Effects of Medicare's Hospital Prospective Payment System (PPS) on Disabled Medicare Beneficiaries: Final Report

The purpose of this study was to determine how PPS has affected the patterns of care received by Medicare beneficiaries with chronic disabling conditions. The study used the 1982 and 1984 National Long-Term Care Surveys to provide an empirical analysis of differences in the utilization patterns of hospital, skilled nursing facility and home health services under Medicare, before and after the implementation of PPS. Findings indicate that there were overall reductions in hospital lengths of stay after PPS, although the reductions were not uniform and appeared to be concentrated in subgroups of the disabled population. Importantly, the most disabled subgroup showed no change in length of stay. Virtually no changes were observed in post-PPS Medicare skilled nursing facility use although one would have hypothesized an increase. There was an overall increase in post-PPS home health utilization. No differences were observed in overall re-admission or mortality rates pre and post-PPS. [55 PDF pages]