title: The effect of prospective payment on admission and treatment policy: evidence from inpatient rehabilitation facilities.
abstract: 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.
authors.affiliation: University of Southern California (USC), Los Angeles, CA, United States; RAND Corporation, Santa Monica, CA, United States; National Bureau of Economic Research (NBER), Cambridge, MA, United States. Electronic address: sood.neeraj@gmail.com.
authors.forename: Neeraj
authors.initials: N
authors.lastname: Sood
authors.forename: Peter J
authors.initials: PJ
authors.lastname: Huckfeldt
authors.forename: David C
authors.initials: DC
authors.lastname: Grabowski
authors.forename: Joseph P
authors.initials: JP
authors.lastname: Newhouse
authors.forename: José J
authors.initials: JJ
authors.lastname: Escarce
mesh_terms: D000368:Aged; D000369:Aged, 80 and over; D019644:Arthroplasty, Replacement, Hip / Q000534:rehabilitation; D019645:Arthroplasty, Replacement, Knee / Q000534:rehabilitation; D016208:Databases, Factual; D005260:Female; D006801:Humans; D008297:Male; D006278:Medicare; D016134:Organizational Policy; D010343:Patient Admission; D011182:Postoperative Care; D011445:Prospective Payment System; D012047:Rehabilitation Centers / Q000191:economics*; D000071939:Stroke Rehabilitation; D014481:United States
keywords: Cream skimming; H42; H51; I11; I18; Medicare; Mortality; Prospective payment; Selection