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'Quicker and Sicker' under Medicare’s Prospective Payment System for Hospitals: New Evidence on an Old Issue from a National Longitudinal Survey

Xufeng Qian, Louise B. Russell, Elmira Valiyeva, and Jane E. Miller

Bulletin of Economic Research
January 2011
Medicare’s prospective payment system for hospitals (PPS), introduced in the U.S. in 1983, replaced cost reimbursement with a system of fixed rates which created incentives for hospitals to control costs. Previous studies found that elderly patients were discharged from hospital ‘quicker and sicker’ under PPS and concluded that families were coping at home. Using data from the first National Health and Nutrition Examination Survey and its Epidemiologic Followup Study, Qian and colleagues used multi-state hazards models to study transitions among hospitals, the community, nursing homes, and mortality. They found that the rate of admission to nursing homes from the community in the first weeks after a hospital discharge more than tripled, and discharges directly to nursing homes from hospitals which jumped initially under PPS, may have risen further when payment rates were tightened in the early 1990s. Hospital readmissions fell after the first few years. Study findings are strengthened by the fact that the authors controlled for patients’ health using health information collected independently of hospital admission. The entire article can be read here.

Xufeng Qian, Louise B. Russell, Elmira Valiyeva, and Jane E. Miller. 2011." 'Quicker and Sicker' under Medicare’s Prospective Payment System for Hospitals: New Evidence on an Old Issue from a National Longitudinal Survey." Bulletin of Economic Research, 63(1):1-7.



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