Strategic Patient Discharge: The Case of Long-Term Care Hospitals

Paul J. Eliason, Paul L. E. Grieco, Ryan McDevitt and James W. Roberts

American Economic Review, 2018, vol. 108, issue 11, 3232-65

Abstract: Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) provides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a prespecified number of days. We show that LTCHs respond to the financial incentives of this system by disproportionately discharging patients after they cross the large-payment threshold. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities colocated with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare.

JEL-codes: H51 I11 I13 I18 (search for similar items in EconPapers)
Date: 2018
Note: DOI: 10.1257/aer.20170092
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Working Paper: Strategic Patient Discharge: The Case of Long-Term Care Hospitals (2016)
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