto
Jane Miller: Rutgers/Bloustein School and Institute for Health

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: Previous studies of Medicare’s prospective payment system for hospitals (PPS), introduced in 1983, evaluated only its first few years, using data collected during the hospital stay to control for patients’ health. We examine transitions among health care settings over a full decade following implementation of PPS, using survival models and a national longitudinal survey with independent information on health. We find that the rate of discharge from hospitals to nursing homes continued to rise as PPS matured, hospital readmissions from the community dropped after the early years, and risk of nursing home admission from the community soon after hospital discharge tripled. Evaluations of new payment systems for one type of provider need to be comprehensive in order to capture the full effects on other providers.

Keywords: Medicare; prospective payment (search for similar items in EconPapers)
JEL-codes: I18 C41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea and nep-ias
Date: 2007-10-09
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Persistent link: http://EconPapers.repec.org/RePEc:rut:rutres:200707

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