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

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

No 22598, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Medicare's prospective payment system for long-term acute-care hospitals (LTCHs) pro- vides modest reimbursements at the beginning of a patient's stay before jumping discontinuously to a large lump-sum payment after a pre-specified number of days. We show that LTCHs respond to financial incentives by disproportionately discharging patients after they cross the large-payment threshold, resulting in worse outcomes for patients. We find this occurs more often at for-profit facilities, facilities acquired by leading LTCH chains, and facilities co-located with other hospitals. Using a dynamic structural model, we evaluate counterfactual payment policies that would provide substantial savings for Medicare without adversely affecting patients.

JEL-codes: D22 I11 I18 (search for similar items in EconPapers)
Date: 2016-09
New Economics Papers: this item is included in nep-sog
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Citations: View citations in EconPapers (12)

Published as Paul J. Eliason & Paul L. E. Grieco & Ryan C. McDevitt & James W. Roberts, 2018. "Strategic Patient Discharge: The Case of Long-Term Care Hospitals," American Economic Review, vol 108(11), pages 3232-3265.

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